Yes, I would very much enjoy a liaison. It seems that you and I have much in common in our understandings.
If the shorts have taken upon themselves to run down gold in anticipation of the European conference becoming unglued, then I believe they have miscalculated. I will say though that the politics could get very interesting this weekend in Brussels. If they go with the French candidate, he will be pro-gold. If they go with the German (Dutch) candidate, he will be pro-gold. By logical extension, if they go with a compromise candidate, he will be pro gold. So the politics may not matter for gold owners. Your read on this? As you have said, the important question is what will the policy be on the dollar?? As an aside, a knowledgeable friend of mine mentioned to me yesterday that the United States was able to maintain convertibility (!) with 25% backing. He assures me that this is true, but I have not had a chance today to check his assertion.
I look forward to discussing the past and future with you, as we do live in interesting times.
I remain your friend, Michael Kosares
(After some prelimary conversation about communication difficulties)
It is very interesting that rumors were planted that Belgium was to be a gold seller. This happened once before when false rumors were planted through London Financial Times and Reuters about EMI selling gold. Do you remember? This time the rumor was planted at FWN. Soon there will be nowhere to plant rumors because there's only so many bridges that can be burned. Then the short sellers will have no place to go with their fiction. As it is financial journalists had better check their sources or suffer the consequence of being played for fools. Perhaps COMEX and LBMA need to clamp down on this sort of thing as well. I had heard from one of my sources that Merrill Lynch was a major player at the end of the day on Thursday on the short side, but as always, such things are hard to verify. It makes sense though. All of this runs together somehow. Also tragic the story about the chairman of the Japanese central bank??? What is going on there?? I do not find comfort in such news. MK
Mr. Kosares, Your friend thinks much of this gold owned by the USA. It could be used to back the dollar up to 25%, no? Many come to this thinking and hold a secure thought, that as last resort, this gold will save the day! I think, many persons never gained the understanding that the American gold is kept by the "Treasury", not the maker of your money, "The Federal Reserve". It is there for good reason, as the present world currency system is not a function of American law! If the US were to place gold in the hands of the US/CB as reserves for the dollar, the BIS could claim it! It is, as a point of contention and of no real use. I think not a war would come of this claim, if it should happen! As the world currencies are now, a "new dollar" would be needed if gold were used as reserves! The present dollar would then, truly be as "paper for the wall"!
The urgent drive to create a new "reserve currency" began in the early 80s, after the last small "gold war". The road to making this new Euro did never include gold in large amounts, until the last few years! Even one year ago, the news would say, 5% or less. Today, we speak of a much greater amount! This is interesting, yes? The BIS did "hatch" this deal in a very late fashion! The future of the Euro was found to be "weak", as the Middle East oil imports onto the continent would continue in dollars! This was so from the dollar being made strong in gold. Gold priced in dollars at near production cost, offered a "no switch currency" position, for oil. This position has been unstable for the last year, and the alternative of a switch to gold was in progress! You have read my "Thoughts" before. Now the BIS does offer to "change the rules of engagement", a real reserve currency is offered!
Few do grasp what is happening and why! They think the holding of gold reserves by the Euro is of a little point, as to what good are gold reserves? One cannot use gold as Marks or Yen to intervene in currency market to support the Euro. My friend, the BIS has played the, as you say, "big poker hand"! The holding of large reserves by the ECB and the withholding of sales from the market will not only bring the end of the London paper gold market, it will, thru a high USD gold price, "make the dollar weak in gold"! From this position, the dollar will lose the "oil backing" from the Middle East! At first, all oil for Europe will be in Euro's, then all producers want "strong currency"!
There is more: Many say, how to defend Euro without much currency reserves? If gold go to many thousands US, what will be used to bid for Euro as defense? I say, these persons will find a problem on their computer screens! You see, the Euro will start as "nothing", no holdings of size, anywhere! The dollar is held as reserves as "the stars in heaven"! It is to say, "the dollar will bid for the Euro", not "the Euro will bid for the dollar"! All currencies will "flow into the Euro for trade". But, if the Euro becomes so strong, how to compete in world trade? It will be the price of oil that will make the "trading field" level! The soaring US$ price of gold will make even a 10% Euro reserve be as 100% today, in USD! Oil will become, very, very cheap in Euros and allow that economy to do well! Many other countries will see this and also want to join the new "world reserve currency" that has become"the new world oil currency"!
The politics of the ECB? It is as a "side show"? We watch this new market, yes? Sir, my words take time. I did receive two E-mail's from you.
Thank you
The Belgium story was the usual rumor stuff. It still had weight from the old CB deals and everyone still thinks more gold is coming to the market. These days, the big brokers look for any sign of gold movements by Bullion Banks. They don't really know what's going on, but any amount of CB gold trades are interpreted as the next big sale going down! Oh, gold is still moving, it's just moving from one CB to the next. The story from the BOE told the tale for the benefit of the public, the Euro is going to bring London some big loses! Merrill Lynch, et al, don'tgrasp the gold valuations by the BIS. Gold is valued by the number of outstanding claims against it. Kind of like a house for sale with ten bidders. Each bidder thinks the house is, in the bag because they have a valid bid ticket. Each one thinks he can have the house at any time,even thought nine others want it to, because all I have to do is bid alittle higher and take it! Insane, but that's what is going on! Somehow, the BIS and the major private gold holders know the total claims, as does Another. The Euro group is going to force those claims into real bids instead of just claims!
They brought the Chinese onto their side by neutralizing the rest of the Asian competition. China hates Japan and would like nothing better than to watch them die as they stick with the US and the dollar. China also picked up huge gold holdings these last few years with the help of the BIS. They will easily fit into the Euro world and enjoy a massive trading block with Europe!
As gold is allowed to drift upward to the $320/$360 area, the real gold wars will begin where they left off in the early 80s. The paper gold market is still controlled by London, and we will see tremendous paper spikes up and down as this monster is killed! That's why Warren broughtsilver for BH, it won't move anything like gold percentage wise, but it's the best they could do in a public company. The poor traders don't think physical can move much, so they trade for a few dollars up and down. Michael, We are looking at a sea change of biblical proportions, that, if it can take down London, it will most certainly eat any and all traders. CPMs included! Not a good thought, yes?
Thanks
Good evening, ANOTHER. I just wanted to say that I received your correspondence today and that I will respond hopefully tonight or tomorrow. Thank you for telling me it takes time to formulate your words. It is good to know that I am not only one who labors over the written word. I understand. My questions, given the important subject matter, will take time as well. Thank you for contacting me, Michael Kosares.
Dear ANOTHER & Friend of ANOTHER, I would like to begin by thanking you for taking the time to send your thoughts. They are very interesting to say the least. As you know I too believe that the introduction of the Euro is a seminal event -- one that will change the world financial landscape. I will try to ask questions in a logical framework for my own benefit as well as perhaps to help you to construct and add to your own thinking on these matters.
I would like to start with this because it troubles me at the moment: I have been working on this euro problem for some time -- trying to make Americans more aware of what the events you so eloquently describe will mean to their financial well-being. As I am sure you are fully aware, the American media has done a very poor job on these matters of earthshaking importance. I recently read a New York Times opinion piece on the subject and was surprised to see that the word "gold" did not even appear in the text. I was interviewed for a national network radio program recently and mentioned in our conversation that I thought the introduction of the euro would be viewed by historians in the future as the most important event of the last quarter of the 20th century (not the sexual antics of our troubled president). The press is only now beginning to understand the import of these events but still they treat it with surface analysis. With that as background, let me ask my first question and it is an important one:
It seems that both you and your friend believe that the world is splitting up into currency/trading blocks -- much as the world did for both World Wars. There has been much discussion around the world about the imposition of a NEW WORLD ORDER and international one world government. Simultaneously, we see another, opposing force at work -- regionalism, nationalism, even tribalism. What do you make of this? Is the euro a child of the forces of the New World Order, or the forces of regionalism/nationalism/tribalism? Is Europe (led behind the scenes by the BIS) an opponent to the United States? If so which countries are in which camp? Your associate seems to feel that Asia is split between the United States which has Japan as an ally, and Europe which has China as an ally ( a notion I found particularly intriguing). Where is Britain in this? Japan? And most importantly, the Gulf States, particularly Saudi Arabia?
Along these lines, I too believe that currency movements will flow through Europe because the euro currency will be gold backed. Where does that leave Japan with over $200 billion in dollar reserves, let alone its massive U.S. Treasuries' holding? Isn't it true that Japan imports nearly 100% of its oil? If what you say is true about future oil payments they will be forced to their own gold backed currency along the lines of Europe, and in the process unload the dollar as unwanted, unneeded currency. All of this, needless to say, is very bad for the dollar and perhaps you are right: A new, gold-backed dollar might be the necessary result. Your associate says that BIS helped China increase its gold holdings. Please tell me what the source of that information is, or is it simply a speculation on his part. One other item you might clarify for me is "Who is really behind BIS? The Swiss? The euro central banks? Who does BIS really represent? Why was Saudi Arabia just included in BIS? Has Saudi Arabia gone with Europe?
Please speak to these issues so that we might proceed.
I do not mean to sound naive but much of this is new to me and I would like to know who the players are and where they stand vis a vis the United States.
I remain your friend,
Michael Kosares
[USAGOLD questions in italics]
Mr. Kosares,
A few thoughts for you, as the questions are asked?
** It seems that both you and your friend believe that the world is splitting up into currency/trading blocks -- much as the world did for both World Wars. There has been much discussion around the world about the imposition of a NEW WORLD ORDER and international one world government. Simultaneously, we see another, opposing force at work -- regionalism, nationalism, even tribalism. What do you make of this? Is the Euro a child of the forces of the New World Order, or the forces of regionalism/nationalism/tribalism? **
Sir,
I would say, "Old World Order" to return. To understand/explain better: " A very easy way to view this "order", would be to simply say that the American Experience is reaching the end! As we know, world war two left Europe and the world economy destroyed. Many thinkers of that period thought that the world was about to enter a decades long depression as it worked to rebuild real assets lost in the conflict. It was this war that so impacted the idea of looking positively toward the future. The past ideals of building solid, enduring, long term wealth were lost in the conception of a whole generation possibly doing without! In these fertile grounds people escaped reality with the New Idea of long term debt, being held as a money asset. Yes, here was born the American Experience that comes to maturity today.
New world order, regionalism and tribalism are but modern phases that denote "group retreat to avoid paying up". The worldwide currency system is truly a reflection of an economy built from war, using the American Experience, the US$ and the debt that it represents. But, for the American dollar to continue as the representative of the global financial system, in the form of being the reserve currency, maturing generations of all countries must accept it, and the tax on real production it clearly imposes! In the very same mind set, that people buy the best value for the lowest price (Japan cars in the late 70s), and leave an established producer to die, so will they escape the American currency and accept any competitor that offers a better deal. Because we are speaking of currencies here, the transition will be brutal!
As you ponder these thoughts, consider that; all economies today are truly equal in production as the exchange rates are the manufactures of profit!"
** Is Europe (led behind the scenes by the BIS) an opponent to the United States?**
Sir, Yes, but not in the ways of war, as it is in the feelings of "pride" and "we go our own way". The downfall of the Russia, did allow for the Euro and all that it will build. They now see the debt of the US$, as a reserve money can be escaped! As even the US citizen will leave it's own workers to die as products are purchased "overseas", how much less will the world also flee the dollar! Opponents? No, I would say they are learners of the "American Way" as they embrace the "American Idea" of a "free world market economy".
*** If so which countries are in which camp? Your associate seems to feel that Asia is split between the United States which has Japan as an ally, and Europe which has China as an ally ( a notion I found particularly intriguing). Where is Britain in this? Japan? And most importantly, the Gulf States, particularly Saudi Arabia? **
Sir, I feel he is correct in this thought. Europe does grasp for a relationship with Asia as the US did have with the Japan. It would build a mighty economy on a foundation of oil and gold as backing for new money. As China and Arabia was once a part of the Europe economy, in a small way. They may now return with no fear of Russia. Britain? A lost nation. Japan? This one is "of the American Economy" and is to live and die by it! They will seek your Alaska oil before loss of face with gold. A dead Yen be a dead Japan.
**Along these lines, I too believe that currency movements will flow through Europe because the Euro currency will be gold backed. Where does that leave Japan with over $200 billion in dollar reserves, let alone its massive U.S. Treasuries' holding? **
Perhaps, they be like Korea? Rich in paper until the world says, "this paper, it is not good"!
***Your associate says that BIS helped China increase its gold holdings. Please tell me what the source of that information is, or is it simply a speculation on his part. ***
The BIS is the gold broker for all interbank sales/purchases. Bullion Banks are for sales to other entities. I think, at first, China was leverage against the oil producers. Then Arabia was allowed into BIS for Euro.
**One other item you might clarify for me is "Who is really behind BIS?**
Perhaps, "who control them"?
**The Swiss?
Yes.
**The eurocentral banks?
Yes.
**Who does BIS really represent?
"old world, gold economy, as viewed thru modern eyes" or " way to move from US$ without war".
**Why was Saudi Arabia just included in BIS?
answered.
**Has Saudi Arabia gone with Europe?
Yes.
Sir, there is much more to this, but we talk over time, yes? I will be away for perhaps ten days. We speak again.
Thank You
Dear ANOTHER, my great respect for you has just deepened further. Have a pleasant ten days and I will consider your words. Yes, we will talk over time. Thank you Mike Kosares
Dear ANOTHER:
I read your last correspondence with a great deal of interest. One question that immediately comes to mind is what exactly do you mean by old world order reasserting itself? The old European aristocracy? Is the political/economic power in Europe as it was prior to World War I? Also, if Europe undermines U.S. does it not also undermine its own security? Is not the Russian bear far from dead but simply in hibernation? Is Europe able industrially to gear up its military defense industry quickly enough to replace U.S. protection? I would think that the same applies to the Gulf and Saudi Arabia. Iraq and Iran are not friendly countries and Europe cannot protect the region from unstable societies. One would think that the U.S. would protect corporate interests in that part of the world no matter what happens in Europe, but if America goes bankrupt it will have other concerns.
On the subject of gold: Do you have any information as to the backing on the euro percentage-wise? Does it actually make any difference if its 10%, 20%, 30%? Or is the psychology the important factor? Any gold backing would make the euro more appealing than the dollar.
This morning a Portuguese central bank governor implied that gold was drawing such a nice interest rate that Portugal would probably would not sell gold. Implied in that statement is a willingness to lend. What would happen if borrowing entities suddenly found themselves unable to pay back their gold loans. Wouldn't this undermine that nation's balance sheet not to mention their sovereignty? Do you know of any instance where central bank gold loans have gone bad? And by the way, just what do you as a central banker take for collateral on a gold loan? Is not gold the ultimate, liquid collateral? Do you take back a piece of paper representing the right to future gold delivery? What good is that. To me it is pure folly. I've never understood this idea of a gold loan from a practical point of view? By its nature, it must by necessity be an unsecured loan.
Along these lines I have one more related question, then I must go. How long do you think those playing this game of paper selling can continue? We have heard for many months that there will come a time when physical demand will force the shorts to bid up the price to cover. It has not happened. Why not? Can LBMA play this paper game forever? Are you and I underestimating their ability to play the magician in this regard and keep us all mystified?
Though we are in a new market because of the euro, there is still much of the old because of the Bank of England and LBMA -- do you agree?
Thank you
Michael Kosares
Mr. Kosares,
I offer simple thoughts for hard questions.
"And by the way, just what do you as a central banker take for collateral on a gold loan?" (USAGOLD question)
Sir,
I think, the currency of a country does no longer hold "backing". This term, it is used often, but is not correct. Today, all modern money does have "reserves", and such is used only for "the dirty float" in currency warfare. As in war, the larger and better equipped army in "reserve" does rule over the lesser force. Perhaps we should think in this way: in "cold war" of modern exchange rates, "digital currencies from reserves are used", however, when "hot war" of major default does begin, "nuclear weapons of GOLD" are deployed!
As in real war defense, of today, some countries hold a much lesser army, and depend on "the alliance" with other stronger nations to defend them. Such it is with the currencies! Many states hold but a few "digital currencies" as reserves for currency wars and see no need for "gold nuclear weapons". They sell off these weapons and do join "the currency alliance" of stronger nations. We see this in Europe, yes?
Time does record, that many young persons do mature without a history of "currency defeat" in money wars. These same do attain positions of authority with respect, to handling the currency "reserves" of a nation. It is in their "education" that the private citizens do lose much wealth. We proceed to such a time today, as gold loans hold only paper collateral! The motives of all Central Banks be not the same, with respect to "gold loans". A small number do travel the road of "monetary union" and sell gold as a commodity for funds to reduce debt. These officials thatsell for this purpose alone will be viewed as "much the fool" by voters, as gold does become a "great value" in the future. Some CBs also "lend" gold for a small return, as they see little difference in this metal to holding the Yen reserves and also receiving , perhaps 2%! These Central Banks place the gold with a private Bullion Bank. The gold is sold and the proceeds wait in this BB and draw market interest. The CB does have a "letter" claim to this "proceeds" and views it as "the same" as other "lent out currency reserves". The BB uses this "proceeds" as collateral to create contract with gold mine for future purchase of "new mined gold". The CB does also "attach" this "future gold" and views it as "lent out bullion reserves". This "attach" , it could claim the entire assets of mine in default, yes? Perhaps, we can see that "default" can also occur from other than "low gold price"? In currency wars of future, workers walk from doing job, as in Indonesia? A mine of few workers has little value, but often we see banks do claim "things of little value".
The key for this "new gold market" is found not in the process of gold loans and sales, but in the "who is the new owner of this metal"? Noone did see clearly, "the other side of this". Always the view was, "see how the fools sell the gold and drive price low", not "who is buying all of this new supply at such cheap prices and giving up interest on currency also"? One should consider, "how much currency has flowed thru gold" over these past years! It is a great deal of wealth! Can not one see the clear view, "has not gold made the dollar strong as world reserve currency"? This happens in a time that all say the dollar would fail! Perhaps, "this new gold supply", it was for the purchase of "time".
If oil was about to go off the "dollar reserve standard" and allow pricing in all currencies, and "the physical gold currency" was to be the most economical way to purchase, then I would say, "time was a valued purchase", yes? It is in this "purchased time", the world finds the creation of a "new reserve currency". The dollar, is today, strong in nature of a low gold price. Tomorrow, it will be the Euro that will find strength in a low gold price! Perhaps, these dollar "gold loans" will be called in to become "Euro gold loans"? "Gold priced in the thousands of USDs does not change this currency, it changes your perception of wealth"
Thank You
Another
Mr, Kosares, I offer these replies to all. Send the next group as able. Thank You
From Richard Burke: Another, thank you for your "Thoughts". At this point I would appreciate your opinion as to whether the following is what you mean about the above relationships. Assume that one $US = one $EU to start and that gold is $US300 and oil $US15. Then, 1 oz of gold will buy 20 bbls of oil. You say gold will rise very much in $US. Say gold rises to $US900, but is still $EU300 (or will gold rise but rise less in $EU because of the gold backing?). Then, oil will be $US45 and $EU15. Europe as you say will be able to developits industrial base on cheap oil while the US is stuck with high priced oil.
ANOTHER: Mr. Burke, You have written the general outcome! Also, note, three $US would then equal one $EU. However, the difference in gold, as expressed in each currency may be much, much greater! I would not say, the US would be stuck with "high priced oil", as a new US dollar could be formed much fashioned from the Euro. If US gold is "revalued" upward to the new true level, what persons, worldwide may be stuck with would be the "old US$" and all that it could not buy! Perhaps shareholders of gold mines will push for recall, as most gold loans today are in the US$ reserve currency! I think, much will be the battle in this area as investors think first to buy physical gold, not gold in ground contracted for delivery and payment in future bad currency.
It is to say, "the foot will be in the other shoe", yes? Thank You for this thinking.
From Johan Campher: It is only very recently that I started reading the discussions on the Kitco web site. I then picked up something about ANOTHER moving to the USAGOLD web site. This is how I discovered your site. Unfortunately, as a relative uninformed, I find reading ANOTHER'S thoughts very difficult,because of the many abbreviations and acronyms. For you, and others in the USA/Europe it might be common knowledge. For some, not so common. For instance, what is the BIS? Could you ask ANOTHER to spell out the full name with the abbreviation in brackets before using it further in the text? ... or is there a web site where all the abbreviations could be found? How about a list of important abbreviations your own website?
ANOTHER: Mss. Campher, Bank For International Settlements! The Kitco group has much on this. I do think many there, that I spoke with, have better minds than myself. They do much to search out the truth! I will have these proof- read in future for better understanding. Thank You
From Polloa: All of these movements and realignments depend upon an electronic system or systems to support the transactions. Yet the Year 2000 problem seems to threaten the entire world's systems. ANOTHER, has this been discussed or acted upon that you know of? And if so, what actions have been taken?
ANOTHER: Polloa, I think, many will "cross this bridge at the last moment". It is a well known, considered problem that, if not fixed, will take the "Western World" back in time many years. Perhaps, luxury will be lost, and many will live as "third world countries". Some may find this a "better outcome" in life? However: Our world economic system does survive many problems. Humankind must battle the war and distrust with great intensity. Always, we find, it is the honest person of simple means that leads the lost! These same citizens will find a security for the future that comes from the past. History has shown the physical gold does hold true against all odds. If gold can stand against war, it will carry your wealth during the time of Y2K.
Thank You
From Tom Young: Also, I found many of your prior posts to be, well, lets just say in need of interpretation. Your statements on $30,000. gold are improbable but not impossible. I agree with you on holding physical. As I have said so often I will judge your words next January. Not that this "judgment" affects you in any way. It is just my way of saying I don't disbelieve your thoughts or words and will let time tell if you speak true or not.
ANOTHER: Mr. Tom, Above, is only part of your questions/statements. I add this: All of life is "improbable but not impossible" and "in need of interpretation."! I offer these "Thoughts" to "open minds", such as yours, for "consideration and discussion". It is the "American Way", yes? This be not a good world, where secrets close doors and hide truths. I do feel ALL persons are very intelligent, and can understand the road maps of life. For many, "the answers are not found at the end of our travels, but along the trail we walk together"! We watch this new gold market, together, yes? Thank You and all of Kitco
From Lyle Montgomery: ANOTHER, If there is substantial backing of the Euro by physical gold the $US must certainly suffer. Enough physical is available if interests are pooled to make the Euro the preeminent money. Might this not precipitate a severe reaction from the US - possibly even covert action to in some way minimize potential backing by gold?
ANOTHER: Sir, Yes. I do look for much destruction of the gold market as this progresses. I think, much of this "fight of money" will happen between 1999 and 2000, as the "gold trading center" in the middle east will be completed by then. If the Euro does fail, gold will become the "world oil currency". We do know this full well, "the Central Banks will horde all gold and buy any offered if this new European currency does not work" and "debt currencies fail". If this does comes, no paper asset of world economic system will survive, nothing! Not a good thought, no?Thank You
From sharfin: You will have to do better than this. I have read all of another's writings and what I read now is a sham.
ANOTHER: Sir, Thank you for reading my thoughts, as I do read yours! As in all life, "events make truths", not the words of Another. "time will prove all things" Thank You
From PH in LA: As the Euro is phased in, how will individual member currencies fare in relation to the dollar? Will a fall in the dollar result in holders of European currencies, real assets (such as European real estate), and/or bonds (in euros) reaping a windfall vis a vis the dollar? Or will gold be the only way for Americans to safeguard assets in the coming turmoil?
ANOTHER: Sir, This change in "World reserve currency" will be "the unfolding event of our time"! As in conflict, the deployment of forces/assets is never a final decision! But, for persons of simple thought, such as I, we do well to "follow in the footsteps of giants"! Today, this trail does show deep prints from the weight of GOLD! For myself and my country, I stand with the proof from the past, I stand with gold! I thank you for your effort, "for all your days, walk tall with wealth"!
Mr. Kosares,
I know you have also seen where the Rothschild prepares computers for a change , perhaps to Euro market gold! Much will be the commissions earned in this area. Some investors say "gold loses face in low price" and "gold is a dead asset". I say, a travel to London will offer much education, as the "city" trades more gold than exists!
Sir,
I offer this for consideration by all.
Do you know the value of gold?
From the day of our birth we are taught to value all things using the one factor alone, currency! Can one contemplate the value of all possessions in other terms? Do you not have to think first as to "how many dollars is that worth" then "how many dollars is this worth" to compare two items? If it is deep within our mind, that we can know value only in terms of paper, to this I ask, can one know value at all!
The Western mind does focus on "what I buy today for the lowest price". Yet, in this modern world economy, the lowest price is always the function of "the currency exchange rate"? The Yen, it is compared to the dollar today, and used to purchase goods. One year later and the Japan offers these goods for much less, as the Yen has fallen to the US$. The currency value of this purchase, was it "true " today or a year ago? Understand, all value judgments today are as subject to "exchange rate competition"! It is in "this exchange rate valuations" that the private citizen does denominate all net worth! A safe way to hold the wealth for your future, yes? You should ask a Korean or the Indonesian ?
One should grasp that "today, your wealth, is not what your currency say it is"! In this world, paper currency is for trade, only! It is for the buying, selling, earning and paying, not for knowing the value of your family holdings! Know this, "the printers of paper do never tell the owner that the money has less value, that judgment is reserved for the person you offer that currency to"! Again, I ask, how can we know a true value for our assets, when they are known only in currency that finds it's worth, as in the exchange rate for another currency?
Many will "think long and hard on this", but will find little reason for this position. For it is in your history to know only "things valued in paper terms". Some say, "I hold investments of great increase these past years, and am much ahead of the inflation, if it should come". I say, "your investments, worldwide, have moved little, as it has been the currencies that denominate your assets, that fall a great deal". The price inflation that comes, it is larger than your vision can see! Your past, holds little of knowing value outside of currencies, this does block the good view!
We watch the approach of this change, and discuss it, together, yes? It will truly be "a gold market as none before".
There is more: Today, the world reserve currency holds the exchange rate of one dollar equals one three hundredth of an ounce of gold! It is this rate, that makes the dollar, not as the Indonesian currency. Perhaps a secure thought? However, even this 1/300 rate is also subject to "exchange rate competition"! This new rate was purchased by the acceptance of the "new paper gold" as equal value to "the physical gold"! This large, new paper gold market was created to increase the supply of "traded gold". The physical gold supply alone could not be increased to bring the dollar into the mid to lower 300s exchange rate area, there by making it "strong in gold". But, as in all new markets, for the "traded gold arena" to accept a "paper gold item" in great amounts, it required new colatteral/assets to give this paper item "integrity"! That "integrity" was found in oil!
Some say, "gold fall because noone was buying it". I say, "gold fall because many were buying it"! They buy as the "trading market" was made "much fat" with added paper! Understand this: The US$ price of gold could only fall if a market existed for paper gold priced lower each time of offer! If the price did not fall, this paper market "could not function" as "it would not be profitable to the writer"! It was, for many years, in the good interest of all, for the dollar to find a gold price close to production cost. That time has now much passed!
One day soon, this "paper gold item" may lose it's "integrity from oil" by way of "competition" from a new reserve currency! In that day, "paper gold" will rush to become "physical gold" as "dollar gold contracts" rush to become "Euro gold contracts". You see, the value of the gold lost from the Euro CB sales will return in the form of a "Euro strong in gold". The "gold reserves" held for the EURO will offer strength, but it will be the total destruction of the dollar gold market that does make " this currency go home"!
When the future comes, and one holds asset values in dollar terms, many may discover, there wealth was not as this currency said it was! In that day, you will know your assets, as expressed in the real money of our fathers! This new dollar/gold exchange rate will end your search for the
"the true value of gold"
Thank you
Another
Michael,
This article (see below) puts a different light on the Euro. I think a major effort was underway for many years to unseat the dollar. It was only after the gulf war politics that the EURO group saw a way to use gold to draw in the oil producer currency backing. It was clear that the dollar was going to someday fall from reserve currency status because of it's compounding debt load. With nothing to replace it, gold would become the world oil currency, as Another says.
Initially, they built the Euro with little talk of gold, all the while building a paper gold market that is dollar settlement based. By increasing the Gold Trading Market with paper gold, it not only drove the gold price down, but gave these contracts credibility as they could be settled in a strong dollar via gold. The hook came when they suddenly wanted gold as part of the reserves for the Euro! Now the BIS just stops supporting the London market with Central Bank gold loans and sales. By the time for the Euro to debut , gold starts to rise through the $360 area, there by breaking the entire dollar based paper gold market! Every oil state, and anyone else that is holding paper gold, will try to first exchange it for physical. After that guess who will be waiting with a brand new hard world reserve currency, ready made for converting dollar gold loans into Euro gold loans!
The dollar will not necessarily be destroyed by inflation at first, but you can be sure it will collapse in terms of gold. In this process, if everyone try's to spend their overseas dollars (presently Eurodollars), the US will no doubt invoke foreign exchange controls and most likely create a new currency. I think, that's where ANOTHER gets the $30,000+ business for existing (replaced) dollars and I don't doubt it one bit. This is why everybody keeps getting lost in the falling gold price. They keep working it like it's the old physical market years ago. It's not the same. Anyone that try's to leverage it in any way will just keep getting pounded as London prints gold for all their worth until the Euro takes effect. I think, sometime in 1999 or a little later, physical gold will stop all trading on US$ markets, it has to, no other way! The Euro gold market will exist, but selling it in Euros will, no doubt be an interesting process. But, a much better prospect than trying to convert mining shares or any other paper gold contracts.
To the best of my knowledge, this is my interpretation of the current market.
Best Regards
Friend Of ANOTHER
ATTACHMENT:
FORMER BRITISH DEFENSE SECRETARY WARNS AMERICA ABOUT A UNITED EUROPE
(As summarized by Friend of ANOTHER)(May 27, 1998) In a speech yesterday at the American Enterprise Institute, a conservative think-tank, former British Secretary of State for Defense, Michael Portillo, warned that European monteary union and a unifed European foreign policy will erode the Amerian alliance with Europe. He said that a united Europe will benefit neither global security nor free trade saying that its future foreign policy could lead to the emergence of a bloc in opposition to the U.S. He said, "What I really want is for a debate to emerge in the U.S. about what the European movement is really about. Americans essentially are comitted to global free trade, while many in Europe are not. And I think they need to be careful about whether a common foreign policy in Europe might lead to a silencing of the British view, the emergence of a consensus to do nothing, and the emergence of a distinct view that there was a third way, a new and positively anti-American way."
Dear Friend of ANOTHER: I didn't know the oil states were holding gold paper. I thought they were in physical metal. Reports show Saudi Arabian physical demand skyrocketing. Also do you have further reference on the Portillo comments? By the way World Gold Council recently published a graph on the level of estimated forwards and deferreds (in London) at over 2000 tons? Is ANOTHER aware of this figure? The name of the report for your interest is "Utilisation of Borrowed Gold by the Mining Industry" by Ian Cox and Ian Emsley. Cox is out of Samuel Montagu; and Emsley, Anglo-Gold. Personally, I think the bullion bank scheme is running out of gas simply because they are having a difficult time talking central banks into mobilizing. When the euro comes on line, we will know what is going to happen with reserves. Some say that mobilizations are already banned, or at least hampered through Maastricht. I would also like to find out more about the Swiss operations. Do you have access to the bill passed by the Swiss legislature yesterday?
Thanks
Michael Kosares
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Mr. Kosares, This "new gold market", it is interesting, yes? The Euro is about to create "much stress" for bulls and bears, in gold! Perhaps, we discuss the past and the future? You have a "more private" e-mail address, as it be for eyes of three, yours, mine and Another.
Thank You