Report: World on Brink of War in 1995
July 5, 1997

OSLO, Norway ( AP ) - U.S. security experts believe the world was
on the brink of nuclear war when Russia mistook a harmless research
rocket for a NATO missile, a Norwegian newspaper reported.
The rocket was launched Jan. 25, 1995, from a civilian research
base on the Norwegian Arctic island of Andoya.
Although Russia had been informed of the plans, the launch
provoked great confusion - so much that Russian President Boris
Yeltsin said he consulted codes to be used when ordering a nuclear
strike.
``The Andoya alarm was the most serious in the history of
nuclear weapons,'' U.S. security expert Peter Pry was quoted by the
Bergens Tidene newspaper on Friday as saying. Pry, a former CIA
officer and now a Congressional adviser, addresses the incident in
his new book ``War Scare.''
The newspaper did not specify what sources Pry uses for his
assessment of the danger.
The rocket was part of a NASA-funded project to study the
Northern Lights. The rocket never came near Russian territory, and
fell into the Arctic Ocean as planned.
``The Russian military made all preparations for starting a
nuclear war except making the decision to launch,'' the newspaper
quoted Pry as saying.
Another researcher, David R. Markov of the U.S. Institute for
Defense Analysis, also called the incident extremely serious. ``The
general staff had been authorized to take all necessary steps, ''
he told the newspaper.
The U.S. Embassy was closed Friday for the Independence Day
holiday.

Goodnight

Donald: Kaplan has got your Rip Van Winkle, see very long term outlook near end. He's also bullish for anyone who needs cheered up. Is he a permabull or don't he read the papers !; ) ) Good night all
http://www.geocities.com/WallStreet/4915/

Good night all like heck! Everybody called it a day, I've got the place to myself again. Kind of like one of those Ghost towns where they had a gold strike, gold petered out, everybody left. OOPS! Guess I shouldna said that! Just a little gallows humor folks, guess us longs will get spanked on Monday, maybe more, but it will all work out.

Panda:I'm with you on your 23:17 post.I got my 10 bucks and I'm
headed downtown ...

So who is buying all this gold that's been offloaded over the past 6 months or so? Surely the secret buyers who have been buying off the secret sellers must be EXPECTING to take a bath on their investment.Doesn't sound like smart investment thinking to me!
And if there is not much point in having AU in your vaults because it ain't worth much, why not sell the whole lot? I see that the Australian
proceeds of $2.1 Billion have gone into buying foreign currency rather than investing in local economy which really needs it.
I'm very confused with all of this!
Hi ho

CONFUSED: We are confused too. My best guess for the buyer is Japan. Buyers in 1996 were China and Russia. And Russia can't even pay its own miners.

Joe Gutnick, chairman of a major Australian gold producer, said in a radio interview this morning that 85% of Australian gold sales had been to South Korea. He did not enlarge on this, but it bears thinking about. Perhaps someone out there can verify this.

I had not hear South Korea mentioned at all in the several days since the news broke. I am sure that yours is the first mention.

This is from the Financial Times. South Korea: Seoul acts on financial
controls

Originally published: TUESDAY JUNE 17 1997

By John Burton in Seoul

The South Korean government yesterday agreed to curb the influence of
the powerful finance ministry by granting independence to the central bank
and transferring financial supervision to a new watchdog agency.

The controversial proposal could, however, still be blocked by parliament
and protests by civil servants worried about job losses.

The sweeping reorganisation of the government's financial powers reflects
recommendations two weeks ago by an independent presidential
commission on financial reform.

The creation of a single watchdog agency to replace three regulatory
bodies overseeing banks, securities and insurance companies was taken in
response to recent large corporate bankruptcies and corruption scandals
that revealed apparently lax financial supervision.

The sudden collapse of the Hanbo steel group in January under nearly
3.6bn in debts caught authorities by surprise. A bribes-for-loans scandal
ensued that has led to the conviction of 11 senior businessmen and
officials. Eight more politicians were on trial yesterday in connection with
the scandal.

The single regulatory body, the Financial Supervisory Board, will report to
the prime minister instead of the finance ministry, which is now responsible
for such regulation along with the central bank, which has a lesser role.

Analysts said the new agency would improve co-ordination among
regulatory authorities, but some questioned its effectiveness. "Efficient
financial supervision cannot be accomplished just by creating a new
regulatory body. A quality improvement in financial supervision is also
needed," said Mr Kim Hee-seong of the Hyundai Research Institute.

The reforms would also give the central bank its long-sought role of
responsibility for monetary policy, which has been subject to the political
influence of the finance ministry.

Analysts believe central bank independence would result in more
consistent financial policies, and make stable prices more likely through a
monetary policy freed from political imperatives such as economic growth
at the cost of inflation.

The central bank's trade union, worried about job losses, has threatened to
strike if the proposal is approved by parliament. Workers at the other
regulatory agencies made similar threats.

Parliamentary approval may be delayed, which would, in effect, kill the
reforms.

Parliament is to meet for the last time this month before a presidential
election in December.

So we think that it might be South Korea, Japan or Russia.I was under the impression that Russia had numerous AU mines. Perhaps they don't have the financial wherewithal to mine them and top up their coffers. If that's the case surely they wouldn't spend precious roubles on dumb old AU! And our friends in Japan have already threatened to dump US bonds and buy more AU. I suppose the reason that South Koreans are said to have purchased large stocks of gold is that they are probably the nearest that the western world has to a possible flash point ( apart from the bad news out of Israel ) .
Have increasingly complex derivative sales of AU meant that physical stocks are not there to cover any eventuality?
Or are we just about to enter the golden era of peace and civility, where it only rains at night and we spend all day watching pigs fly?

Yes. All those things are going to happen. Better still, death has been cancelled as we are already in heaven there is no need for it.

Now that the gloom is so pervasive that even some goldbugs are mourning the demise of the shiny yello as either money, or a "store of value," perhaps it's the time to speculate ( you'll pardon the expression ) on the return of a specie standard in the next century. While I realize most visitors to Kitco are a bit more short term oriented, IF the worst case financial fiasco were to happen, as some postulate here, AND the world was eventually forced back to a precious metal backing for currencies, notes, and electronic account balances, then would it not make sense for SILVER, not gold, to be a very important species of specie? Revaluing all that paper out there in the world in terms of the existing supply of gold would bring currencies, the US dollar for example, to tens of thousands of them per ounce. In terms of pure economics, this really would not change anything, as notes can be printed for any fraction of value so long as the amount of metal is available for transfer. But this would be a gargantuan embarrassment to governments, and really make it a pain for consumers who wanted to price a stick of gum in terms of a fraction of an ounce of gold. Silver, perhaps, might find revaluation under such a scenario, at over one hundred dollars per ounce, or more. Gold would return to transactional use between nations and large institutions, while silver would play a significant role in the general economy. More significant than even current die-hard silver bulls could imagine. I realize this is a "worst case" ( for the more greedily perverse among us, perhaps "best case" ) scenario. Nevertheless, it's always interesting to consider all possibilities.

Credit card companies tighening up:




July 6, 1997


Credit Industry Tightens Terms on Many Cards

By SAUL HANSELL

he last few years have been heaven for credit-card users, who have been inundated by
offers promising no annual fees, low-interest "teaser" rates, frequent-flier miles, bonus
points and assorted other goodies.

Well, the platinum parade is coming to an end.

Credit-card companies, bloody from brutal competition and a rise in the number of customers
defaulting on their bills, have started to raise fees and interest rates, limit credit lines and scale
back the most generous bonus programs.

The competitive battle led to an "irrational balance in favor of the consumer," said Michael
Urkowitz, the executive vice president in charge of credit cards at Chase Manhattan Bank, the
nation's largest bank.

The pendulum is set to swing back, he said, as a banking and consumer-credit industry
"rationalization" cuts back some of the most lucrative card offers.

Seamus P. McMahon, a partner at the First Manhattan Consulting Group, said: "The
credit-card industry is in the same position as the airline industry was three or four years ago.
The players have come to the conclusion that too often they are giving away the goods for far
less than their costs."

The pressure is on because losses from bad credit-card debt have reached 7 percent of total
balances, a higher level than even in the depths of the 1990-91 recession. Personal
bankruptcies are increasing at a 27 percent annual pace.

"This business dipped further down into the barrel in terms of reaching people with marginal
ability and willingness to pay their debts," said William L. Hodges, the executive vice
president for marketing for the Discover Card, a unit of Morgan Stanley, Dean Witter,
Discover & Co.

Some evidence of the cutbacks is visible: Last week, Ford Motor Co. canceled a credit card,
with Citibank, that offered generous rebates on new cars. And Advanta, once a rapidly
growing credit-card company that has been hit with sharply higher losses, has recently raised
interest rates by two percentage points on most of its accounts and has imposed a raft of new
fees.

Much of the retreat, though, is so subtle that many consumers may not even notice a change.
Certainly there is no escape from those annoying early morning and dinner-hour phone calls
from credit-card solicitors.

But the number of credit-card mailings is already down sharply, and experts estimate that there
will be 25 percent fewer offers for credit cards than there were at the peak two years ago. And
the offers are not as lucrative as they once were.

For example, 75 percent of gold-card offers in the mail a year ago offered a low introductory
interest rate, according to BAI Global, which tracks card mailings. This year, only 58 percent
offer the teaser rates. But in a sign that card companies are still competing heavily for the best
customers, those who do get the rates will pay less -- 5.68 percent, against 6.58 percent a year
ago.

Similarly, card companies are trying to impose fees, but only on some customers. Being late
with one payment these days or going over a credit line by a single dollar can cost $20 at most
big card companies. Such "nuisance fees" increased by 55 percent last year, according to
Credit Card Management magazine.

Issuers are trying to come up with other unusual fees. Advanta wants to impose a $25 fee on
people who close their accounts. Last year, General Electric imposed a $25 fee on some card
holders if they always paid their bills in full to avoid interest charges.

The total cost of credit cards -- combining interest rates, annual fees and other nuisance fees --
started going up sharply last summer. It now represents 18.72 percent of card balances,
compared with 17.96 percent a year ago, according to a study of large card issuers by Moody's
Investors Services.

A similar reining in can be seen in what are known as co-branded programs -- cards linked to
companies like airlines, auto makers, gas stations and retail stores. Few cards were as good a
deal to consumers as the Ford program, now defunct, and the General Motors card it imitated.

Those awarded a rebate of 5 percent of all card purchases toward the price of a new car. The
credit card linked to Sunoco gas stations, for example, just lowered its rebate from 2 percent to
1 percent of purchases.

"The new co-branded cards these days don't have the razzmatazz they had a couple of years
ago," said James J. Daly, the editor of Credit Card Management magazine.

In some cases, banks are canceling the programs entirely because they are losing money.

"Some banks thought that any co-branded deal would make money," said Joseph Saunders,
president of the credit-card unit of Household International, which runs the GM card. "They
didn't know what they were doing and they got hammered."

Credit-card issuers receive a fee from the stores where charges are made equal to about 1.25
percent of the purchase amount. Saunders said some issuers had set up bonus programs that
gave away rewards costing 1.5 percent of purchases or more.

If the card does not carry a fee, that is a recipe for losing money unless the card company has
the skill to aim the cards nearly exclusively at customers who allow unpaid balances to build
and pay hefty finance charges.

Household has been quick to adjust the terms of its cards when it concludes it is not making
money. It cut the rebate on the GM gold card, for example, from 10 percent to 5 percent last
year. And it is imposing annual fees on some card holders who do not actively use their
accounts.

Raising prices in credit cards is harder than in almost any other business because it can have
exactly the opposite of the intended effect. If an issuer simply increases the fee or interest rate
on a broad group of customers, the most creditworthy card holders will find better deals
elsewhere, leaving only those customers who have few alternatives, if any.

So instead of increasing its fee income substantially, the credit card company that
indiscriminately raised prices might instead be faced with unusually high losses for bad loans.

That is why the bigger, more sophisticated card companies are using their computers to analyze
each customer, raising prices for some people and lowering them for others. "We are repricing
our accounts both up and down," said Urkowitz of Chase.

Similarly, many card issuers are constantly monitoring the payment performance and debt
levels of customers and increasing or decreasing their credit lines accordingly.

Some customers may get upset when their limits are cut, acknowledges Hodges of Discover,
but the practice still makes sense from the company's viewpoint. "After all, people are
constantly moving up or down, getting in better or worse financial shape," he said.

The credit-card industry's current interest in raising prices and reducing risk is changing the
tactics that a consumer should use to get the best rate.

For the last few years, the best strategy was to flip from one low teaser rate to the next,
assuming the mail carrier would always bring another low-rate offer.

Now it is probably better for consumers to concentrate all their spending and borrowing with
one or two card companies, experts say. The more card holders appear to be profitable and
stable customers, the more likely their card companies will try to keep them.

The companies may not volunteer their best deals, however, so consumers should periodically
call their card companies to ask them to waive fees and lower their rates, experts say.

"The customers on whom card companies make money are getting better and better terms,"
said Eric K. Clemons, a professor at the Wharton School of the University of Pennsylvania.
"But the ones on whom they don't make money are getting terrible terms."


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Russian gold has all been sold, stoled, or is still in the permafrost, down deep cold. In '90,91,92 every bigwig in the former USSR what could get their hands on a bar of aboveground shiny yello sent it packing out of the country. Russian mining industry is a basket case. Their current unravelling gangster society is still very inhospitable to foreign investment. Their strategic metal stashes are getting down to the bottom of the barrel. Fortunately, their Sevruga caviar is still very nice and an excellent value. Just make sure it's fresh!

This from Dubai: Gold's plunge to a 12-year price low has
stimulated retail turnover in Dubai's local jewellery and bullion markets but the main re-export
trade to India remained sluggish, traders in the Gulf emirate said on Sunday. - Jul 06 4:22 AM
EDT

This from Taiwan: The account value of Taiwan central
bank's gold reserves has dropped by T$9.2 billion ( $330 million ) after sharp declines in the
price of the yellow metal in the past two months, the Economic Daily News said on Sunday. -
Jul 05 11:49 PM EDT

My confusion eases not. Gold is the financial thread that has weaved throughout the warp and weft of history ( sorry about that! )
Why should everyone decide at the same time that gold's not worth mining. Or are we at the furtherest swing of the pendulum and about to swing on an exciting journey towards its opposite? Or am I a classic gold bug - now squashed and in severe denial?

My confusion eases not. Gold is the financial thread that has weaved throughout the warp and weft of history ( sorry about that! )
Why should everyone decide at the same time that gold's not worth mining. Or are we at the furtherest swing of the pendulum and about to swing on an exciting journey towards its opposite? Or am I a classic gold bug - now squashed and in severe denial?

I suppose it is all very simple. Either we are really entering into a brave new world where a fundamental paradigm shift has left us goldbugs stacked in the archives with the buggy whip investors of yesteryear or this is just another wiggle on the ultimate 7,000 year gold chart. In which case its just a matter of which floor on the gold elevator you get off and whether you are riding that elevator for an up destination or down. I will admit, and I am new to pm/pm stocks, that this is the first time I have been caught for more than 5% in a change of trend without having reversed. Ah, that beguiling gold and seductive silver I may have become a ( AARRGH ) buy and hold investor, as the saying goes, involuntarily.

The central banks seem to be quite a player in the gold market these days. Back in the 1960s they were larger yet. The rage back then was "paper gold" I believe it was called sdrs. Seems there was not enough physical gold then and people needed to be soothed with paper gold. Funny they never explained why there was suddenly not enough gold but that is another story. Since there was no difference between paper gold and physical gold a central bank could settle its obligations with another central bank by delivering either. To prove that paper gold was as good as real gold the usa delivered a small amount of our physical gold, something like a few thousand ounces I believe. We figured others would be impressed by this action and would also deliver physical gold thus cementing the interchangability of the two forms of gold. Well the rest of the world was impressed. To this date no one has been as stupid. Including us.

Donald: Thanks for the posts and info. BTW, your 06:30, I'm taking your word for it and skipping church this AM.

EARL: Re: your excellent graph on 5th July, 11.42. Looking further back, gold actually fell below US$120 ( 1976 ) before hitting $800+ in 1980. I remember high in my final year of high school. The kids were raving about it on the upstairs balcony. So, it gold has been down there before, but not for a long time.

JOHN DISNEY: I believe the French Connection is a precious metal's company ( employee/s ) . Let's face it, we haven't really had a REAL depression for a long time either. 1990/91 was NOT a fully blown depression. At lunch today, some of my cronies were saying there is something in the wind, & it isn't good. Another stock broker was agreeing with me that there is something wrong, but he couldn't put his finger on it. In this week's Business Review Weekly in Australia, John McIntosh, one of Australia's more famous stockbrokers, says he owns "very little" in the way of shares, having sold after deciding that the market was too high FOUR MONTHS AGO!!! The warning signs are EVERYWHERE! All we need is the disaster now. But imagine, what WOULD happen if gold got down to $125 an ounce?? I hope it doesn't, but stranger things have happened.

If you have long term weekly charts, go back and examine the action just before the real big bull moves in any commodity. Just before the bull gets started there is often a sharp move down. This is caused by the strong hands gunning the stops. Most of the time you already have your position but cannot resist picking up some freebies for the long ride ahead. There are lots of ways to do it. Selling 10 physicals while at the same time buying 100 futures is the clasic. Perhaps the action we are seeing today in gold is the mother of all stop gunning.

Quantifying irrational exuberance:
The Wilshire Associates Equity Index -- which represents the combined
market value of all NYSE, American and Nasdaq issues -- ended the
week at $8.639 trillion, up $239.6 billion from last week. A year ago, the index stood at $6.498 trillion.

It is my opinion that Bill Buckler's "The Privateer" should be required reading for all Kitco contributors and lurkers.
Thanks Bill.

For any new goldbugs lurking, Captain Bill has some great charts/ commentary on Gold Bottoms recently updated. Is it really different this time? Comments anyone? http://www.the-privateer.com/g-bottom/g-bottom.html

Especially Bill Buckler's monthly electronic newsletter. Just finished reading the latest issue. Great insights!!!

Some of Australia's top fund managers, Alan Beasley & Anton Tagliaferro of BNP says "it is hard to find stocks that are worth buying now. It is increasingly difficult...we can't necessarily see where the value is coming from...all the good news has been factored into stock prices". I wonder if they have been looking at coal stocks lately??

http://www.yahoo.com/headlines/970706/business/stories/stocks_53.html

CONFUSED: You don't sound so confused to me. Least you're not in denial. STEVE ( PERTH ) : Last time gold was 120 in '76 it was recovering fromcorrecting 50% from 200. It had run from $42 in 1972 to 200 in '75. Don't forget that gold was officially pegged at 32-42 dollars from 1934 to 1972. Amazing what free trade can do to a chunk of metal. $120 gold today would be the symptom of an aberration or tragedy far greater than the shenanigans of central banks and leased sales.

NOTAGOLDBUG: Yesterday you suggested that often a good strategy is to "do nothing". Let me counter that "doing nothing" in 1997 is a lot different than "doing nothing" before 1933. By that I mean when ( in my case, grandfather ) wanted to get out of the market and was concerned with the quality of other investments such as bonds or realestate he could cash in with beautiful St. Gaudens $20's or silver dollars. You can't do that today. As a poster said yesterday, "a silver Maple Leaf still gets you a burger and fries" Yes it gets you that, and a lot more. It gets you a safe investment and peace of mind. My point is: can I get you to agree that the current day equivalent of "doing nothing" is taking physical delivery of metal? Some of the posters here seem to be trying to get rich. Many though, I suspect, are just trying to maintain the same standard of living they have today. They only want to keep even.

From Yahoo news: "...Many Wall Streeters believe that the market, which is one of the most the reliable economic indicators, will stand up to the earnings challenge. After the earnings odyssey, they see smooth sailing for the market."
"Blue skies" of 1929 is here again.

Thoughts re gold price: The average cost of production seems to be around $300, give or take $50 or so, considering comments made here from various sources.

If I owned a lot of gold, I believe I would anticipate that exploration and mining would diminish greatly if price languishes for long in the area of $300 or below. ( Barring a technological breakthrough lowering mining costs ) . Which would mean that there would be no more new supply after a few years. I don't think I would want to sell below $300, as such a low price is not likely to be sustained. ( And this is without even considering the credit risk and/or inflation hazards related
to paper money. )

Do the owners of large hordes of gold think this way? I don't know.

Australian prime minister John Howard, is keynote speaker later on this month re: gold industry's annual conference...isn't he brave...or ????
http://www.theage.com.au/daily/970705/bus/bus6.html

International market pundit Milhouse questions the common-sense of Australias CB selling 2/3s of its gold reserves at historically low prices. He foresees higher inflation & money supply - see Guest Guru Milhouse:
http://www.gold-eagle.com/gold_digest.html

Of Course They Do!

Re: Your 6:40 - 'The time has come ( 'my friends' )
To talk of many things: ...'

BTW - Don't you even occasionally sleep in on Sunday?

Milhouse:

You were absolutely correct sir, You did mention that the information was from Princton Economics. It was my error that I assumed you were associated with them in some manner. On the other hand, anyone who brings that type of accuracy to Kitco at least deserves the "Prince of Kitco" award ( :- ) ... Maybe Earl will take over being the King ( at least a stand in ) since he had it last. Thanks for the posts from Princeton and please keep them coming.

TTFN

Joseph Gutnick's ( Australian mining entrepreneur ) reaction to RBA sale
http://www.newsalert.com/free/story?StoryId=Cm7X1qb8Zu1LemZi1ndK&FQ=gold&Query=gold

I agree with Mooney...ALL rich guys think that way! I mean, just ask Mooney ! ( ;- )

TTFN

JAPAN BETWEEN A ROCK & HARD SPOT: To Dump U.S. Treasuries & Buy GOLD! ( PART - III ) . BOJs June 27 Balance Sheet & Foreign Central Bank Holdings of T-Bonds:
http://www.gold-eagle.com/gold_digest/oracle707.html>http://www.gold-eagle.com/gold_digest/oracle707.html
Oracle has expanded on initial findings of Barrons Randall W. Forsyth and Internets Economist George S. Cole. Land of the Rising Sun plagued with financial difficulties, choking on T-Bond indigestion, exacerbated by a pittance gold position, must reduce excessive dollar exposure to stabilize Yen parity. Due to the BOJs Balance Sheet & chart of Foreign Central Bank Holdings of Treasuries, the website is a little slow to fully load - HOWEVER, I GUARANTEE YOUR PATIENCE WILL BE AMPLY REWARDED:
http://www.gold-eagle.com/gold_digest/oracle707.html

SORRY, this URL should work:
http://www.gold-eagle.com/gold_digest/oracle707.html

Milhouse: If you look at Orpailleur's summary ( on Gold-Eagle ) of a May 97 speech by Martin Armstrong, founder of Princeton Economics, you will note that he prints a projection of $18 silver "once the bull market gets in gear." This seems to be a direct contradiction of your post that he feels that silver is a lousy investment and will fall to $3.25. Can you clarify this for us? Has he changed his mind since May?

Oops, let that be a lesson for me "thay shall not use your brain for
converting tons to ounces and calculating price - thay shall use a
calculator" my brain is not calibrated for so many zeroes and slipped
three more of them in there :- (
Agreed, gold was a looser last year comparing to other investments. My
point was that the price of gold fluctuates less and holds its price
pretty well despite the dropping demand and heavy selling. High fliers
on stock market sometimes gain and loose 50% in a matter of days. This
means that gold comparing to other investment is still a good place to
put your money when things go wrong in financial market. If I thought
that things will be all well in coming years I would not be on this
forum - I would be on "S&P unlimited forum" ;- )

To Donald:

My comment to "Do nothing" is very short term in relation to gold..
Unless your into short selling. I believe, and that may be what is
getting my interest up in this site again, gold is at the crux of a
very important move.. Im basically a trader and "short" ABX currently.
It looks very good that ABX will bottom in the next two weeks. This
will be a good time to cover and go long. Each days data will tell me
more.

Front, my friend, If I am not so in reality, at least I am in spirit!

To Donald..

Answering your comment:

"My point is: can I get you to agree that the current day equivalent of "doing nothing" is taking physical delivery of metal?"

That is just not my way.. I am to 20th century to believe that physical gold is a proper
vehicle for your idle cash. I could be wrong. I love real-estate, and if I was not trading
I would convert my trading account there. Gold just has no appeal to me other than
the warm feeling on gets when holding it.. This is an "each to his own" thing and if
you enjoy physical gold I would encourage you to buy.. I also do not like gold coins..
The premium, just because they are a coin, is to much.. Just my opinion again. I know
many think we will be using gold coins again to buy goods and services but when
that happens I hope my life is over.

Milhouse: I will second IDT's motion and ask for any additional reasons you have for silver going way down. I do not believe digital cameras will pose a threat to silver for 6-12 months minimum and even then not a sudden significant impact.

MOONEY: Early to bed ( most of the time ) and early to rise has made me at least healthy.

Lest anyone think that I am among those who look forward to us citizens buying things with gold coins, please abandon that notion. The point of a return to a specie ( gold or silver or both ) standard is merely a natural curative for paper note mismanagement. It will come as surely as a pendulum swings because there will come a day when paper note mismanagement will not be repairable. Then, for a time, which may be decades, or hundreds of years, notes will be by law exchangeable for a specific commodity. This process will regulate both the value of the commodity ( within the limits of supply and demand ) and the "value" and quantity of the notes. Paper money, or token coin, or credit cards and kilobytes will still be used as convenient proxies for the gold in storage behind every decimal printed out on monitor and paper bill. Tha's all. It's really no big deal. It just takes enough people catching on and getting fed up, or having the roof fall in for a decade or two of chaos. Usually it's the latter. I'm the first to tell you this is not necessarily an INVESTMENT or SPECULATIVE concept. It is merely an historical one. But one would be well served to be long a tad of the shiny yello should the day arrive.

http://www.tiac.net/users/kaleberg/maria/maria.html

TO ALL: My compliments to No mercy, Front, the omnipresentandappreciated vronsky, IDT, Miro, NotaGoldbug, Mooney ( wish I was rich like U ) ,Ron ( nice post ) and the ineffable Mike Sheller for holding down the fort 4th of July weekend since noon. Now for anoudder Margarita at the pool ( hic )

ALL: I don usually drink can you tell? But now I can blame it on gold!
( BBUURRPPPP! )

NOTAGOLDBUG: OK, no more missionary work on you! You can't be converted! I like real estate too, I own my home and it is fully paid for. I wouldn't move for the world. Even though I think it is overpriced and a lousy investment. A thousand years of history says real estate is only worth 100 times the monthly rent. Most homes in America have a bigger ticket than that on them. When I was a kid, September, 1939, I remember when my father sold the house we lived in for $2000. The house is still there and doing fine. ( I didn't leave off any zeroes ) .

I kind of have to laugh at Aussie miner Joe Gutnick's outrage at the RBA's sale ( see nomercy's 12:19 url ) . Of all the bad things said about the sale ( most of which I agree with ) , let me say one good thing - it appears to be an honest transaction, i.e., it gets paid straight up for merchandise delivered straight up, as distinguished from the crooked leases and forward sales a lot of miners and CBs are involved in. One can at least monitor sales by CBs, try doing that with leases, which are just about impossible to track. If the people of Oz disagree with the sale, they'll make it known, if it was a lease they'd never know, which is the point. Gutnick admits in the article his company has sold over 2 million ozs forward and seems more concerned about the availability of the cash up front that forward selling generates than the low prices the whole loan/forward selling scam has generated ( I guess that means he favors short sales vs. long sales ) Just to put it perspective, the RBA sale is about 15% of the annual amount of gold dumped on the market as result of leases, according to the WGC.

If the hedging miners think these low prices are a problem, wait till prices explode - then they will truly be in a world of hurt.

Milhouse " Is Gold still a store of value " @ Gold-Eagle site.
Great article, but, not acceptable to my expectations of the future.

The talk on the street, suggests, the opposite result, to the very
thoughtful, and well presented article. Yes, using the exact reasons
presented in the article. Yes, gold is a store of value.

When a person, walks down the main streets of Canada, and one takes the
time to communicate to his fellow citizen, one is struck by the
confusion, and tired talk, of one's fellow citizen.

In the main, the talk is such:" What the hell is going on, one works
long hours, contributes to family, and friends, as best one can, yet,
it gets worse, and worse. What is in store for his children, and their
children. Taxes, debts, retirement, fear, *money* "

It comes down to *one* question: " WHAT THE HELL, IS GOING ON ? "

Referencing, Financial Times--The Gold Book--Pierre Lassonde. ( 1993 )

In 1990 the European economies were strong while the North American
economies were entering a recession.

If this scattered growth can be sustained, gold will probably continue
to trade mainly as a commodity with the price being set by jewelry
demand and economic growth. GOLD as an investment would remain unattract-
ive and the price would likely stabilize in a fairly narrow bracket of
US$ 350 to US$ 400 per ounce.

What if the growth can't be sustained? If the world sinks into true global deflation, the price of gold would rise dramatically as worthless
paper money is converted into a hard currency - GOLD.

The price to which gold would be propelled would depend on the magnitude
of the collapse. If it were restricted to only North America, gold would
react only modestly, perhaps reaching US$ 600 an ounce.

If the entire global economy slid into depression it could reach dramatic
new highs of over US$1,000 an ounce.

The economic plight is repeated in Canada, where the central bank has
squeezed out inflation but at a terrible cost to the economy.

North America faces three ( 3 ) possible economic scenarios - deflation -
growth without inflation - or more inflation.

The material referenced above, is presented by a person that represents
the gold interests, yes, he references inflation, also.

I have used his quotes' as per my take & feeling, to provide a deflationary position. I expect deflation, unfortunately, the Elite of the world, have not been able to stop, the future trials, of a consumer economy. We do have over production of consumer products. There are no shortages ! Only, a shortage of valuable cash, it is gone into debts, and retirement savings ( out of fear. ) The Consumer is BROKE, spiritually, emotionally.

Soooo, is it *Inflation* or *Deflation*, North American style, or World
style. I expect it has started in North America, and will be at the World
level by this time next year. ( 1930 - 25 % unemployment, 75 % working )
( unemployment amongst the Canadian youth is estimated at 25 % to 30 % )

Labour: human activity that provides the goods or services in an economy
;: the services performed by workers for wages as distinguishing from
those rendered by entrepreneurs for profits.
;: expenditure of physical or mental effort esp. when difficult or
compulsory.

...Canadians are still going broke as economy barrels ahead...."..it's a real conundrum..." Tom Delaney, independent financial advisor, "it's a real problem that economists have a tought time to put their finger on"
http://www.canoe.ca/BizTicker/CANOE-wire.Bankruptcy-Conundrum.html

Ted Butler: Right on my friend! The one good thing about the Australian gold sale is that it might make it more difficult for the OZ miners to sell forward. But no one mining firm can stop this by itself in the current bear market. It must be a joint undertaking by the many. The miners have not hung together on this issue and now they are hanging separately.

NOMERCY: Do you get "Funky Winkerbean" in your Sunday comic pages? Today there was a cartoon strip about just what your article ( Canoe-Delaney ) says. In the strip a young couple are tossing out their old couch. They leave it on the street for the trashman. They go back in the house and watch out the window as a passerby with a pickup truck grabs it. The punch line is "If this is what it's like when times are good what's it going to be like when the bad times come?"

NOTAGOLDBUG: Have to agree with you on Real Estate. Am currently involved in an RE situation for rental. The numbers are too enticing. A 15-17% net return on cash invested, leading to equity doubled in under 6 years makes some of these potentials attractive come inflation or deflation. SEVERE deflation of equity would, of course, reduce that return - but would it crush it to less than a CD? Perhaps, but barely. Even the Great Depression RE deflation averaged around 30-50% in 3 years. On the other hand, with inflation the equity gets an additional boost. Alas there's risk in everything. A chunk here, a chunk there.

While everyone had their eyes on the price of gold on Thursday, it seems that the 30 year bond peeped its head above our vaunted 113 level. If the uptrend continues Monday, then all the stockmarket bears had better have a few Margaritas, or Martinis, and settle back in the sun for a while. The Bond looks to be coming out of that Rhino triangle on the weekly chart, and if so, stox are going to be positively nauseating to them's what's been calling for imminent collapse. This could put a topping pattern forward into the late Fall!
When prices come out of a Rhino ( or most triangles ) they often do it on sharp upmove days, back to back. Thursday looked like Day ONE. If Monday is Day TWO, the bond will be running on stilts. Don't get in its way.

ROEBEAR: How many times do you have to be told, the olive goes in the Martini, not the Margarita.

on your couch pick-up story...we renovate and rent apts...so if somebody
is throwing out something that we can use..we stop and pick it up...if we
can fit it into our 95 LandCruiser...true and its hilarious to see their
faces...

DONALD and ALL........That is common where I live...In a small city of 50k and in the uppermiddle class neighborhood....The garbage man cometh on Thursday, preceeded on Wednesday afternood and several times on Thursday morning by people in pick up trucks scavaging. Haven't seen any in the cans though. They just go for the big stuff outside the can. You wouldn't believe some of the junk they will get....An old couch or chair won't last an hour....One took an old aluminum garbage can I was throwing away that had half the bottom rusted out of it.....

To Donald..

Answering your comment:

"My point is: can I get you to agree that the current day equivalent of "doing nothing" is taking physical delivery of metal?"

That is just not my way.. I am to 20th century to believe that physical gold is a proper
vehicle for your idle cash. I could be wrong. I love real-estate, and if I was not trading
I would convert my trading account there. Gold just has no appeal to me other than
the warm feeling on gets when holding it.. This is an "each to his own" thing and if
you enjoy physical gold I would encourage you to buy.. I also do not like gold coins..
The premium, just because they are a coin, is to much.. Just my opinion again. I know
many think we will be using gold coins again to buy goods and services but when
that happens I hope my life is over.

Mike: Ithaught theressomethin funnnegoein on here? Martinis? Ain't they fer brokers?

ROEBEAR: I thought Olive went with Popeye? Couples today, I don't know it's coming to!

Mike Sheller & Donald:

My personal fortune has resulted from some lucky investments in real-estate.
When people say gold is a inflation hedge I look at my real-estate investments
sense 1980 many have gone up 2000% and gold has gone, no where. And many,
because they are commercial, keep paying while they keep growing in value.
Now, I still like to trade gold but I think it just basically stands on its own.. I keep
saying this but I really dont think people hear it. Gold is just a commodity
subject to its own supply demand characteristics. The stigma that is attached
to it amazes me.. People get just fanatical about it. Humans, irregardless of their
intellect, are drawn to want to "believe" that gold has some value that goes beyond
its usefulness. It is also very hard to argue with someone who feels gold will
be the last bastion of hope, financially, someday.

I am not really real intellectual and possibly this saves me from thinking of all
the worst possible outcomes governments will have on their currencies. I just
dont worry about it much.

DUnald: ( HIC! ) Popeye, yew betcham didch I ever telll ye about HairliP??
Awww nefer mind, need a feww more fer thet one! GOld to 320, then 333 Monday close ( hic ) .

Some of us are blessed ( cursed ) with a vision outside of today. Some omly see today or yesterday.... Look at the posts earlier today and you have peole discussing what will happen probably well into the next century and you have people talking about what is going on today....Others are discussing what happened 20 or 50 years ago.....There is a time and place for it all...When and where are the keys...

For instance, gold will go up sometime, but when ????? Real estate will go up, but when ??? Paper assets will be worthless someday, but when ??? So, I say that some look at today, and some look at yesterday. Some look for tomorrow.....Suffice it to say, we may all be right in our thoughts....SOMEDAY.....

Oh my, oh my..... Should I extrapolate today or intrapolate ???? DOES THE PAST TEACH OR CONFUSE ??????

NOTAGOLDBUG: That was the past. It is over, over, over. Real estate will be blown away when the stocks go. It won't be so apparent but most of the real estate you pass by on your way to wherever is leveraged to the moon. And the mortgages have been packaged into CMO's, pensions are infected with them. EVERYBODY is tapped out except a few goldbugs who see this whole 70 year crapshoot about to unravel. There is no real money anywhere. 55 Trillion in what will soon be worthless derivitaves. Banks, insurance companies, 300 year old companies like Barings, Sumitomo, Nomura are letting kid riverboat gamblers run their trading operations. The Savings & loan thing papered over with money out of the pockets of widows and orphans who trusted the banks. Every Tom, Dick & Harry took his lousy 2% money out of the banks as a result and put it in the Stock Market. A recent survey says 40% think their stocks are government insured, etc, etc, etc. One stumble like Penn Central or WT Grant in 1974, Continential Bank or any one of thousands brings the whole thing down.

How is it in our modern world of transparancy of transactions that are so bandied about by our goverments, that Central Banks can sell billions of public property ( gold ) and not report as to who the buyers are?? Something here is backwards.

HHHH- Excellent observation:
If we were in a bull mrkt, the spin would have been, "xyz central bank ( s ) bought gold 167 tons of Oz gold during the last 6 months."
Who says golds image is not intentionally manipulated, and is only reacting to market pressures of supply and demand? As usual, the meaning and sequence has been turned around and people get lost in their own !@#$....manipulation of golds image has caused it's poor perception, causing momentary lack of interest. Supply still remains much lower
than demand. This dangerous form of economic counter-publicity is ultimately selfdefeating.

CMAX: An earlier poster from Australia says a mining insider indicates that South Korea was the buyer.

Donald:

You may be right.. All my real-estate holdings are paid in full so I
personally dont worry.. The only thing I owe on is my BMW and I figured that
it was poor judgement to put $50.000.00 into a auto.. By the way anyone here own
the new 5-series? Its a really fine auto! Makes me want to invest in
the company!

You talk as if the entire world is going to crumble.. I personally hope
your wrong. Such a fatalistic attitude.. Why worry so much?? You only
live once ( I think ) and at least for me at 45 Im more than half way through.
So, live it up a little!

Anyone out there trading ABX?? I am watching this weakness to go long.
And the 1/17/97 $15.00 calls ( ABXAC ) will probably get more reasonable over
the next week or so.. There is very little premium in these now, but as the
stock moves towards the strike this will undoubtedly change.

All this talk about the impracticality of gold as a possible future currency, due to the impossibility of being able to buy a stick of gum or loaf of bread, is mute. Of course it can, using debit-cards that are linked to your gold deposit account. The electronic bytes do this for you, and without fractional banking ( a la "e-gold ) . In a real currency meltdown, the ONLY way to restore stability FAST is with 100% gold backing. Period.

fwiw dept.: Joe Granville is said to have predicted a gold meltdown last Monday. In a weekend report he is said to have predicted US$15 for Barrick and US$9 for Placer Dome. He's been hot for a year.

NOTAGOLDBUG: I do live it up, I have no complaints for myself. The indians had a feeling about the world that I like. They felt that you didn't own the land, you were only temporary custodian of it. Your duty as a good indian was to leave a place better than you found it. I was born during the Great Depression, I carry that invisible scar that never lets you forget how tough times were. I actually think that hard times are good for us. They were for me, but only in retrospect. I bet your father knows what I mean.

To Aurophile:

I also have a last ditch target of US$16.00 for ABX. The next few weeks will
be very interesting indeed.. Thank you for Granvilles comments, he has been
hot lately and by the way very bullish on the overall market suggesting we
are in a "new era".. What ever that means!? :D

AUROPHILE: Doesn't ABX and PDG account for a very large part of the XAU? What is you feeling on that?

Donald,

The Indians were interesting people I respect their wisdom.. The great depression
was fascinating and yes my father ( now deceased ) was in the thick of it. Though he
held no "hidden scars" and really, looking back, had a lot of fun during those tough
times.. He lived in Detroit and always chuckled about prohibition and loosing
everything.. He mentioned that it brought the family much closer together.. I really
dont know if we can prepare ourselves for catastrophic events such a the depression.
The next financial debacle will be different, I suppose, and something to talk about.

I had an old friend, an architect who died recently, that was very bitter about the
depression.. He attributed it to all the pain in his life.. He had graduated from
Princeton and just loathed the rich of that era.. Actually blaming them for the whole
mess.. Even on his death bead he was bitter. I tried in vain to tell him to let it go but
he clung to it like a blanket.. Why?
.

Donald:

The ABX/XAU relationship is very easy.. If ABX goes to US16.00 XAU will be
close to 80.. I have suggested 85,a while back, as my target for XAU and that still
stands..

Additional point of view, regarding previous post this day.

A loss of gold reserves would immediately manifest itself in a loss of
currency, curtailment of economic activity and deflation.

In the early years of the paper system, the central banks maintained a
tight grip on money creation through regulation of the banking system.

Not so today: after eleven ( 11 ) years of deregulation, there have been
fundamental structural changes such as *disintermediation* of the credit
markets - a way of bypassing the formal banking system to create new
sources of money - and securitization of assets by banks - the bundling
of debt into investment packages to create securities such as
* mortgage-backed securities *

As a result, the links between money, economic activity, inflation and
gold have become much looser.

NO, the Conspiracy theory is not in effect, it is a simple fact, that
business, is taking care of business, exactly what they are expected to
do, look after the best interests of their respective share-holders.

Government, is expected to represent the interests of government.

Labour Unions, are expected to represent the interests of their members.

Average Joe, well, he can be expected to, be Quiet - Consume - and Die.

Jay Gould 1886:
" I can hire one half the working class to kill the other half "

The reality of deflation,is a sick economic system, and people will die.

REF: Cmax ( to: Mike Sheller ( but no astrology ) ) - I could not agree with you more that any serious currency meldown can ONLY be remedied by GOLD BACKING OF PAPER MONEY. For serious research studentS who seek rationale for this considered opinion, may I suggest the most comprehensive and contempory work on this subject: "MONEY MELTDOWN" by Economist Judy Shelton. Ms Shelton is a former Senior Research Fellow at the Hoover Institute ( Stanford University ) . IMO there is NO better treatise on the subject. With a view to qualififying Ms Shelton's impeccable professional credentials, may I mention she is also the author of "THE COMING SOVIET CRASH" - which IN 1989 accurately pinpointed what happened in the soviet Union just one year later. Subsequently, the likes of Zbigniew Brzezinski and James Grant. Brzezinski recognized Ms Shelton as a brilliant international policy analyst. And James Grant's ( Editor of Grant's Interest Rate Observer - and OFT Louis Rukeyser quest, who recently said most gold stocks are now a BUY ) review of her "MONEY MELTDOWN" was: "An informed plea for sound money and solvent public finances from the woman who brilliantly foretold the bankruptcy of the Soviet Union." It is a MUST READ for those who hope to see the future international monetary scene clearly -- AND PROFIT BY IT!

Vronsky:

James Grant has been a bull on gold, I believe sense 95 or so.. His is a
perma bear on the market.. I have a close friend who knows James
personally and on Jamess recommendation ( this was between friends ) told
him to short he market "big time" in early 1995. Subsequently he lost,
and Im not exaggerating, millions.. My friend could afford the loss but
I really dont think Grant is a credible individual to quote.. He has been
wrong and that is all there is to it.. Do significant errors with regards to
recommendations mean anything?? Your comments are interesting
none the less..

Roebear: LOL! You must come to the Kitco bash!

NOTAGOLDBUG: Some of the rich didn't even know it was happening. They were pretty callous. I have a friend, now nearly 90, who was very rich. His father owned a car dealership, he had a Pierce-Arrow and all the women he wanted when he was at college during the Depression. Now he is nearly broke. He retired and sold the dealership for a small down payment to someone who looted it and took it into bankruptcy. He sees the world differently now and I think he is a much nicer man than when he was rich. Its better to get whatever you get from your own hard work. It means more to you than that which falls into your lap. My wife had a tougher childhood than I did. She had to walk along the railroad tracks looking for coal that had fallen off of trains. When you have experiences like those you see life differently. I lived next door to my grandfather. He helped us out from time to time. My father was fluent in several languages and stayed employed for three days a week as a linotype operator because he had that rare combination of language and typing skill. My mother was a farm girl, we always had chickens hanging from the clothes line, plenty of eggs, spent summer days like today going along the roadside picking wild grapes. That stuff brings families together, just as your father said.

Read the last two paragraphs of this article http://biz.yahoo.com/finance/97/07/05/y0023_z00_4.html ,or check here at gold daily news.

NAILZ: It's what makes horseraces. Real estate, in certain locations, is going up now. The NYC area is heating up, and Manhattan is bubbling. Apartments are very interesting in certain areas. And by the way, those who do not learn from the past are bound to detrapolate. NOTAGOLDBUG: I must admit, despite my fondness for gold, and my escapades in corporate astrology ( some of which have been utterly spectacular and even scare ME ) various RE involvements have been the greatest financial blessing ( outside of our health and ability to work ) for the Shellers. ( My wife is in RE, so you know who to ask for insights here ( ( she's also an astrologer! ) ) The trick is, as you implied, to live one's life with a sense of adventure and fun, no matter what the times. What does it profit a man if he gains the world, but loses his soul? ( A great investor once said that ) .
ALL: Take Vronsky's advice. Judy Shelton is a monster. And she does it without a horoscope. Check her out. She is #1.

Shek ( Jul 6 9:13 - 9:27 ) Thank you very much. I should point out, though, that The Privateer comes out every two weeks, not once a month.

No-one seems to have picked up on the fact that buying of gold "coin, bars, and jewellery" was up tenfold on Friday, after the RBA annoucement. I find that most significant. As I said in the latest issue. commercial buyers don't buy "coin, bars and jewellery. Individuals do that. Coin being bullion coin, of course ( Krands, Koalas, Eagles etc. ) .

Today's Australian Financial Review is a good place to sample Aussie reaction to the gold sale. The url is http://www.afr.com.au

Why has the U.S. - fountainhead of antigold sentiment - NOT SOLD any of its gold while encouraging its allies to sell?? - SEE Coles Market Insights poignant question:
http://www.gold-eagle.com/gold_digest.html

It will be necessary for many to click RELOAD at the Gold Digest page to see George S. Cole's July 7, 1997 REPORT:
http://www.gold-eagle.com/gold_digest.html

NotaGoldbug : Your 13:11

'My comment to "Do nothing" is very short term in relation to gold.. Unless your into short selling. I believe, and that may be what is getting my interest up in this site again, gold is at the crux of a very important move.. Im basically a trader and "short" ABX currently. It looks very good that ABX will bottom in the next two weeks. This will be a good time to cover and go long. Each days data will tell me more.'

Would you please elaborate this statement. Are you basing the probability of a very important move in gold on any specific reason, or is it based on the all important feel of a good trader.

GEORGE COLE: Read your report. Nice job, well said.
BILL BUCKLER: Yours is great too. I like the charts. Let me guess...Delphi 3 software using T-charts from Spain?

This site is great...IQ Power sending sparks sizzling across the planet!
Trading starts soon on the other side of the dateline...markets move on emotion, not fundamentals. I said that for myself as well as the rest of you. Enough said.

Just for fun, Any prediction on the Far East markets tonight? Fireworks or ho-hum?

From Austrialian Financial Review. http://www.afr.com.au:80/content/970707/invest/invest6.html>http://www.afr.com.au:80/content/970707/invest/invest6.html and http://www.afr.com.au:80/ content/970707/invest/invest5.html

There has been a lot of discussion concerning the price of gold and mine closures. I worked for many years for a large base metals company and know that they mine a lot of gold as a byproduct of their other operations and will continue to put gold into the marketplace at any price.

http://www.afr.com.au:80/content/970707/invest/invest6.html and then http://www.afr.com.au:80/content/970707/invest/invest5.html

Jack @ 19:38-Good article, Thanks. D.A.--Jack's article quoted Ted Arnold as saying gold will hit $250 before $450. Maybe he would be a taker for your wager!

RETIRED: You are absolutely right. I think that is even more true of silver.

This http works:

http://www.afr.com.au/content/970707/market/markets4.html

CMAX: Was I saying anything different? RETIRED: A number of large general mining companies bring out lots of Gold & Silver as the result of copper & other metal mining. A close associate did some promotion for ASARCO many years ago, and I believe they bring up more silver than anybody just as a byproduct of their less glamorous metals. I know a company like Sunshine Mining will stockpile silver when the price gets uncomfortably low for them. I can't say for sure if ASARCO sells at any price, but I would bet they do, now that you bring this up. It's a good insight.The question is what percent of supply of gold & silver is byproduct mining.

I am afraid gentlemen, that we have not seen nothing yet on this gold drop. There is still plenty left to go. I believe $250-270 is coming. Gold has to hit a point where speculators and investors feel that the down side risk is negligible. The $250 level would spur a lot of buying and people willing to hold gold for awhile. A bull market in gold will not begin until stocks have peaked, and there is no sign in the world that they have. Stocks are exclusively a supply and demand relationship now, earnings, PEs, etc. are meaningless as long as more money chases fewer stocks, the price will rise. The stock bull could go on for many more years. I have to smile at all these predictions of $1000 an ounce gold, I have been hearing that for 17 years now, and as I have said before, $200 gold is far more likely than $1000 gold. When the stock frenzy does come to an end, deflation will hit the world economies like a hurricane and prices ( including gold will drop..only gold will not drop as far thus gaining in purchasing power ) The $50 face value on gold eagles will someday be relevant as their trading price. Dont get caught up in the belief of high priced gold, if it were going to happen, gold would have moved up gradually with stocks in the last several years. Gold has been signalling a massive deflation for some time now, only most people are reading the data incorrectly, gold is not underpriced, the rest of the debt laden paper world is vastly overpriced. Heed the warning!!

LURKER: Fireworks to start, Ho-Hum to end. P.S. Everytime I make a prediction like this it is wrong!

BOB M: Tho I am one of those $1000 gold folk ( actually 2400 in 2003 ) yours is as valid a call as any. But how ironic it would be if we were to be refused the $50 face value of our Gold Eagles by the Treasury with gold trading at $38!

Auric: ( 19:50 ) Never intended for that one to come up, didn't even know it existed; anyway notice who the badmouther's were.

BobM-You may be correct. I also think it very possible gold could hit $600 on its route to $200 or lower. If we really get going on the deflation path, Governments and CBs will pull out all stops to fight it.

Mike Sheller- if the spot dropped to $38, that would be a tremendous increase in purchasing power! To me the crux of this whole discussion is purchasing power..if a 3 bedroom house is worth a $1000 or a million dollars, its value as a house is still the same..one has to look at the stock and debt markets as being completely overvalued, but, the people putting money in there havent realized it yet and it may take awhile longer...

Since it is obvious that at this hour on Sunday, only the elite are here to man the bunkers at Kitco, I offer this tidbit in light of some of the more literary concerns during the past, ugly, week...
From the great Maestro Ludwig Von Mises' "Omnipotent Government," first published 1944, I quote:
"All governments are firmly resolved not to relinquish inflation and credit expansion. They have all sold their souls to the devil of easy money. It is a great comfort to every administration to be able to make its citizens happy by spending. For public opinion will then attribute the resulting boom to its current rulers. The inevitable slump will occur later and burden their successors. It is the typical policy of apres nous le deluge. Lord Keynes ( here's the good part ) the champion of this policy, says: "In the long run we are all dead."

GCQ7 H-325.80 L-321.00 Last 324.70

BobM. Re 20:02: Very thoughtful post. I copied and saved that one.

BOB M: I agree wholeheartedly about purchasing power. That is the essence of my view of a gold standard as a means of taking currency manipulation out of the hands of a monopoly ( govt ) . I was just bemused at the thought of the government once again reneging on a face value instrument when it was embarrassingly inconvenient. If it were to happen to a gold coin, rather than a slip of paper, it would be morbidly ironic.

EBN gold down 1.45 at the open.

BOB M: Actually, same DID happen in '34, to some degree, when the populace's $20 gold pieces were rounded up in exchange for $20 paper. THEN the paper was devalued by a third. It ain't easy being a gold lover at hardly any time in history, is it?

The trick in the stock market is when to bail out and preserve a big chunk of profit and then buy gold strategically cwhen it is real cheap and let the world slide down around it. I dare to say that the biggest fortunes in gold will be made by the people that currently could care less about gold, but for some reason sell their paper and convert it to gold at the proper time. I know that this is a tough thing to do, but I firmly believe stocks have a long way to go up, unless a major war erupts. The only reason I have heard why stocks should go down is that they are overpriced, no reason of any substance. On the other hand, the only reason I have heard for gold to go up is it is underpriced. That is not enough to drive up a price, especially when just 20 years ago gold was $100 or so an ounce. To the average investor, $300 gold is still not cheap. Gold needs to take out its 1980 low of $250 or so to be viewed by the masses as cheap. Let us remember that the basic driving force of the human race is emotion.

The trick in the stock market is when to bail out and preserve a big chunk of profit and then buy gold strategically cwhen it is real cheap and let the world slide down around it. I dare to say that the biggest fortunes in gold will be made by the people that currently could care less about gold, but for some reason sell their paper and convert it to gold at the proper time. I know that this is a tough thing to do, but I firmly believe stocks have a long way to go up, unless a major war erupts. The only reason I have heard why stocks should go down is that they are overpriced, no reason of any substance. On the other hand, the only reason I have heard for gold to go up is it is underpriced. That is not enough to drive up a price, especially when just 20 years ago gold was $100 or so an ounce. To the average investor, $300 gold is still not cheap. Gold needs to take out its 1980 low of $250 or so to be viewed by the masses as cheap. Let us remember that the basic driving force of the human race is emotion.

at 8:45 NY time...EBN has gold down $3.40!!! Oh Me...Oh My!!

AL, BOB M., AURIC: Whoa! The No. 1 job of a Central Banker is to support the bond market of his host country. Wild swings in the gold and stock market make that difficult. Stock markets are on the wild side in US, UK, France, Germany, HK, and much of Asia. What is a Central Banker to do? You try to talk it down first. Greenspan tried. It Didn't work. Next step? Have a G7+1 meeting. You do, but Japan won't go along. It has a completely different problem from the rest of the world. Why should it?
Now the Central Bankers are forced to act on their own, every man for himself. Greenspan's next step? Stocks are too high, he is already worried what that could do to distrupt his main job, supporting bonds. He already told us that. He doesn't want $500 gold, but niether does he want $200 gold. That screws up his balance sheet and there is a run on the dollar. He has a number in his head for gold and he works to make it happen. Mabye a new margin requirement for all investments? Mabye intervention in the various important markets. Mabye a few personal calls to brokers to tone down their earnings estimates? Who knows. When you make the kinds of investment decisions you are about to make tomorrow you need to think, as best you can, like a Central Banker. Bob M. I can visualize your chart and agree with the shape. I can't accept the "several years" timeline. Things are moving to fast.

Notagoldbug:

You question James Grants credibility? How presumptuous! Lets consider what is credibility here:

James Grant goes by the name James Grant.
Notagoldbug hides behind one or more handles?

James Grant can be contacted through his publicly known email.
Notagoldbug hides his whereabouts.

James Grant is a veteran analyst known & acclaimed for his abilities -- on a national scale.
Notagoldbug boasts of his fortune from Real Estate. Who knows?

Notagoldbug has an un-named friend who lost millions - A fictitious person supporting your spurious argument. Is this your credible argument that James Grant does not know what he is doing? Gimme a break! And if indeed it were true, you broke a confidence of close friend ...this was between friends AS YOU SAID. Thats some friendship! He confesses a very discreet failure in his business life, and you blab it all over the Internet. If that is how a friend is treated, God help me NOT be your enemy.

Furthermore, do you know of any analyst in any market during Wall Streets 200 history, who has occasionally not been right in ALL his predictions -- OF COURSE, ...EXCEPTING YOUR INFALLIBLE SELF??

And your last two sentences are pathetically transparent. We would all do better if you will sublimate your excess negative energies to more positive and constructive avenues. Why dont you share more of your market wisdom and studies with us... or do you fear the risk of disapproval, rejection or criticism. Anyone can tear things down, but it takes great effort and dedication to construct.

No doubt you will be motivated to come back with another glib retort to the above, but frankly I do not have time nor inclination for useless, unproductive banter.

BobM @ 20:26--First of all, ditto to Lurkers comment on your 20:02 post. My question is, what happens when Governments and CBs go all out to fight deflation? They haven't had to deal with this problem for a long time.

Few ridicule Mr Dow's 12,000 view:
http://www.brw.com.au/fs_feat9.htm
BOB M: Hi! Good to see you back. I would never have believed your 250 gold forecasts a few months ago, but after hearing it from my sources here, I have been seriously considering your overall scenarios.

Warning sounds in London, Economic Mess in France, Recessionary Trend in Australia & Financial Crisis in Far-East, ALL BODE ILL FOR U.S. Stocks. Looming Crash heralds Gold & Silver bull market:
http://www.gold-eagle.com/gold_digest.html

Nekkei down 249 or 1.2%. Yen down to 113.20 Yen/Dollar. Gold down. Mr. Hashimoto, how about another press conference?

Bob M; I agree with $250. I made my calculations about Nov '96 and sold out most of my precious metals holdings based on the idea that $275 was a resonable guess at the average cost of production. The 250 is not in-- but in hindsight the selling at $370-380 looks good. Got some flak when in raised the issue here and elsewhere but all good natured.

mike--

for currencies to escape manipulation from the taskmasters,
it must have boundaries, such as gold has. there is a finite
amount available, ratio of gold/people is absurdly small,
difficult to profitably mine, survived all recorded history
as a universal medium of exchange.

paper money has no boundaries except those perceived to
be needed by the moneymakers\moneychangers as it fits
THEIR needs. there is an infinite amount, ratio of paper/people
is absurdly large, very easy ( cheap ) to print, has failed throughout
history,-------- and will fail again.

the equal reaction due gold--"for every action, there is an equal
and opposite reaction." ------is going to make such a bang as to
make the h-bomb pale in comparison.

let the short sellers continue till we reach 270oz. or better.
this benefits us. -------hello------this benefits us.
buy LOW, sell high? how much lower can gold go? silver?
what does your head vis-a-vis your gut tell you? will we
ever have such an opportunity again? i think not. we should
be jumping for joy! this is our day, with more to come. buy
low. buy low.

chaos and flux have teamed-up with el-nino' to manage the next
round of inclement weather to help the grain-train resume its'
trek up the mountain. our weather has been in a decidedly
un-settled pattern that is increasing in intensity. what is
next? more chaos for the weather, and more chaos for the
ones who tip the scales of life against the norm. flux is closer
than you-cat know.

cherokee!; ) holder of the license for the ssm, seeker of truth, and
slayer of the incendiary flotsam and jetsam of life.

Vronsky,

Ouch! My ears are burning! I figure I deserved that. I am humbled by your
and Grants prowis and will humbly remove myself from this site...

Test-EBN Gold down $3.30

The big gold miners have cash and cash credits sufficient to turn the price of gold around if they formed a marketing group ( Cartel ) much like DeBeers has formed within the diamond trade and let their wallets do the talking.

As the gold price tanks production costs exceed spot and miners who hedged complete their forward sales commitments what happens next ?

The miners will then need to decide to close substantial gold production or buy the metal at lower cost than they could produce it to stay in business.

The shorts could be hammered if an RTZ, BHP, HM, Barrick, or Placer pulls the trigger on a couple billion $US gold long contract ( Barrick alone has this kind of money in the kitty ) .

This is the event that gold needs to turn around. The big producers need to step up to the plate and take care of business before long - especially those ( HM ) that don't have a forward book.

Its the classic decision: make or buy or get out of the way.

The question remains...Are the senior producers interested in building shareholder value or to sit on the sidelines and let the shorts and CBs massacre their ( our ) assets ? After the forward sales are satisfied then what ?

BTW, although gold will continue to be sold by mineral miners who produce it as a byproduct ( Inco, Noranda ) this amount of gold is not sufficient to meet market demand.

Cheers.

vronsky- had a little storm here this PM and right after the Steve Puetz letter part I and part II were both available. I guess the mistake I have been makin is RELOAD MUST BE DONE ON THE DIGEST PAGE AND NOT WHEN THE ARTICLE APPEARS. I knew I was SLOW!!, but I am learnin.
THANKS FOR YOUR FINE WORK!!!

$250??-- DAMN

Tally Ho

Mike Chesser/good questions are you from South Carolina/ I went to school with a Mike Chesser back in'85 from said state.

Can't help but jump in with all the silver talk going on.......Story time: about 7 years ago, I got a call from a fellow coin dealer saying that "silver just tanked and this is a great time to get into some hard bullion." So, I said "fine" and bought some very pretty looking door-stops at $5.44 delivered in 100 oz Engelhards ( complete with cool serial numbers ) . To this day, I have the most expensive doorstops in town ( complete with cool serial numbers ) . My point? I've been waiting for the day I can sell and that day has not come. Of course, my advantage is that I can sit on this forever if I have to. But, a 7% bond would've done mighty fine compared to silver.

However, I've also been waiting for the day when I can change their duty title from "door stop" to "sustinence provider" or "I tolya so."

Just finished reading George Cole's recent gold eagle posting and would like to open this question to any and all: When the stock market crashes and home/real eatate prices decline and pepole are declaring bankrupcy as a result of over extended credit card accounts--Where are they going to get up the funds to drive gold prices up? Seriously. I don't get it.

How about an alternate scenario? The price of gold falls, so do the mining company shares. Who becomes a take-over target at really cheap prices? Who has the most cash? Who needs to increase reserves? Just a thought, nothing more.

If we get any more 'good news' on the disinflation front..... I find it real hard to believe that we are heading towards a deflation/depression. If we are, the shorts will have a hollow victory. The Dollar will never withstand a real deflation. Debt backed instruments will collapse. On the bright side? You'll at least have a fist full of TP. :- ) ) One less cost to worry about while contemplating life on 'the throne'.

Bob: You are making some great points. When are the mine owners going to do something and when will it be too late? At the current $1.00 per hour drop, we will hit $250 gold by Wednesday.

Geff @ 22:24-The total valuation of Gold and Gold Stocks is relatively small in comparison to Real Estate, Stocks or Bonds. It seems to me the problem for Gold has been one of Market allocation. Under deflation it wouldn't take a huge sum to chase Gold up. Maybe some one here has those figures and could post them.

Vronsky: that post to NotaGoldbug was uncalled for. If people listened to your advice or those on your website, they would be broke a long long time ago. Face it your advice regarding the price of gold has been dead 100% wrong for over a year. I only hope you don't take your own advice seriously. Keep posting your website 5-10 times a day here because there still may be a few goldbugs with money left.

Vronsky: Furthermore, James Grant is presently the laughing stock on Wall Street. His appearances on Wall Street Week damage his career more than help it. Anybody taking his advice is living in the poorhouse.

I talked to a friend in the coin business today - he is not as big as Vollmer's
or Gaithersburg Coin Exchange for bullion in the U.S. but he does a fair amount of
business. I asked him if people were buying or selling gold coins over the last week, and especially over the weekend, and he said selling. He also said that
"it has got to turn around soon" and that he was in for the long term anyway so
he really didn't care what the price went to short term. He is quite comfortable regarding his income, which I'm sure mirrors the majority of people who contribute
here.
No matter what I post on this site, I am going to be attacked. I am not anti-gold.
I just want to raise two questions, so that I can be educated.
1. Why does the gold price necessarily have to turn around soon? What is it
about gold that makes its turn around an absolute, besides that historically it has always turned around? What makes gold different from, for example, baseball cards? Most people would have no trouble accepting the fact that the sportscard
market is not going to turn around soon and may never return to the levels that
it enjoyed 10 years ago. What about gold is so fundamentally different?
2. What about people who own gold is so fundamentally different that they
cannot even accept the fact that gold might be out of favor with the buying
public? Why is everything cast in terms of conspiracies, and manipulations, when the price of gold drops? Why do you want to invest in something which is
subject to so many outside forces? How can all your intelligence ( and some people at this site are obviously very intelligent ) be at all useful for something which
seemingly depends on whims? How do you get any enjoyment out of analyzing or predicting something which can disappoint you because of facts you didn't have
and never will have access to?
Everyone at this site talks about things going in cycles because
"human nature doesn't change". Yet it appears to my untrained eyes that the people who are the most vociferous about this are the best examples of human nature not changing. I don't see anyone drawing a line in the sand and saying,
"If gold gets to this price, then I will change my view." Even if it was an
outrageously ridiculous price, like $300. In a way I admire you for having such strength of convictions. But I wonder if it also indicates that you are well-enough off that it doesn't really matter if gold drops another twenty-five dollars.

To all: If CBs have leased out more Gold than they possess, they must reimburse their gold creditors in cash. What's to say they won't pay them back at the official Government price at $35 per ounce? Any thoughts?

BOB @2151: Hmmmm, thanks I needed that. Some one will step
up to the plate. I think you are right.

geff---

the billions and billions of $$$$ that your and my parents
have saved, is where the money will come from. the generation
before us knew how to save money. until their assets are
disseminated by their heirs, there will be a lot of old money
to buy into gold. my dad has been buying gold and silver coins
for 40 yrs. and still does to this day. the mentality needed
for people to frantically buy gold is just one small chaotic
event away. the flux-man cometh, and the bull run for gold will
leave most standing at the station. this market has confirmation
from all who say-sooth, that gold is dead.--- she sleeps only for
a while,-- awaiting a most noble moment--- for a noble metal. let the
games begin, the real goldbugs are, and always have been, ready.

cherokee!; ) biter of the coin from a non-pugilistic perspective!

Make sure to visit this incredible Site http://mpfwww.arc.nasa.gov/default.html. The best Postcards of the year. Congratulations NASA! ( I know this is not gold related but some of the recent posts show uncalled for tension and a bit of diversification could prove beneficial ) .

Auric: I agree with your well taken point that there's less gold to go around than stocks. On the other hand, there are even less fine paintings and collectable numesmatics and these haven't held up so well during past recessions, although granted they have less industrial utility than gold. Upon further reflection, I am beginning to think the real wild card that could bid up gold could well be some sizeable government REALLY deciding to back their currency with the stuff. Who knows, maybe the gold Australia sold could be on its way the the Japanese equivilent of Fort Knox as we speak.

Good charts of Gold in Dollars, Yens, and D Marks. Thanks, Cap'n. http://www.the-privateer.com/g-charts.html

Lurker@: Thanks for the invite as long as there are no olives in Margaritas!

Dollar is falling just as fast as gold. Take a look http://www.abn.com.sg/feeds/currency.html

BTW about my prediction 320/333. If I am right I was obviously sober and if I am wrong I was obviously not! I had the TA for that forecast but lost it along with the shaker of salt. Good night all.

John: In response to your questions: I am one of those still betting on a turn around of the gold price.

I can visualize as you suggest that gold could go much lower and stay lower, if nothing ever goes wrong again with the administration of fiat money. I suspect that the fed's good track record since Paul Volcker took over ( and now Greenspan ) has much to do with the current decline. Fear of devaluation of the currency is something that a lot of people today have not experienced. This includes CB's like Australia that have decided they'd rather own debt of other countries than gold.

Is this an irreversible trend? We'll never know. The potential for abuse of fiat currency is something that will never go away.

Just as an aside to ponder how things could change - suppose Japan were to ally with China and the two were to become the mortal enemy of the USA. Would they expect the US continue to tax its citizens to send interest payments on the federal debt to them? In such a situation
gold might look like a more attractive asset to these countries than US debt. I'm not predicting such a thing, but it's an example of how gold could be a more popular asset than it is this evening. It's also an example of how "human nature" comes into play.

Reb-Maybe ol' Hashimoto does need to have another one of them press conferences!

John ( hepcat ) : Your post was well stated and non-adversarial. I appreciate the change in tone. I am moving 12K out of a gold fund first thing in the a.m. I began with 15K. I am buying electronics, brokerage firms and more Stillwater Mining and my outlook is very short term. I believe gold will turn, but am not "as avid " as WW has said. I have a neighbor who is a silver numismatic dealer and his business is up 20% this past quarter. ( He also grows really good tomatoes ) . Bill Buckler has reported massive new coin and bullion purchases in Australia this past weekend by individuals. I tried to purchase a 1901 $10 liberty MS-63 from Blanchard and it was back-ordered for a week. So much for anecdotal evidence.

Most of the people here are arguing very good ideas. They are also well diversified with only a couple of self-proclaimed exceptions. Gold doesn't have to go up. It could go to $50 and park for years. I don't believe it will, for reasons stated by G. S. Cole, Vronsky, and Mr. Puetz. This is not an "either/or" argument. Make money any way you can, and argue for your point of view. If we can all keep our tempers under control then we can learn. Gold is obviously going down for the next few days and quite possibly way down. My goal is to preserve some capital and buy back in later and lower. No trend lasts forever. The business cycle hasn't been repealed. Let's see if George Cole isn't right about an August stock selloff.

Oops. My last post should have been addressed to NJ.

Hello all,since gold has arrived at a very sore point,lets look at bismuth.Who can give me some info how this metal trades at what price and what are the amounts bismuth trades in?thanks for any replies.

I think I put Gold on "Diet". hahaha.

thoughts re Australia: Instead of seeing news that the RBA has sold gold, why didn't we see news that whoever was on the other side had bought? What occurs is that whoever that was likes the idea of a lower gold price, even though they just bought, because they intend to continue buying. Could RBA have sold to a broker?