The Gold Trail by FOA - July 2001

All times are U.S. Mountain Time

(07/16/2001; 12:42:07 MDT - Msg ID: 82)
The evolving message of gold

Hello everyone,

Once again, after walking only a short distance, we come to a clearing where a speaker is beginning his talk. Let's just stand here on the hillside and quietly listen!


Ladies and gentlemen, good evening an welcome to our ongoing traveling talks on the changing world of gold. Thanks again for being here and we will get started now.

Much thanks to the USAGOLD people for recording and reproducing these discussions. Also a hardy appreciation to their Randy for organizing all our thoughts as they were presented in the TrailGuide context.

I begin tonight by reading an item from the very first TrailGuide walk. Then proceeding on to expand in more detail from our points in earlier talks. For the benefit of those who missed our last discussion, this thought picks up that theme very well:

"""""""""""""""" Our most broad view, expressing our strongest position is this:
From ten or perhaps twenty years ago a political will, a concept, was being formed that would today change the economic architecture and power structure of the world. Within this change, gold would undergo one of the most visible transformations since it was first used as money. We expect that, starting three or four years ago, the gold market itself has started responding to this sea change. As such, in our time, physical gold will enter the greatest bull phase in it's human use history. This my friends is the very trail we walk today. During our hikes and fireside chats, we will point out this political will, consider the logic and express our reasoning for this position. All the while observing the "river current", in the form of events, that will soon confirm our view."""""""""""""""""""""""""


First off, I want all of you to know that I was a hard money Gold Bug for decades. Actually, I still am in many ways. Yes, in spirit I am one of those little "roadrunners" mentioned in our last talk. Still storming down the gold money trail. Fortunately for me, and my portfolio position, I started looking at a realistic human / political side of money thought. A side most of us never grasped quickly enough to help us; because evolution was changing it before our understanding could catch up. My slow learning curve was speeded up with help from some very sharp people. Today I still see things using a hard money position; but, just as the world has turned and time passed by, my position has evolved quickly enough to flow with our human tide.


The major object of our discussion tonight is this thought:

--- the present state of affair in our gold market isn't just the result of political motive alone. --

I'm carrying this over from our last talk; that mentioned a new demand for fiat.

Yes, it's true; a simple political motive explanation would, indeed, solve all our problems. For many Gold Bugs this explanation does end their need to think much further on the subject, but their continued financial loses in the gold arena says their problem was never solved as such. Indeed, there is plenty of political push and pull going on to overtly move the market and we will later cover most of that in other talks. But, to underscore our isolated point, tonight, we magnify a few thoughts.


Had the dollar run it's inflationary course, in a manner and time period that history records all fiats as doing, there would have not been any contest for us to follow. From 1971, had dollar prices of everything soared, as hard money theory said it should have, every asset in the world would have seen hyper prices reflecting our run from this inflating currency. Perhaps not all of the wealth held in dollars would have went into real gold: some of it surely would have competed against the politically contrived paper gold markets. But, in spite of official thrusts, enough cash would have went into physical to drive it's physical dollar price to at least $1,000 or $3,000 over the last 30 years. It didn't.

The dollar did very much inflate from a printing press viewpoint and did so without massive price inflation. A 30 year repudiation of much hard money dictum. This tremendous rate of currency creation could not have been contained in a way that held off price rises with coordinated Central Bank support alone. The amounts of currency created and the build up of official assets held in CB vaults, to support the inflating currency, did not come close to matching each other. Even in a reverse fractional banking context. This one observation, simple to grasp as it is, points to another demand for fiat currency that did not exist when hard money thought was first built.

Over the last few decades a new demand use for digital money, or fiat unbacked paper money, has helped absorb most of this extra printing. The velocity of and gross increases of both private and world trade gave a use to worthless digital transactions and helped build a value that didn't exist in fiat currency before. This effect had to be real, because the world took in every last dollar that was printed and didn't dump them off to buy other real assets. A process that would have matched printed money rates to price inflation rates! I'm speaking of dollars alone, of course.

And there is more to observe that this alone.


In recent society's demonstrated use of unbacked fiat currency, they were advancing a trend to use currency in trade only; while owning wealth assets outside the known money context. As society advanced and trading volumes mushroomed, the need for more digital units increased more so from their trading function than their value retaining function.

This process was rendering the whole school of hard money thought useless as a strategy to to defend one's savings from inflation: as these inflating digital units failed to create a meaningful price inflation. The expanding universe of fiat was best used to gather real wealth, at stable fiat values, each time the fiat cycled through your domain. The object became; to gain fixed value wealth in quantity instead of gaining finite wealth and waiting for it to gain in value.

This is all completely beside the point that all this action will one day destroy the dollar unit as a saving / debt denominating vehicle. We will get to that later. Right now we are gaining an understanding about this money evolution in it's basic trade use and how we should advance ourselves using it.


Owning wealth aside from official money units is nothing new. Building up one's storehouse of a wealth of things is the way societies have advanced their kind from the beginning. What is new is that this is the first time we have used a non wealth fiat for so long without destroying it through price inflation. Again, a process of using an unbacked fiat to function as money and building up real assets on the side. Almost as if two forms of wealth were circulating next to each other; one in the concept of money and the other in the concept of real wealth.

This trend is intact today and I doubt mankind will ever pull back from fiat use again. Fiat used solely in the function of a money concept that I will explain of in a moment. If we inflate this currency to it's death, and I expect we will, then the world will just start a new one and the process goes on. Note the minor examples of this process in various third world currencies as they kill their own kind and advance to using the king fiat dollar. The local currency printers eventually fail their task, so the next nation state's fiat comes into use. Currently, in the major category, the dollar is giving way to the Euro. Ha! Ha! In logical progression of this we will, one day three hundred years from now, be using the new mighty Argentina whatever as the world's next great fiat. (smile)


Understanding all of this money evolution, in it's correct context, is vital to grasping gold's eventual place in the world. A place where it once proudly stood long ago. In the time before us, fiat monetary policy, interest rates, appropriate debt levels and even speculative stock market binges will all be regulated to how a fiat does it's singular job of being just money; not functioning as a long term savings vehicle. How well that job is performed will depend on a free market trading value of gold wealth.

All of this transition is killing off our Gold Bug dream of official governments declaring gold to be money again and reinstitution some arbitrary gold price. Most of the death, on that hand, is in the form of leveraged bets on gold's price as the evolution of gold from official money to a wealth holding bleeds away any credible currency pricing of gold's value in the short run.

To understand gold we must understand money in it's purest form; apart from it's manmade convoluted function of being something you save. Money in it's purest form is a mental association of values in trade; a concept in memory not a real item. In proper vernacular; a 1930s style US gold coin was stamped in the act of applying the money concept to a real piece of tradable wealth. Not the best way to use gold, considering our human nature.


Modern society thought, has taken a step beyond our schooled understanding of money. Going beyond, by taking a step backwards and embracing a practice more real. By accepting and using dollars today, that have no inherent form of value, we are reverting to simple barter by value association. Assigning value to dollar units that can only have a worth in what we can complete a trade for. In effect, refining modern man's sophisticated money thoughts back into the plain money concept if first began as; a value stored in your head! Sound like something that's way over your
head of understanding? I'll let you teach yourself.


So, you think we have come a long way from the ancient barter system; where uneducated peoples simply traded different items of value for what they thought they were worth. Crude, slow and demanding, these forms of commerce would never work today because we are just too busy.
Think again?

Lean back and think of all the items you can remember the dollar price for? Quite a few, yes? Now, run through your mind every item in your house; wall pictures, clothes, pots and pans, furniture, Tvs, etc.? Mechanics can think about all the things in the garage, tools, oil, mowers. If one thinks hard enough they can remember quite well what they paid for each of these. Even think of things you used at work? Now try harder; think of every item you can remember and try to guess the dollar value of it within, say, 30%. Wow, that is a bunch to remember, but we do do it!

I have seen studies where, on average, a person can associate the value of over 1,000 items between unlike kinds by simply equating the dollar price per unit. Some people could even do two or three thousand items. The very best were some construction cost estimators that could reach 10,000 or more price associations!

Still think we have come a long way from trading a gallon of milk for two loves of bread? In function, yes; in thought no! Aside from the saving / investing aspects of money, our process of buying and selling daily use items hasn't changed all that much. You use the currency as a unit to value associate the worth of everything. Not far from rating everything between a value of one to ten; only our currency numbers are infinite. Now, those numbers between one and ten have no value, do they? That's right, the value is in your association abilities. This is the money concept, my

Unlike the efficient market theory that was jammed down our throats in schools, we all still use value associations to grasp what things are worth to us. Yes, the market may dictate a different price, but we use our own associations to judge whether something is trading too high or too low for our terms. We then choose to buy or sell at market anyway, if we want to.

In this, we have moved little from basic barter. In this, we are understanding that an unbacked fiat works because we are returning to mostly bartering with one another. A fiat trading unit works today because we make it take on the associated value of what we trade it for; it becomes the very money concept that always resided in our brains from the beginnings of time.

In this, a controlled fiat unit works as a trading medium; even as it fails miserably as a retainer of wealth the bankers and lenders so want it to be.


The American dollar has brought it's makers a lifestyle that is at odds with this new thrust in money use. A reserve currency today must allow it's value to be set solely upon it's money function, not it's function of retaining wealth. Use trends today are forcing money creation policy and money values to be determined by wealth outside the official money realm. All the while the dollar holders are fighting to stop this from happening. Free Gold markets would today destroy the current dollar exchange rates and render it's debt creation null and void as a proxy to buy us things for free. Much is at risk to the lifestyle our old gold dollar relationships brought us if gold trades free. Much is to be gained for wealth savers, today, who buy gold for it's wealth function and forget it's current dollar created price.


I'll go further into the other aspect of money titled; "Who said we were suppose to save this stuff"!

Next time in our talks on the evolving message of gold. Good night and thank you for being here.


Ok, folks! I checked the schedule and there are several more of these talks coming. After those are done, we can take a real good hike and check out where the trail is going. The GoldTrail that is!

Thanks all

(07/20/2001; 09:57:51 MDT - Msg ID: 83)
Why do we need to save this stuff anyway?

Hello everyone.

Can't believe I brought folding chairs on the trail! (smile) I guess I'll also take notes with the others here. Hey, lower in the front, I can't see! OK, it's getting started. Let's hear what that guy is getting into this time.


Good evening. I hope all of you rested well into the morning and had time to consider our thoughts from last night. Today's talk is, once again, a more detailed continuation of our theme: the evolving message of gold. I'll begin now.

Again I'll read a small piece from the TrailGuide series and use some slight editing to make it more clear. From that we can move into our subject:

"""""""" Our modern gold market and the price illusion it creates is little more than a product of the fiat dollar system; a design that denominates the trading of most gold credits in a contract form. Is it a free market? Why yes, very free. But, really free, in the sense that contract supply is unlimited. Investors and the gold industry, in total, brought into this paper based gold; even though they fully well knew 90% of the trading volume was represented by only cash equity collateral on the other side. Some of it private and some of it official. Knowing that, they somehow expected that those contracts were limited in creation by the fixed amount of gold in the world. Their mistake, not the markets.

Clearly, anyone schooled in classic hard money Thought should have known that this was but another gold inflation; another version of a typical fiat gold inflation and a transitory era between money systems. This was a time to gather gold over years, not invest in the leveraged aspects of gold's new fiat versions. Nor, to buy into the gold industry that owed it's life and cash profits to the
maintenance of such a system; transitory as it was."""""""


To paraphrase that TrailGuide thought let's repeat what I said last night:

""The expanding universe of fiat was best used to gather real wealth, at stable fiat values, each time the fiat cycled through your domain. The object became; to gain fixed value wealth in quantity instead of gaining finite wealth and waiting for it to gain in value.""

Anyone, that understood this new fiat era, knew that this is how you handled the evolving process. For myself and others, knowing that gold's inherent value could not change much and was historically undervalued in it's comparative value to all things, we brought gold in quantity. We tossed aside Western concerns about shifting currency prices of gold. We did not try to paper leverage a finite amount of it; as some were trying to do in betting for a higher currency price to come. A price value, by the way, that would never arrive in this era. That higher dollar currency price, so many were leveraging for, would not be allowed to surface in paper values while the present pricing system still functioned.

It was plain as day that the whole world could sell gold short; with most financing deals and future deliveries predominantly structured towards cash settlement. With little more than margin money and no gold at all; you, me and that "man behind the tree" could all help set the price of gold lower with little thought of dealing in actual physical metal. With such a system firmly ensconced in investor minds, as the one and only true gold market, only a partial percentage of the coming price rise could ever be reflected on paper; as gold's price discovery system was and is eventually inflated until it fails it's purpose.

Such is the way our gold arena has evolved in our present financial culture. This entire realm represents the conclusion of a convoluted, decades long, attempt by mankind to tie his fiat money concepts to physical gold. These centuries of gold / money tie-ins will end in a colossal breakup of the entire fiat money plus gold concept; leaving gold and fiat to trade independently of each other.

Unfortunately, it's the dollar's watch this will all end on as this gold failure is running in parallel to the dollar ending it's position as a world reserve currency.


The dollar faction's war on gold is now lost as their whole system of fiat gold creaks under a load of failing credibility. That failing credibility is being driven home as the Euro system pumps far more dollar based paper gold sales into the system than their actual physical gold sales. All the while structuring a stand alone system, aside our present dollar gold world, that will later identify gold's
pure value in traded physical only form. For all of Europe, London sales included, the BIS sanctioned Washington Agreement was little more than a settlement of some official accounts; taking their CBs somewhat out of harm's way prior to an unimaginable rise in gold values.

The US Treasury, coming a little late to this recognition, is trying to get in the game by renaming some of it's gold stocks. They are trying to show some involvement; but their political motive, to actually deed over their gold, will only become powerful enough after the real breakup begins. The great gold reserves, so many Americans think they own, will leave our shores at prices we will later think are sky high; only to watch those values double and triple again! The US will be forced to use a good portion of it's gold to just keep the dollar in the game; still, no amount of gold will make it a reserve currency again.


The incredible simple design, of using gold in the Euro political thrust, is what has hidden it from our Western view. So far, have we advanced, that few of us can fathom gold ownership having any purpose outside using it for leverage gain and credit lending. Four fifths of the rest of the world will later grasp the Euro concept and embrace it completely.

While many in the gold industry note the harm this paper selling is doing, we can hardly fault the Euro side's reasoning behind the paper sales. It's no different than selling short a stock you think is going to become worthless. Any investors that brought these paper gold goodies, because they thought they represented real gold, can just put up the cash and ask for delivery! The trouble is that the ones that point to the Euro CB sales and yell the loudest, never had the cash to buy or intended to buy gold anyway. They played the game for more dollars, not gold! They cannot see the different political gold reasoning behind Euro faction thrust vs. dollar faction thrust and proclaim that these are one in the same. Confusing the issue for all gold investors.

And the beat goes on!


Looking back, for a moment, at our last talk about the money concept; we can see where most of our money failings originated from our thinking that gold was, itself, money. Actually one writer, on the USAGOLD forum, hit the nail on the head when he said that; "money is just a book keeping accounting of real wealth". Indeed, as we mentioned in our last talk, money is an associated value in your memory and, for help, usually recorded on paper.

We were first alerted to the "gold is money" flaw years ago. When considering the many references to gold being money, in ancient texts, several things stood out. We began to suspect that those translations were somewhat slanted. I saw many areas, in old text, where gold was actually more in a context of; his money was in account of gold or; the money account was gold or; traded his money in gold. The more one searches the more one finds that in ancient times gold was simply one item that could account for your money values. To expand the reality of the thought; everything we trade is in account of associated money values; nothing we trade is money!

The original actual term of money was often in a different concept. In those times barter, and their crude accounts of the same, were marked down or remembered as so many pots, furs, corn, tools traded. Gold became the best accepted tradable wealth of the lot and soon many accountings used gold more than other items to denominate those trades. Still, money was the account, the rating system for value, the worth association in your head. Gold, itself, became the main wealth object used in that bookkeeping.

This all worked well for hundreds and perhaps thousands of years as fiat was never so well used or considered. Over time, society became accustomed to speaking of gold in the context of money accounting. Translations became all the more relaxed as gold and money accounting terms were mingled as one in the same. It was a subtle difference, then, but has become a major conflict in the money affairs of modern mankind; as gold receipts became fiat gold and bankers combined fiat money accounting with gold backing.


Last night we alluded that humans have not changed all that much in their barter trade associations. We, today, use fiat record keeping to associate trades for every thing we want. It's in the same mental concept people used a thousand years ago. Our tendency is to freely trade and value things up and down the association scale; that flexibility in our association accounting means fiats cannot remained fixed to any real wealth. In modern money terms and concepts; that means the prices of all things must be free to flow up and down in any amount. Our modern perceptions of inflation and deflation upon debt values only serve to destroy the understanding of this basic drive.

This need to change valuations is a human trait and is the main force that keeps attempting to break gold free from modern money attachments. We inherently wish to use gold as wealth and trade it's changing value within the same universe of moving values all other tradable things exist in. However, for credit banking sake, we tried to fix gold's value into our fiat money accounting so we could lend the "money concept itself"; lend money in lieu of real things. As just said, gold could never be attached rigidly in our accounting money concept because that requires it's value to be fixed


Our world has built fiat system after fiat system; and all upon the notion that the money concept can be lent in lieu of lending wealth. This debt, in money terms, requires said money values to remain stable or the banking system fails it's purpose. In this, governments, banks and political stylists always try to entwine gold into the money system and control it's value for the sake of money debt viability. Such is the conflict in our gold money culture today. Our dollar is just one more fiat coming to the end of it's timeline as it's basic flawed concept, again, destroys the savers wealth.

The question stands in modern times: Why do we need to save this stuff anyway? Indeed, fiat is only a trading medium that reflects our 1 to 10 value rating of any good in trade; and that rating is a just value for only a short time. Fiat purpose is maintained for those that save it for later use over short terms, not long term accumulation as wealth or for spending far in the future. Real wealth is what humans save for the future and this is where our basic instincts drive us.

The incredible explosion of fiat use, sense it became a non wealth holding in 1971, bears this out. Fiat values, the world over, reflect only our tradable values placed on all things. The dollar, nor the Euro, have any value of themselves except for the denomination of tradable goods. The mismatch that has occurred is in the massive debt our world dollar use has developed. A debt that cannot be traded back into the US economy to receive goods at anything close to today's prices.

For years American lifestyles encouraged it's political system to protect their banking /debt credibility at all costs; so we could buy others real goods without sending real wealth to pay for it. We did this in the only way we knew how; in body, mind and spirit, our political economic purpose promoted the dollar and it's debt to be as good as gold and a substitute for real wealth holdings. Even a substitute for real wealth to be held in reserve behind other currencies! Still, in parallel to this US thrust; for thirty years fiat use evolved on it's own to embrace the non wealth trading aspects of "the money concept". Leaving in it's wake a world of worthless dollar debt as people brought wealth outside the "money concept" anyway. We are, today, in a transition away from that dollar mess and much of our wealth illusion will passing from our grasp in the process.

In every way, society is trading it's way back to where it started. In the process, gold will find a new value from it's history in the past:

" a wealth of ages savings for your future of today."

Thank you for attending these workshops. We will continue these discussions for a time and later envelop current events into our thoughts. It's been my pleasure, good evening.


OK,,,,, I'm out of here,,,,,I think I'll just fold my chair,,,,, hike over to the Trail restaurant for some
Tuscany vintage and good Italian food,,,,, not to mention a plate full of political sauce. (smile)

Amazing how the GoldTrail connects to so many parts of life, society and economics!


(07/26/2001; 18:08:48 MDT - Msg ID: 84)
"The wind will blow"

Hello all!

I thought it was a good idea to tack this notice on a large tree.

It says that:

"another talk is to be given here tomorrow (fri) on the evolving message of gold"...... The Wind Will Blow!

Ok,,,,, good enough for me,,,, I'll bring some coffee and snacks. Unless a storm blows in and shuts down the presentation,,, we'll see everyone then.


(07/27/2001; 15:20:44 MDT - Msg ID: 85)
"The Wind Will Blow"

Welcome to our next series of talks on the evolving message of gold. Today's discussion is titled;

"The Wind Will Blow".


As our modern society has evolved, we currently use fiat and own wealth in a way that demonstrates exactly where both values stand within our lifestyles. The examples abound everywhere in personal finances. Fiat has, today, become both a trading medium and short term savings asset. This long trend, in American money use, suggest that an acceptable price inflation cost for both theses uses has been evident for some time. Even though world use of our reserve currency has made an illusion of most of our real costs structures.

The concept that wealth is the long term savings asset that most strive to attain has been evident also. Even with US taxes on it's profits, real wealth assets still overcome that disadvantage by providing far less risk in an increasingly hostile world. However, in the background, behind the enormous, overshadowing expansion of public and personal debt, this new meaning and usage's of wealth and fiats are difficult to perceive. Most of what the general public has come to believe as real wealth is simply forms of paper ownership of wealth producing industries and paper claims on real assets that can never be recovered at today's values. This is true in most all items, not just gold.

Aside from Western cultures taking this debt expansion far beyond their means, our trend of buying things and not saving fiat currency, long term, should have sent a signal to money officials; but it didn't. Dollar inflation was exploding to meet a new fiat use demand and not creating a price inflation to match: a process that should have encouraged our economic engines, the people, to save the currency itself. In hindsight, they were spending it; not to escape future run-a-way price rises, rather they were doing what comes natural; trying to save real wealth by buying it. Even if they were buying mostly a value illusion.


After 1971, the entire dollar system was too far down the debt road to change step; that is to allow all forms of real things to fluctuate up and down in dollar value. This would have required gold to rise into several thousands, even then! They were still trying to maintain dollar value for the viability of expanding dollar debt and that meant changing was not an option; especially for a system built on debt that required the illusion of a stable gold price. Still, the nature of fiat use was changing the world over and would have grave consequences for our entire dollar support system years later.


Contrary to Western thought, our use of money has not changed since time began. It's true that "Gold is the only money the world has ever known"; as long as one accepts that barter is the only trade the world has ever known. In the context of barter, gold has been our only money. Once we stamped gold with official unit sizes, perhaps done a thousand years ago, money became an associated value used as an intermediary between uncompleted barter.

We barter goods and services, today and anytime money has been used, using a bookkeeping system of value comparisons; all done to better convey a sense of values between ourselves. All done in the confines of what we call our world economy. The use of fiat today involves half a barter trade; then keeping the currency as an associated value and hoping it doesn't lose too much of that value before we complete the other half of the transaction. This works in a high speed trading environment where fiat is not saved long term.

I'll read an item from our last talk:

"""" Fiat purpose is maintained for those that save it for later use over short terms, not long term accumulation as wealth or for spending far in the future. Real wealth is what humans save for the future and this is where our basic instincts drive us. The incredible explosion of fiat use, since it became a non wealth holding in 1971, bears this out. Fiat values, the world over, reflect only our tradable values placed on all things. """"""""""


The money concept, we have recently spoke of, did not suddenly evolve! Nor did our dollars suddenly become unbacked credit items after 1971. Well before the dollar's separation from gold all money bookkeeping, and all it's forms of currency moneys, were actually credit items.

Circulating cash dollars, official metal coinage and other previous fiats, themselves thought of as a final hard payment, were never anymore than a known tradable value. A trade credit owed to you as long as one held the money unit. Even with gold backing the dollar unit, money's value was always in it's exchange for something else we wanted. Gold values behind these fiats was used to represent some fixed tradable value the money unit stood for; not to be the money unit itself.

Gold, in ancient trade, could not become the thought of money as we know it today. It was the end of a barter transaction; two pieces of gold for one cow demanded no other trade to complete the deal. The use of money back then did not entail nearly as much associated concept, it was the
use of outright barter. Today things are, indeed, different!


What purpose is there in understanding the descriptions and perceptions in these last few talks?

Because there is a conflict between society's basic desire to use our modern money; or "our modern concept of money as it has evolved".

Our natural drive to use money, in lieu of barter, is to use a simple bookkeeping credit trading medium that keeps track of our barter. This requires our embrace of the fact that every item in our universe of wealth constantly changes in value. Even as gold changes in value; both up and down.

The unnatural convoluted drive, of many, is to use this same "money value concept" to borrow real wealth "use"; instead of borrowing the actual wealth itself to gain said "use".

This second item comes under the heading of trying to get something for nothing and is everywhere in Western Thought!

If we lend an item of real wealth, say a tractor or chair, it's future value is unimportant to the lender as long as the real item is returned. It is the "use" that is lent, not the money concept in the form of a trading value. In this process we recognize that, because the value of things change, the debt to be repaid is the item of wealth, regardless of it's higher or lower value. Only it's "use" changed hands during the lending and repayment of debt. All is well.

However, lending the value contained in our modern money concept exposes the lender to uncertain gain or loss of tradable value because it's the value that's being lent, not the actual "use". Without some way to lock down the value of money, over long periods of time, the industry of money lending (banking) fails it's purpose and risks it's profit if tradable money value falls.

This is the trend that is killing the dollar today.

It's not that price inflation may erupt; it hasn't done much in 30 years compared to the money printing volume. Our demand for more fiat has absorbed most of what we issue.

It's not that the massive dollar debts won't be paid; they will as long as it's in more cash. Payment in real wealth, such as real goods and services from our local economy, was never an option. We simply couldn't do it!

The risk is; that our money system requires dollar and debt stability for lenders and said banking system must regain that lent tradable wealth close to par. Further, the money system is backed by this debt being stable; so without said stability the currency system fails.

The contrast here is that modern fiat use trends are advancing towards flexible fiat money. Not so much flexible against other currencies; flexible against all other wealth, including gold. The more a currency can adjust to commodity and industrial use demands, the more in demand that currency reserve system will be. The immovable past structure the dollar is built upon demands it's values be defended with complete hyperinflation if necessary. Prior to EMU, there was no other reserve currency that the world could run to. Now, the dollar cannot deflate and take the rest of the world into deflation with it. The tables are turned; deflationary policy will not defend the dollar. Only inflationary policy will. Make no mistake, we are not calling for price inflation to end the dollar's reserve rein! We are calling for "inflationary policy" to dethrone it while said hyperinflation follows.

So begins and ends our long march that attempted to steady the value of modern money by firmly attaching it to the value of gold.

So ends man's march to fix the value of gold, even during short term use, while we still naturally wish it to change.


To comment on the present

The very changes needed in our money universe, today, would kill dollar demand by devaluing all dollar assets in super higher gold prices. The debts and the dollars would remain; only 90% of their current illusion of value would vanish. Hyperinflation in prices of all wealth objects will be the workout result of this process. As such, opposing dollar political motive will force the US to give the markets what is needed; both gold and gold prices beyond imagination.

As has been mentioned by others in several public meetings;
"The world is in the midst of what could well go down in history as the first recession of this modern era of globalization".

We must point out that this is lacking some breath of perspective: in reality this will be a dollar based recession and one that the world will repulse from by advancing the use of a more flexible currency unit; the Euro. A unit that will match modern needs for fiat by marking the value of all debts as they change; by allowing a free market in gold wealth to exist outside the "money concept".


The captains of oil have not seen all of this in a vacuum. Selling irreplaceable oil for a currency entering the end of it's trend was not an option. Gold prices were lowered in exchange for a short term wait; to see if Europe could do what was intended. They did.

The next step will be an orderly exit from dollar use; a somewhat destruction of all dollar gold pricing; and a super price inflation for US dollar assets. We are not at the end my friends, we have just come to the beginning. For physical gold advocates that understand the difference between real wealth and leveraged real wealth, the time arrives when values are reflected with the speed of the wind. Truly, in our time,

"The Wind Will Blow".

At our next talk, we will move completely away from concept and into current events.
Titled "Political Gold - how much of it is ours"

Ladies and Gentlemen, thank you so much for listening tonight. I look forward to our next meeting.
Good day!

Thanks all,
still hiking the path


(07/31/2001; 21:14:43 MDT - Msg ID: 86)
Political Gold

Hello All!
Looks like I'm here tonight to escort everyone to their seats,,,,,,,,the guest speaker will be here in a min.,,,,,, Uhhh??,,,,, could I see your tickets please?
All right, it's starting,,,,,,,,,,,,,,


Good day to all our guests and thank you for arriving early. Our talks are an ongoing progression on the subject; the evolving message of gold. We will begin now.

Starting off, I'll read an item or two from the TailGuide series: A Tree In the Making. Please read again this portion of his series for clarity.

"""" But, greatness is within those that know life is dynamic,,,,, what we do is never certain and subject to the leadership of nature. That person will spin the Bonsai on a table for hours, days, and even years as he styles what will work for that period of growth,,,, perhaps planning the timeline in a currencies development. A cut here,,,,, a change there as time grows the next limb. In the processcreating something we all recognize, can use, understand and enjoy,,,,, yet,,,, different in many ways from what we knew or saw before. """""" -----

""""""Understanding the events that got us here and how they will unfold before us is what this Gold Trail is all about. Everyday our political world is pruned like two Bonsai, in an effort to shape a more healthy future. The dollar tree is failing because it needs so much dead wood cut off,,,,,, but if it is pruned it will not resemble the mighty Bonsai it once was! The Euro tree is growing as it is being styled,,,,,, what it will look like we have an idea,,,, but not a complete picture. It's hard to imagine that anyone can look at an early Bonsai and shape it's future some 20 years out? But, that is exactly what someone did with a tree on the roof of the Monkey Bar in Hawaii; indeed, this is what has been in process for so long with our changing money system.""""""""""


My friends:
We are, today, at the very conclusion of a fiat architecture that is straining to cope with our changing world. Neither the American currency dollar, it's world reserve monetary system or the native US structural economy it all currently represents will, in the near future, look anything as it presently does. Trained from birth, as all Western thinkers are, to read everything economic in dollar system terms; we, too, are all straining to understand the seemingly unexplainable dynamics that surround us today.

Western governments, the public and several schools of economic thought are attempting to define and explain what extent these changes will have within our financial and economic world. Most are all striving to see this as the next plateau of dollar integration, carrying us onto the next level; looking always higher for what this next level will bring in social, financial and lifestyle enhancements.

Governments look for a correct policy mix; one that will serve their political motive when the next cycle moves higher. The public looks for the next great investment or industry to be employed in; to enhance their well-being all the further. Economic schools, as represented by both the financial industry and the academic areas, all want "their take" on the next cycle to be seen as the correct one.

After all, this is just one more in a long line of up and down economic cycles that are so common in American economic leadership.

However, all of this positioning has left out, this time, one important, almost unthinkable question; what if current trends are moving away from using our dollar reserve system? Even further, let's ask; what if the last decade's efforts to prolong dollar use, both internally and worldwide, have inflated it's worth to such an extent that it's now vastly overvalued? Asking more; what if the architects of a competing currency system and the major players that helped guide it's internal construction, all took a hand in promoting the dollar's extended life, it's overvaluation and it's use; so as to buy time for this great transition in our money world?


Most average Western Citizens and dollar use nations have pined everything on this ongoing dollar system. Their jobs, debts, investments, retirement and lifestyle expectations all depend on the dollar always being what it is; a world reserve money that buys them more than one can create during a lifetime. As true as that thought is, few understand the implication or even want to consider their life without a supreme dollar. But, just as a large portion of world inhabitants are accustomed to using more than one currency; those of Western Thought would have trouble grasping the perception behind this simple offering:

------ I once walked across the globe and brought two persons together. I gave each $1,000 US dollars in cash. The first replied; "You can't be serious? Is this as good as it gets?" The second replied; "Oh my, thank you! In all my years of life I never knew it could be this good!"------

One reply is the product of a life with unquestioned debt availability. Where the majority of debt users cover their burden with an ever growing supply of new credit money. In this economy, not to mention this person's perception, almost free debt can purchase anything and everything.

The other is the result of local money debt being built upon foreign dollar debt reserves and covered with payments of real wealth from the sweat of one's brow.


Within this theater of thought, we can begin to picture how Western perceptions cannot grasp our on going curve on the money road; much less a twist in the Gold Trail! Follow with me, if you will, as we expand some thoughts from TrailGuide's last talk, a few days ago.

"""""" As our modern society has evolved, we currently use fiat and own wealth in a way that demonstrates exactly where both values stand within our lifestyles. ---------- In hindsight, they were spending it; not to escape future run-a-way price rises, rather they were doing what comes natural; trying to save real wealth by buying it. Even if they were buying mostly a value illusion.""""

The purpose of this portion was, I believe, to deliver food for thought. The conflict, for investors and thinkers to discern, was in the evolution of fiat dollar use. While practically every historical evidence pointed to a devaluation of the dollar, within US border use, dollar use demand expanded along side of very little price inflationary pressures. Still, even with years of low inflation numbers, a cause that traditionally drove money into long term savers pockets, investors rushed to seek their perception of real wealth. Fulfilling an ages old drive to own "something" for the long term. As the final conclusion, partially phrased above, pointed out; most everyone tends "to read everything economic in dollar terms"; even buying into paper dollar versions of a value illusion. To this end, Americans have continued to save for serious consequences by buying every kind of dollar dependent real asset they can; stocks, business, debt, farms, industrial metals production, etc. and expecting it all to act as real wealth. Some of it will, most of it will not!

Further on from "The Wind Will Blow":

""""" After 1971, the entire dollar system was too far down the debt road -------- the nature of fiat use was changing the world over and would have grave consequences for our entire dollar support system years later."""""""""""""""

Having evolved a dollar reserve money system into a straight debt fiat currency, without gold involvement, the entire dollar function became locked into one basic premise: for the system to survive, it's core reserves of debt values had to remain somewhat price stable as the currency inflated relative to GDP. Over the next 30+ years their dollar controllers, the fed and treasury, thought they had a fairly good handle on the system as they managed banking reserve requirements. To their amazement, it turns out today, that digital use demand was the best function that supported their efforts all the while; by increasing the world's use and need for currency. Had they understood this modern economic function early on, they could have somewhat printed the currency outright with almost the same result while arriving at today's destination. They could have let gold float, not to mention they could have skipped a large portion of the debt build up that will now end the
dollars timeline.

Most, if not all, of this perspective is only now coming to light as the Euro builds pressure on the dollar. The better architecture of the Euro system is leaving little room to adjust as the US fed must singularly act to inflate their local currency in a historically new and unprecedented fashion. The actual debt machine that built much of America's lifestyle is now going into reverse as it destroys it's own currency; one built upon a stable debt system with locked down gold prices.

Going further and paraphrasing what TrailGuide writes:

"""""""It's not that price inflation may erupt --------- ------------It's not that the massive dollar debts won't
be paid---------The risk is; that our money system requires dollar (goods prices) and debt stability -------- so without said stability the currency system fails""""""""""""

Without an international floating gold reserve pricing, to balance against their devaluing debt reserve, the entire dollar banking system can only rely upon extreme dollar inflation to float it's accounts. Price inflation will have to be ignored. To this end the group of dollar supporting countries, we refer to as the dollar faction, has locked itself into a box. It must find a way to float gold prices with a gold reserve that only drains away if world gold price rise.

Current events

There once was a time when citizens owned their trading vehicles; all wealth, including gold, was free to barber. Then ruling authorities stamped most of those gold trading vehicles as "legal tender" and made them money objects; dependent upon value associations instead of barter. No doubt to collect taxes as running nations was a costly affair.

Extending the point:

Around 1975 Americans were given the legal right to own gold again. Many did not then, nor do they today, see any reason to own gold as their treasury has gold with which to back their currency. The logic of this perception is clear and simple to the casual observer. However, take out one US legal tender dollar and read it's cover carefully? Does it say it is your currency? Is your name on it?

The US dollar is a note, a security that specifies a value the holder is owed. You may keep it or spend it or even trade it, but it does not belong to you. It belongs to the US Treasury and is created by the Federal Reserve; both political entities. What a person owns, when holding a dollar, is the value that note is tradable for; the value that is owed to you and said dollar note represents. In
every way it is real money; in that it's value is in it's tradable value association; not of itself. If the dollar itself had real value, it's use would constitute barter; not the use of TrailGuide's money concept.

If you think you own the currency of this country, understand this one item: the political entity that the dollar is owned by, can cancel it's legal tender status at any time. There by removing your use of it's holdings!

Extending further:

The only gold Americans ever owned, prior to 1933, was the very gold coins they carried. They owned it because it was a true barter vehicle. Even if the Treasury removed it's legal tender, "money aspect", from said gold coins, you could still barter the value contained in the gold. By 1971, Americans owned no gold and all gold held in the name of the US Treasury was "Political Gold" owned by the government.

The perception, by some, that because the government owned the gold, the citizens own it too. This flows from a similar convoluted logic; that stock holders of publicly traded gold mines own the underground gold. In reality, if the mine was dissolved, both processed and reserve gold would be sold and "Legal Tender" money would be distributed to it's owners. Not gold.

The same is true for Political Gold. All gold held by the state, unless distributed first to it's citizens, is subject to world wide "Legal Tender" political claims first. The precedent for this is clearly revealed as the Swiss must ship their "Political Gold" to others first; while sending currency to satisfy gold claims against it.

As the IMF has recently extended this protocol, swapping gold at different values, to settle political debts; this action further justifies the US being able to use it's gold to defend it's currency's settlement function. Aside from the US minting eagles for public sale and it being against the law for gold reserves to be sold outright to open bidders.


To draw a conclusion from this "current event":
Deep Storage gold

Americans have the right to buy and own the "Wealth Of Ages". As events draw to a close upon dollar use, we can expect outright use of America's "Political Gold" in restraining the speed of it's currency's burn. To compete in the new architecture of a Euro System currency, unrestrained trading of gold will advance it's dollar and Euro price significantly. With political pressures to tax private physical gold trading as low as possible, expect enormous taxing and windfall profits rules to impact all other forms of gold ownership. Indeed, long before such changes are in place investors will rush to be in the correct ownership place, well ahead of the fact.

Of Fiats and Gold:

It is ironic that both roads have curved as time moved on. One returns to it's roots, as a wealth value today, few have ever know. The other becomes the money a modern future requires. Both on a different path and building for our better future.

Next time I will discuss; what one should realy expect to see when all paper burns; and how close political events are saying we are to that fire!

Thank you for taking the time to come here and listen to these talks. I wish you well and good night.


Ok, everyone please leave the Trail as you found it,,,,,, no trash or drinks. (smile) We will meet here for his next talk when it comes. I'll comment in between.


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