Foundational Gold Trail Commentary

The Inside Story on the Gold-for-Oil Deal that could Rock the World's Financial Centers

(Sun Dec 07 1997 18:45 - ID#60253)

Will we have "Deja-vu" again?

Some people have followed the gold market from 1970. Some have followed it all their lives, depending on when you were born. Some say they were right, as the market has fallen and they held "no gold". They council from experience and a short life.

But, some have traded gold from times before. Those who trade with the sun know we will never have"Deja-Vu" again. This market is unlike anything from the past. And those with a "short life" of investing will learn from this coming future as gold will show their knowledge was limited to where they stood on the mountain!

Unlike the past, this market has an end. And this end will not be for those who have waited to buy! They see this bottom at $100 or $200 or $250, and they will buy at the turn as no fool should have held from $360! But, I say they will buy only paper if lucky!

All should make ready and be holding metal only, as the turn will move $100+ the first day and $200 the second day as comex is closed! It will trade no more from the 3rd day on! The gold market of your youth will be no more! For those who were smart from experience not to buy at $400, will look at $600 as "the deal of a lifetime".

To close,
Try to live in this outcome and see how different the world will be. It will not be the end of all things, only the changing of most things in "western thought". The "Digital Currencies" will still trade, but we will value them as not before. Anyone who has sold gold they do not have will not be allowed to cover that position. Anyone who has brought gold they do not have will not be allowed to cover that position. Many will lose all they have in a world without honor! Looking back , one will ask, "how could I have thought that noone wanted gold, when more of it was being brought than existed"? Indeed, more gold than exists or will be produced in the next ten years! And some say, "only a fool would say the market was cornered".

During that time, a gold stock in the hand will not trade on an open market! And the government of the country, of the land, of the mine, will no doubt speak with you of new taxes on GOLD!

A year has passed as the winds of change have started to blow. Waste no more time on paper gold, you have suffered enough. Play paper games no more, as the future of your family waits a decision.

(Sun Dec 07 1997 20:04 - ID#60253)

MoreGold and A. Goose,
We approach production costs, therefore we come to the end of this game. This is not lost to the oil states. They, along with three CBs are buying as this is written! The size of these orders could make the turn? We will see by way of a flat price over several weeks. If yes, then those with orders of a month delivery are to late. We approach unsettled times.

(Fri Dec 12 1997 21:06 - ID#60253)

Oil is only priced in US$ worldwide. Gold is only priced in US$ worldwide. It is important that this process of dollar backing continue, as it is the only thing keeping this "digital currency" alive! It is also important that all other currencies seek the US$ for backing, as they would not survive on their own. Why would not these countries just hold oil or gold for backing? Because oil is not buried in their back yard and real gold would bankrupt them in a minute. You see, a country can buy all the paper gold they want as that gold remains on deposit at the BIS controlled CBs. But, if they try to buy real gold outside the LBMA system the price would explode and the BIS would not come to rescue their currency. All real bullion outside the system must remain available at production cost prices ( in US$ ) for the cross trading of oil thru the LBMA. There are only two threats to the world fiat currency system at present. The oil states could stop buying US$ for oil and drop all paper gold for real bullion. Or, the masses could buy up all the physical supplies thereby breaking the OIL/GOLD/US$ bond.

The paper gold market controlled by the BIS/LBMA system is, alone equal to more than all the gold in existence. This market works like a hybrid currency using approximately twenty to forty percent of all CB gold in leased form as backing. The paper behind the lease is a form of CB/gold and is used as a "fractional reserve" that has built this huge market. This system has worked and does work well. You have but to look at the good value that is received when dollar debt ( digital currency ) is purchased with oil. The world works! But this system cannot continue. There is a limit to how far gold can be inflated in quantity using "fractional reserve leasing" as backing. The fatal flaw was found in the "forward sales" of unmined gold. The whole system counted on the expansion of cheap mining techniques to supply much more gold at a cheaper price far into the future. This happened to a degree for a few years but then just leveled off.

Now the LBMA continues to flood the market with paper gold as if nothing has changed! But it has, we reached production cost! That wasn’t suppose to happen until the mining industry had raised supply many times what it is today.

To close:
Notice that we say "they use oil to buy gold" and "they use oil to buy dollars". You should try to think in these terms as oil is the real value here. Oil functions as the true gold for the modern world. Indeed, it was only when the world started needing oil for everything that gold was dropped as backing for the US$ and replaced with oil!

The falling price of physical gold only hurts the mining industry ( and it's stockholders ) and leveraged paper buyers. All others benefit from a lower value of gold. Look now as even the western public are buying coins. They help themselves even in the face record Dow Jones.

Will the BIS try to settle this unbalanced market by destroying LBMA? Or will they drive the CBs to lease another 20% in an effort to inflate this "paper gold currency". Just like the fiat dollar, if inflated it loses value. This is not lost to the oil states.

(Fri Dec 12 1997 21:33 - ID#60253)

If you owned an oilwell in your back yard and no-one could take control of it, then oil is the best investment. But, most people use various forms of western paper to trade oil and that paper will burn in a currency fire. Make no mistake, a currency fire is now in process and it has much fuel remaining. Even Korea will find out that oil is all that counts. Their paper will die! Gold would have helped them in a different world, but for now gold is in the background as the IMF tries to add more paper to this inferno. If one owns real gold , it will be with ease to view the world currency developments. They will be truly of biblical proportions!

(Fri Dec 12 1997 22:31 - ID#60253)

What is "cloak and dagger"?

(Fri Dec 12 1997 22:45 - ID#60253)

It is a many hard question you ask. The transactions are still working, but some are "covering the back side" with real bullion. I ask you, when your worth in the ground is equal to much of the earth, is an IOU of the same future value?

Only gold has such a history book for reference. These people do not trust foolish thoughts of value from western minds. That history book is only in the first chapter.

This game is deep and one for your "007" to play.

(Fri Dec 12 1997 23:08 - ID#60253)

You will not see 80% or more of gold deals. If it was done with all to see the discount value would be lost as the world price would explode. This is not the relm of any public "wall street". At one time it belonged mostly to the Barron. Now it is large with the BIS and super rich. Wars will be fought over the lack of "visibility" of these dealings.

(Fri Dec 12 1997 23:29 - ID#60253)

I oil says "I am currency" and I will buy gold for $10,000/oz.. Then gold will be at that price. Then all the bullion reserves will ballance debt for oil states.

If Arabia says, "I will sell oil for $10US a barrel or in gold valued at $10,000" what do you think would happen?

If I had gold I would get oil very cheap! Or if I had only US$ I would have to pay the higher price of $10.

In this day this cannot be, in that day it will look correct. This has been discussed for that time to come.

I will be gone for a time.

(Tue Dec 16 1997 07:07 - ID#60253)

Mr. Allen ( USA ) :
Thank you for your thinking thru of my posts. I am told that you are "on target". Understand that using oil to back gold instead of the US$ is but one of several outcomes affecting the gold market at this time. This will be the final move as the currencies are destroyed. Gold at a much higher dollar price, as a result of oil/backing, will allow most paper economies to continue in operation. Gold will, in fact, become a "world oil currency" and be of national importance to all countries. In the same way that all oil in the middle east ( and most other major producing countries ) is nationally owned for the good of all, gold in the ground will be deemed a "currency reserve" for the good of all. During this time all other metals ( and paper investments ) will fail to hold value. Access to oil and gold will be next in line of importance behind food.

CB leasing/ lending is winding down as thoughts are changing. With the oil states going more to physical there is no point in maintaining the paper gold market. UBS was the first to be cut free. If you do not have physical yet, it will cost perhaps 100% more after the turn, if available at all. If the paper fire in ASIA burns too hot, at some point gold will not be supplied even before the turn!

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