The Gold Trail by FOA - November 2001

All times are U.S. Mountain Time

(11/02/2001; 12:35:27 MDT - Msg ID: 128)
Gold,,,,,, Gold,,,,, Who has the Gold?

Let's take a walk and think about the big picture for a minute. Then we can get back to that question.


If you followed most of Another's Thoughts over the years the line of reasoning below will fall easily into place.

Somewhere during the late 90s, when events made it more certain that the Euro would be formed, the threat to use real gold as a partial pricing unit for oil was moved to the back burner.

By including an extremely small amount of delivered gold in trade for oil, along with digital dollar settlement, gold would once again be returning to it's ancient roots as a world class wealth used in barter. Instead of allowing it to be controlled by bankers and governments, gold's socialist tie in with official money use would be all the further distanced.

So, if swapping oil with third world nations, for grains, finished goods and other commodities, offered lesser countries another way to circumvent their lack of hard currencies while using the dollar system; then using gold to partially settle world wide oil trades would bring more balance into this one-sided dollar economic world. Trade alignments, such as gold for grain, grain for copper, copper for oil, then oil for gold would easily be adapted into our current solo dollar realm; forcing the dollar to share it's fiat use demand with real barter trade for real goods. In this, allowing international trade to abrogate the dollar's iron clad pricing of goods and services to the singular benefit of American lifestyles.

Where official dollar supporters have structured our paper gold market in a way that values gold only upon it's money backing merits; a returning of gold into it's barter trade realm would force a realignment of values between physical and paper. Once again allowing gold's value to soar and creating a large enough liquidity mass to serve not only as an oil trading medium, but wealth savings for all.


On the back burner, perhaps, but not out of the picture.

In this premier position of barter trade for oil, gold itself would have been backed with a demand component, the demand for oil, that would last as long as the world remained advanced. As dollars and Pounds were once backed with delivery of gold, in a turn of events, modern physical gold would be backed with delivery of oil.

Even matching a barrel of oil to just 1/100 of a gram, the long term demand for oil would have brought physical gold trading back into the forefront and shown the true worth of gold in it's non money barter roll. Such a price valuation that has not been seen in, perhaps, a thousands years.

With physical pricing again setting the level for derivatives pricing, the dollar reserve system's evolution from gold standard to derivative standard would permanently dissolve. Not only would our current form of paper gold would lose it's effective control in price discovery; in a repeat of 1971, our paper gold game failure would once again costing paper leveraged investors many fortunes.


For now the Euro: the vision held together

Once again the choice would be clear for both common man and international trader; use fiat if it's economy of use is efficient and controlled or use taxable barter to help control your controllers. Within the confines of the US, this may not become a reality (I think it will), but internationally, with European support, it cannot be avoided. All nations will use gold as nature intended and do so for the betterment of mankind.

At this point in time, there is no longer a concern that the Dollar's timeline might have no end in sight. With the world's more favorite form of trade settlement, digital currency, about to be represented by the moneys of a group of nations; the dollar's singular drive to enhance the lives of only one people is about to end with the currency's credibility.

First and foremost in the ECBs political will to establish a credible fiat, gold was and is set free to be valued at whatever level free physical trading would allow. We know now that the dollar marketplace for gold paper is coming to an end with this process. Not only will they be allowing limited, taxable gold barter to accelerate, but to also encourage it's bilateral barter use within international trade settlement. Something the IMF has fought so hard to contain.

Therefore, by the end of the 90s, the need to employ gold for partial payment in oil settlement, as a means to block our dollar faction, was removed from the table. With that the threat that buyers, traders and hard money players would join oil sellers in flocking into the physical gold markets, also disappeared. The thought that driving this suddenly new oil pricing tool thru the roof, was simply restructured. For the time being, the complete burning of our paper gold markets was put on hold; along with the 280 floor big trader and other official gold holders said "must stand" at that

Indeed, from hindsight, the often repeated remark that "all paper would burn" was not invalidated; rather expanded in scope beyond just our dollar paper gold markets. It now seemed that this paper burning would also include the entirety of dollar assets, both debt and equity. With the
acceptance of a Euro based trade protocol, our dollar system would now be forced into a super inflationary fire. Truly, this day has arrived with current events literally shouting "monetary inflation" as we have never seen it before!

Not only Euros, but some form of freely priced barter gold is now firmly on the road to becoming a real competition for use in world wide trade. Within this evolution, the currency trade settlement game is being slowly switched from virtual to real time as the act of slowly accumulating gold over
a long transition period is drawing to a close. Over several past years and for the remaining time ahead, selling the illusion of paper gold short while buying free gold will come more into open view and no longer be the sport of kings. The coming premium price, paid for physical delivery, will develop for all to see. Something I will personally welcome as an open confirmation of our views.

The events begin to unfold:

To the bane of Western thinking hard money gold bugs, who craved the leverage illusion our gold markets seemed to create, the death watch for their favorite game is about to begin. As if out of a fog, an end to our gold pricing illusion will march, hand in hand, with an end of our economic prosperity. The coming inflationary fire will now sever the wealth our reserve dollar system created for all of us Americans. In the same scope of time a, Euro based, free gold price will evolve out of these inflation fires. I for one do not relish this outcome, but welcome the good such a staunch reality will infuse into our national values.

We pointed out earlier this year that our Fed would begin it's inflationary march "now" and never turn back again. They did "then" and we are well into it now! Our point was made in spite of all the past decades of similar "dollar inflation" calls other hard money people declared were coming. Our dollar's decline never arrived for these people because they based their calls on economic theory; instead of "political will". "Political will" won then and will so now as we point correctly in the next direction.

Many said that the "bond vigilantes" would hamstring any effort to price inflate a credit driven money like the dollar reserve. Perhaps causing our Fed to eventually lose the war as it "pushes on a string"? Many of you have read countless opinions as to why our credit markets would implode into deflation as a "mise" style economic theory surfaced to control the controllers. Truly, these people confuse theory with human action as much as they do not understand real physics! Indeed, strings that cannot be pushed are either thrown or cast aside in the real world.

Reference today; we see where the "political will", trumps economic theory hands down, as the dollar people remove 30 year bonds from the system. In the process, forcing rates all the lower. The next time someone reads to you reams of hard money theory; ask they why they said the same thing 30 years ago about the dollar and the US economy? But it kept right on running; proving them repeatedly wrong? Now, for the hundredth time they say: "mise is correct, the markets cannot be faked, so a little deflation will follow this inflation!"

Baloney! The evolution of Political will is now driving the dollar into an end time hyper inflation from where we will not return. That is our call. Bet your wealth on the other theorist's call if you want more of Their last 30 years of hard money success.

More is to come!

Are you worried about South America? Don't! We will print all the money it takes to save any and all US financial interest in that sector.

Are you worried that we will enter an Japan like economic environment with rates at zero, economic stagnation and falling real asset values? Don't! They do not use an out going world reserve currency and we do! We will print what ever amounts needed to keep real Estate up, the Dow up and our economy purring: no matter what the value of the dollar on foreign exchange becomes. Or our eventual price inflation.

Our local economy will soar in dollar terms; no matter what our dollar is worth.

Are you worried that our 10 year bond, the new bench mark, will soar and squeeze off any recovery? Don't! We will just remove it from use and move to the 5 year,,,,,,,, to be replaced later by the 2 year,,,,,,,, to be replaced later by the 6 month,,,,,, 1 month,,,,,, 1 week,,,,, 1 day,,,,,, then


Who has the gold?

I do and so should anyone that wishes to participate in the next currency system. Only, don't expect your gold to become money, it won't! It will become the most valuable wealth asset in your portfolio,,,,, by a long shot. For the simple thinker; gold is good. That's all we need to know. For the man with a question: Gold must vise in value many many times just to regain it's wealth barter asset value. Perhaps $10,000 to start. Then, it will run with any and all dollar inflation,,,,, even Euro inflation that ECB people openly admit must be a part of a dollar to Euro transition.

The EuroLand Central Banks have every bit of gold in their vaults their accounts say they do. For that matter, so does the USA (for now!). So what if they or we swapped it out on paper? It means nothing because the gold never moved. Remember, EuroLand is playing a dollar gold market game
for now. If we walk, and they know we must will walk first, they will simply opt out of the dollar bullion paper system. Period! Why do you think England it trying so hard to enter the Euro fold? Think: saving their bullion liabilities by opting onto the other side!

Hell, pre 1971 the US swapped it's entire vault of gold to foreign interest by issuing dollars overseas. In a news flash, some seemed to have missed, we killed that arrangement by simply keeping the gold! Today, because the ECB would love to see the entire dollar gold market fail, I cannot imagine them shipping gold to support it if we default on shipments. Well, perhaps gold bugs would think this appropriate because it saves their leveraged futures, options and mine investments?

No,,,, most of these theories about missing gold are extrapolations that attempt to explain how the industrial / physical gold market is meeting demand. Hard money thinkers simply cannot believe that private Western gold holders have been unloading real gold for the paper variety and filling the physical demand void in the process.

If this paper buying is true, it goes a long way in explaining how fractional gold paper has filled the real demand for gold. It also ruins the dreams of investors in "illusion gold" because it points to a colossal default and asset seizure (via windfall taxes) is coming to a mine near you. Events march on and will soon begin to prove "who knows what" about our political world. Watch carefully, the
show is beginning.

In a final note: I see that in spite of world shaking events, the downfall of our paper gold markets is keeping the "virtual" price of paper gold very low. Just remember; inflation in the paper gold markets works the very same as inflation in currency markets: it cheapens the value of the paper holding and works against allowing leverage to return real gains. Conversely, physical gold will gain as leveraged gold assets fail.

Once again, I see where Big Trader is selling silver to buy real gold. Some people just know where "political Will" is going. (smile) Others don't.


(11/03/2001; 14:39:16 MDT - Msg ID: 129)
An "inflationary depression" is in the cards -- a "price deflation" doesn't have a chance!


Back in the mid to late 70s Sir John Templeton always drove his point home for investors watching Luis Rukiser's show. (how does one spell his name,,,,, we always called him Lou Baby (smile))

Sir John, living here on Layford Cay, kept saying that the Dow of the 70s was very under priced and would soar. He was the most absolutely correct person stating that then! But more into the mechanics of his perception: he knew that anyone buying the Dow and waiting a decade or more, would gain way beyond mere price inflation. Monetary inflation would eventually drive the perceived virtual wealth of US stocks ever higher. So high, in fact, that their percentage gains over price inflationary gains would be incredible. They were!

Truly, what John was referring to was the effects that simple "passive inflation" has on paper assets; especially in a "reserve currency's" domestic market. In this; real price inflation is mostly exported by importing "real goods" competition. This happens as we export excess credit dollars to buy things. It also has another effect; some of that same exported printed money flows in a circle and joins native investor's buying of local paper assets. When this process first starts, "passive inflation", in the form of massive money creation that's far beyond real price inflation, allows one to gain "virtual paper wealth" even before the markets price out the gains. That is; the Dow stays cheap at first then eventually rises to absorb the money inflation! As long as prices don't rise too much.

People that followed his advise, accumulated the Dow over a decade or more; buying "virtual wealth" before the fact! Stock investors made a killing by positioning their assets where this created "passive monetary inflation" would eventually end up. Even though hard money players laughed at them all thru out the 70s, 80s and early 90s! Look who is laughing now? Stocks tromped hard money plays hands down for over 20+ years! Even considering the latest fall on wall street.

My friends:

Today, this same "virtual wealth" effect has been created again and is located in physical gold bullion. I believe Sir John has already made part of my point but I will repeat.

When a currency system comes to the end of it's reserve use, I'm speaking politically, it's domestic market will come to a point where it can no longer export "real price inflation" in the format of; "shipping it's excess currency outside it's borders". This happens because internal money inflation, that is super currency printing, is increased so much that it overwhelms even it's export flow. Worse, even that export flow later tumbles as the fiat falls on exchange markets.

The effect is that local "passive inflation" , built up over decades and fully reflected in "Sir John's" paper assets, spreads out as "aggressive inflation" and hyper price rises begin. In this action, the very same wealth effect that was eventually priced into "John's" Dow stocks and other assets, begins a long march of being priced into real gold.

Anyone that has accumulated physical gold over this past long period was doing the exact same thing Dow buyers of the late 60s and early 70s were doing: ------ saving "wealth" as unpriced "virtual wealth" stored up over that "passive inflation" period. ---

As "political will" begins to impact the economies of the US,

our old "virtual wealth" that is no longer in the form of "passive inflation" nor limited to the currency, and is openly displayed in our vast sea of paper assets values including stocks, bonds--------

must now be defended in the open with official printed money flow.

The "virtual wealth" in gold, saved over years by patient investors, will also be priced to market in this process.

Never mind that during the Dow years paper gold markets could not work in parallel with all the other asset gains; it couldn't. Hard money players, trying to somehow play the Dow's game, never caught on to what was happening. Instead of buying "virtual wealth" by saving real gold; they brought
leveraged bets that gold would be priced correctly during the "paper asset" years.

Obviously, this "trade" failed hard money players as the waves of value from other paper gains and derivatives leverage were employed to match against their every long bet on gold. Not only that; the "virtual wealth" in gold was never opened for them with the super price inflation they all thought was coming during that era!

Now that the paper game is about to stop for the dow, it will also cut off the leverage of gold bets. Just as the real game begins.

The reason for this is that our massive, decades long gains in our stock markets did not bankrupt the leverage in the money system. Where as any massive rise in physical gold values cannot be priced into "derivative gold" without crashing the system.

Remember; in political inflation's, money is printed
to save the assets as they are currently priced; not create new loses by saving the liquifying the leverage that's countering your play!

This paper gold market will be cashed out at prices far below real bullion trading so as to inflate further the books of the Bullion Banks,,,,,, not destroy them. At least this is how the US side will proceed.

Michael Kosares-- A thru Z

In this perception USAGOLD has been guiding it's clients, and now the world, in much the same way Sir John did decades ago.

"Buy what has value at the greatest discount and wait for the politics of money to price your new savings correctly"!

The politics of wealth today is centered around gold bullion and only gold bullion: that is where the wealth and power will be manifest: this is where the gains will be! To bet on the rest of the hard market ; is to bet against the coming inflation making your asset whole!

Place as much of your wealth in physical gold as your understanding allows and save this "virtual wealth" of the ages today: waiting for it to become real wealth, priced correctly in the market place, tomorrow.

Make no mistake, the wealth is there "but only there in bullion"! Because a free bullion market cannot be denied or controlled

----- when it stands between the opposite goals of political powers! ---

In this: it will separate from the politically crushing reality the current dollar based paper gold markets represents. The premium on bullion will soar!

The "Political will" of old world Europe is about to help make our investment real. For myself, a large percentage of my wealth is being saved by going with the evolution of paper moneys: not against!

This trend is visible now and based on the forward flow of human affairs, not the backward rules of money theory!

Our future is today; if not just around the trail!

Sir Douglas; aka FOA

your: Gold - Trail - Guide

(11/05/2001; 18:31:01 MDT - Msg ID: 130)
A quick note from the "TrailHouse"! (smile)


You just have to give the devil his due,,,,,, Wim Duisenberg gave a clear signal today and his timing
allowed him to hit two birds with one rock.

First target: He has all of Political officialdom now holding their tongues because they learned that
the ECB is not the same animal as our Fed. From the link:

---- "Politicians have been scared of publicly pressing the independent ECB to act for fear it may
dig in its heels and remained cautious Monday" ----

Ha. Ha. They now know that these guys (ECB) are looking out for not only the money of a large
diverse group of nations, but perhaps a new bench mark currency a good portion of the rest of the
world may use. Their stance, recently, states that a currency should be valuable too and even offer
a real return for those that hold it for a while.

Don't expect Western dollar investors to fully taste this flavor just yet. But, they will as their local
economic structure begins to hold complete sway over the Feds actions. And all those deflation
boys thought our Fed would not inflate? Shoot, even our treasury in manning the guns now!

Second Target: Wait long enough for the US to have to drop dollar rates even lower before you move. "Watch him Alan,,,,,, Old Wim keeps his Euro biding a little higher than your dollar! I got a bad feeling about
this trend!"


Leigh,,, thanks for reading and thinking. I also want to thank everyone for using the fine services of
USAGOLD. Because then they further offer this entire forum library to further expand your understandings of gold. It takes a lot of effort by
everyone, who thinks and writes here, to offer such a broad spectrum of Gold thought.


Gold has always been the most political metal our world has ever known; political because it offers
so much power to those that hold it in their hand. Many of the downtrodden look at government
policies and say:

-----"they dictate our wealth and put us in debt so as to control us"! -------

Conversely; A simple person can control his controllers by staying out of debt and owning a wealth
no government can dictate the value of: Gold Bullion!


-- value it with official contracts and currencies and your wealth is their power ,,,,,,,,,, keep it as your savings of ages,,, and your wealth becomes their master!


(11/08/2001; 15:10:35 MDT - Msg ID: 131)
Words of a fool!

These are parts of several posts presented today on the main forum. This person does not know me or my associates. Indeed, most of us let blood for this country in a war long gone. I will say this for the record: Another is English and not Islamic!

But you have no trouble at all casting me in with the same evil that crashed into our nation on the 11th., do you? . Sir, you have spit upon the "flag" that waves outside my window. I do so now spit upon your name. You are not part of the same country I served!

I have spent years teaching and debating with men great and small. And have learned that only the mean ego of a useless fool uses such tactics. I am ashamed to have read your words at all and will do so no more. You are but a reflection of the very political hatred you condemn. It is a sad, sad day when someone wants your story silenced, so badly, that they resort to such comments. My spirit is low, I will walk this trail in silence.

-------However, I do not say "all paper will burn", and I definitely don't send demented religious fanatics to crash into the paper trading house and burn it down. -----

------ Finally, when FOA started putting forward his economic theories, I realized that he had spent too much time listening to an Islamic cleric who had not a clue as to economics.----------

------ So, from my vantage point of budding economist, FOA's explanations come down to being non-arguments and economic gibberish that would even shame Marx and Keynes. ----------

------ The motives of these people complaining of US defaults and monetary imperialism are simple: the greed for the unearned, envy grown of a zero sum view of social life that is characteristic of feudal societies such as Arabs still live in and Europe has barely made one step out of, and fear of their economic and financial future as a result of their stealing and wasting of their people's wealth. -------------

(11/12/2001; 16:31:28 MDT - Msg ID: 132)
There comes a time

There comes a time in all things when one must do nothing and simply wait. This is an ages old truth that crosses all the boundaries of life's endeavors; for everything is not always in the doing, but also in the watching. Any good farmer knows that he does not grow a crop; he only prepares his field so the growing, he knows is coming, can take nature's course.

My friends, we have crossed time and space, while plowing these fields of understanding, and the unfolding drama before us must now sprout it's own life. For now, it is my time to watch the trail and let the crop develop. Indeed, it will and it will do so for all to see.

Enough has been said to prove our reasoning is true, especially when the fields become full and in a shade of physical green only our seeds will produce. And planted them, we did, by hand, one at a time, over many years.

Enough has also been said about myself as this story was never about me; perhaps too much untruth was also said by others?

I am going to travel for a while and watch the trail from a distance. It won't be long before the rains come and the ground begins to open; in that time I will return. Until then; this farmer will rest from this work.

Thank you USAGOLD and all the fine people that make this media the best gold site in the world! Another time, we WILL hike again.

Sir Douglas
Your Trail Guide

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