USAGOLD Discussion - November 1998

All times are U.S. Mountain Time

(11/01/1998; 06:30:11 MDT - Msg ID: 873)
Prospects for the credit card business
Mr. Greenspan and the Clinton administration know only too well that it is the confidence of the US consuming public that drives the GDP and the stock market. With all the hedge fund and big bank financial troubles and the occasional stories of the meltdown in credit and bond markets, I raise the question of what is happening in the credit card business. My mailbox continues to fill up with offers to refinance my supposed card balances with 6 to 12 month introductory rates of as low as 3.9%, before the double digit rates kick in. One of the consuming public's financial problems is obviously credit card balances. Despite the best economy the US has ever known according to the benedictions from DC, this debt and attendant defaults and bankruptcies are also increasing. If the economic naysayers are correct and this economy goes into a decline, in large part from the many events posted in this FORUM, then we are all in for a shock. A quick look showed a leading credit card company's BB+ rated bonds yielding 8.2% to maturity in 2020 and still selling at a 2 point premium over parity. This would not appeal to me despite the 3% premium over similar term TSY debt, and should interest rates in the US rise as a credit crunch become obvious, one would not want to be tied into a long term bond that might have a rather illiquid market. This also raises the question as to how such companies might raise future capital to serve present and new customers, and what future card interest rates might be. Present rates from l2 to 20% are already causing problems to many. There is little if any collateral behind these card loans except the armtwisting threats of a collection agency and perhaps small claims court. Perhaps wiser heads can enlarge on this subject and its ramifications. Note that I have not even mentioned the home equity loan business that is being promoted by mail in much the same fashion, and poses the very real threat of leaving the financially overextended literally "homeless".

Penny Nichols
(11/01/1998; 11:38:29 MDT - Msg ID: 874)
A front page article on the Oct 29 issue of the "Financial Times" stated that Japan has reduced holdings of US Treasuries greatly and is now favoring the "Euro" because of LIQUIDITY. It is remarkable that we now have a mega player who is expressing doubts about the "full faith and credibility" of Uncle Sam. It certainly reinforces what ANOTHER and FOA have been trying to make us understand.
Peter Asher
(11/01/1998; 12:42:49 MDT - Msg ID: 875)
Happy Halloween
Just in time to celebrate the current holiday! The trick of default and devaluation was deflected by the treat of 95 billion dollars in IMF loans. So, Nations A, B, and C turn money over to Nations E, F, and G to pay creditors. The funds keep changing hands, circulating the global scene as ledger entries, earning interest as they go.

I remember, as a teenager, one friend saying to another to whom he owed money, "I'd rather owe it to you than do you out of it." As long as you call a loan "a loan", it's not in default. All debt gets "squared off" by (a) the earnings of increased production facilitated by the new capital, (2) confiscation of tax payers' money or (3) default. Therefore if, for example, the contributing nation spends less on, say, welfare, in order to hand over funds to the receiving nation, who then increases production capability, things could get better. But, if potential productive capital is depleted in order to lend it to other nations for various squanderers' activities, then things get worse. Sooner or later, original debt and the growing interest balance due will overwhelm the system.

So we have here on Planet Earth a small group of Mr. Spocks, applying Vulcan logic to the games of currency, stocks, bonds and commodities and being amazed at the antics we see, while there's a mass of Dr. McCoys out there saying, "Gold's dead, Jim."

This brings me to the subject of trading "spikes" mentioned by MK and others in recent posts.

First of all, since Gold is a single entity in its trading mechanics, it will behave much more as a thinly-traded issue than as a stock market or major stock issue. Secondly, Gold is more likely to be held as a cash potential.

Selling pressure can come from something being out of favor or it can come from a desire to convert a large quantity to cash. It is basic to trading that to sell a large quantity of stocks or commodities, one must "sell into strength." So if there is "overhead supply," waiting for strength to sell into, then a run-up in price will be met by a quantity of selling, and hence the spike.

Only when the desire to hold gold creates more demand than the desire or need to sell it, can the price move up and stay there. Copyright by Peter Asher 31 Oct l998.
David Linkley
(11/01/1998; 13:28:44 MDT - Msg ID: 876)
"This bank does mate with the great tiger of the orient..."
China eyes euro for its huge reserves

SHANGHAI, Nov 1 (Reuters) - China plans to convert a "serious amount" of its $141 billion in foreign exchange reserves into the euro after the new currency makes its debut in 1999, European Commission Vice-President Leon Brittan said on Sunday.

China's foreign exchange reserves are the world's second largest after those of Japan.
(11/01/1998; 20:29:11 MDT - Msg ID: 877)
December gold now $293.60
still ho...hum. But the new week begins. Nite' all.
(11/02/1998; 06:34:18 MDT - Msg ID: 878)
Euro and Socialist tendencies in Europe
Another, FOA and others... Any comments about the recent
socialistic leadership elected in Germany and the consequences this has towards the Euro? The new German PM is becomming so bold as to attend the German Bank's meeting to push for lower interest rates.

Thanks in advance

Aragorn III
(11/02/1998; 07:42:33 MDT - Msg ID: 879)
A week old, yet still ripe. As always, read between the lines...
Strong euro forces US fiscal discipline-McDonough

NEW YORK, Oct 26 (Reuters) - A successful launch of Europe's new 11-nation currency will force the United States to maintain disciplined fiscal policy, said Federal Reserve Bank of New York President William McDonough.

"What a successful euro will achieve is that, for the first time since World War II...if we lose our virtue of fiscal soundness or have the wrong people at the Fed... you'll have a reserve currency...the euro, to go to," said McDonough, answering questions after speaking at a conference on the euro.

McDonough also pointed out that the euro will put the eleven member countries in the same position towards negative or positive external shocks.

"There will be sufficient similarities among the eleven countries that an eternal shock will affect them all positively or negatively," McDonough said while commenting on the impact of economic convergence through continental Europe.

"Euroland will be less subject to asymmetric shocks than the economy in the United States," he said.

Turning to the financial sector after the launch of the euro, the New York Fed chief said he foresees a "rather significant problems for (European banks) to work through."

McDonough expected European banks to lose revenues in the foreign exchange area after the launch of the euro and see "much less use of bank loans and much greater use of fixed-income" financing for European corporations.

He also expected a "rather difficult" period for European banks following the January 1 launch of the euro.
Aragorn III
(11/02/1998; 08:06:06 MDT - Msg ID: 880)
scp--it is a demonstration of PM's myopia, or a "public relations" ploy and no more
On the "eve" (two months away) of the permanent fix of exchange rates among the 11 euro members, the bigger picture must be seen and appreciated. Positioning for the preferred exchange rate must receive priority over the PM's suggestions for economic stimulation...unless the resulting weakening of the mark has become the goal. This is no time for rogue actions. Coordination is the key. See the attached article.
EU sees room for euro-zone rate cuts - Klima

POERTSCHACH, Austria, Oct 25 (Reuters) - European Union leaders believe the conditions are right for interest rate cuts in the 11 countries taking part in the single currency, Austrian Chancellor Viktor Klima said on Sunday.

Klima, briefing reporters after a two-day informal summit of EU heads of government, said the goal of economic stability also required efforts to head off the threat of deflation following financial turmoil across large parts of the globe.

"There are good conditions for low interest rates in the euro zone. Further convergence of interest rates is desirable," said Klima. "Inflation is at historically low levels."

Klima said efforts by euro states to reduce budget deficits and cut government debt had given a high degree of stability to the single currency, due to be launched by 11 states on January 1, 1999.

But the creation of the single market and common currency was not an end in itself. That newly-won stability should be used to promote growth and create new jobs, he said.

Four EU countries participating in the euro will have to cut their rates to 3.2-3.3 percent, the level of the core euro countries, by the end of the year when the European Central Bank will begin setting a single monetary policy for the zone.
Aragorn III
(11/02/1998; 08:49:20 MDT - Msg ID: 881)
Monday...typing PM when FM is what was meant...(sigh)
More about what we already know...
11/2 Bundesbanker Says Convergence 'Difficult' if Germany Cuts Rates
Cologne, Germany, Nov. 2 (Bloomberg) -- Bundesbank council
member Peter Schmidhuber said the process of aligning 11 national interest rates into a single euro currency rate would be "much more difficult" if the Bundesbank cuts German rates before the Jan. 1 start of the euro, German newswire VWD reported.
Schmidhuber, speaking at a banking conference, said that would be especially true since Europe's common currency will start with interest rates close to if not at the German-French 3.30 percent rate. Schmidhuber said the "Bundesbank's sovereignty over monetary policy is not that complete anymore," indicating a German rate cut, if any, would have to be taken in cooperation with monetary union members so as not to complicate the process of aligning rates for the euro, VWD reported.

German Finance Minister Oskar Lafontaine will attend the
Bundesbank's policy council meeting on Thursday, the German
central bank said, where he is expected to urge council members to lower German interest rates.
(11/02/1998; 17:15:09 MDT - Msg ID: 882)
From Fleckenstein
***My buddy Colin Negrych had this to say about the how the world works. "Businesses fail, and banks bail them out. Banks fail, and big banks bail them out. Big banks fail, and governments bail them out. Governments fail, and the IMF/World Bank bails them out. The IMF/World Bank fails, and the G8 bails them out. One of the G8 fails, one of the G7 bails it out. This process has been ongoing for decades and it is near its end. When the G7 fails, and it will, the bailouts will end. The worst financial/economic disaster of this century will follow."

Well, I am certainly not rooting for Armageddon because that is something that none of us wants, but Colin's logic is hard to argue with. That's why I share all of this. If one is prepared for trouble when it hits, it doesn't hurt as much. It remains to be seen how bad the outcome of all this government intervention will be. We just need to be alert.***


(11/02/1998; 18:47:15 MDT - Msg ID: 883)
Unomas, the battle has already begun
We are way past the time when voting can change anything. The agenda has been set by the rich elite that run governments behind the scenes. Clinton is a stooge for these men and women, as are most of the people who have robbed us of our wealth, our heritage, and soon will take what is left of our freedom. The blueprint can be descerned in the publications of the UN. Gold will be one of the few things - besides food, water, guns and a really good hiding place - that will be less than easy for the new order to take away (for our best interests of course). Up to 3 years ago, I would have laughed at the notion that the new millenium would usher in the worst global maelstrom ever to take place in the world. After reading many books that use the govt's own records to prove their agenda, I have no doubt that it is coming fast. The UN openly states that they are in favor of population reduction from currently 7 billion to 1 billion. Any crisis in the near future will used to mark the end of our country and the beginning of global martial law. If you think this is all hocus pocus, I am glad. I am not going to be one of the 6 billion. History is too full of similar events. Our technology is better, but human nature is all too much the same. Hitler will be considered a piker compared to those who will assume his mantle.
(11/03/1998; 04:04:22 MDT - Msg ID: 884)
Dec. gold now $290.60

Lower bollinger for both daily and weekly gold price hovering around $289.00. Statitically speaking gold is unlikely to drive much lower than $287.00 before a turn around.

Listening to NPR (National Public Radio), I heard and had to work at that, that a Mike Egeln or Engler responded to NPR's reportage of American's savings rates in the negative that he wasn't concerned because stocks were up and people had lots of equity in their homes. So what would happen if homes went down as they did in Peoria in the mid-eighties when Catepillar was the only game in town and they were having troubles? So what would happen if the stock market went below purchase prices? This negative savings rate, which hasn't been this low since 1933, would look a lot worse.

I believe cycles are a priori (or that which is before all things). Cycles are unstoppable, skewable, but unstoppable.

(11/03/1998; 10:05:19 MDT - Msg ID: 885)
Michael, thanks for the market report....

I've been staring at my computer for the past 24 hrs. trying to figure out how to pose the question about the POG......Your update answered or at least addressed the thoughts careening through my head.

Now I have different questions: Are these people insane? Do they actually believe that there is a bottomless pit of money at the Fed and the game will go on forever?

How can they possibly think they'll win?

Buena Fe
(11/03/1998; 10:21:24 MDT - Msg ID: 886)
My head (emotions) is telling me to sell my short-term gold position. But my guts are telling me to double up and expect $325 by November 30th. Humm! I think I'll bet long! Keep Well!
(11/03/1998; 11:09:09 MDT - Msg ID: 887)
Goldfly.....Quick Thought; then I have to return some phone calls
It's not so much that they believe the bail-outs will go on forever. They are trapped with no where to go; nothing to do but feed that position and hope that when critical mass is achieved somebody will be there to bail them out, and the hot potato moves thankfully to the next pair of hands. It used to be that we applied Newtonian physics to the markets -- what goes up must come down; for every action there is an equal and opposite reaction. Etc. That's no more. In the new age, we must apply the principles of Einstein -- relativity and critical mass --in other words the atomic bomb, a one time hyper-critical critical event achieved when the markets reach critical mass. It suits the Age in which we live. Since we have never been here before, we do not know when/how it's going to happen though we know that the gauges are are now in the RED and the steam is blowing through every seam.

(11/03/1998; 11:10:57 MDT - Msg ID: 888)
Buena Fe.......
I received an interesting phone call from an old pro ex-Wall
Streeter who has some interesting ideas about the technical chart on gold. I was going to post these at InfoStream but I will post them here later instead. His ideas relate to your post.
PH in LA
(11/03/1998; 12:13:57 MDT - Msg ID: 889)
What about silver? Seems very repressed, too.
Back from a road trip and wondering about the same fundamental questions: ie. what is holding the gold price down in the face of an impossible position re. the hedge funds, etc. I like the explanation being floated by Friend of Another and USA Gold. Nothing�else makes any sense whatsoever. The inauguration of the Euro in January offers the only (semi-)orderly way through this whole mess and we all expect the fireworks to start then.

But markets always anticipate events. Are we (at this site) really the only ones�who have figured this out? Shouldn't we be seeing things starting to take off already? Michael, are physical gold sales really beginning to fly? We have heard that demand at the US Mint is over twice the norm for 1998. Are you seeing the same uptick?

Also: What about silver? We have read for some time that the same short position overhangs the silver market, too. But no one ever talks about a "silver-carry" trade. Is there actually one of those, too? Are the hedge funds also up to their eyeballs in impossible silver trades?

Or is silver just following in the psychological footsteps of gold. ie. potential investors just too stupid to do anything but follow the old patterns? All it would take is a few savvy ones buying to put the pressure on. Or is the old order (hedge funds, central banks, etc.) sitting on the price of silver just to be sure that the spark of a rally in silver doesn't set off an explosion in the gold market by accident?
Gold Dancer
(11/03/1998; 12:49:05 MDT - Msg ID: 890)
Gold-that big short position
8ooo tonns of it. That is a pretty big number. But I for
one don't really believe it is as simple as it seems. I don't disagree with the number just on its significance. What if the intention of the central banks was to not get
back all the gold? That is the only thing that makes sense
to me.

What if their intentions were to create a big demand for
the Euro. I believe it states in the gold loans that they
must be paid back in gold OR a hard currency. Is the Euro
not a hard currency? Does the Euro not want and desire to
be a world reserve currency like the dollar? So just how
do you create a big enough demand for the new kid on the block?

You know that if there is not a BIG demand for your new
currency it will go up in smoke. Plus, there needs to be
a lot of it created if it is to be a world reserve currency.

Enter the gold lease trade. The CB's don't wan't the gold
back. They still have enough of that. They need a big demand
for Euros to come into being. So they are happy because they
know that they can never get most of this gold back. No
problem they say to the hedge funds. Pay me back in EUROS!!
NO, the US dollar is not a hard currency because it is not
backed by any gold. Only EUROS will do. It will be the only
hard currency in existence.

Now we have built up a demand for EUROS which will feed
the bull market for EUROS and gold at the same time.

The CBs will then have EUROS to lend out. In essence the
market has traded US dollars for EUROs on a massive scale
even before anyone realized it.

That, or something close to it, is what is going on.
That 8000 tonns is in no way a simple direct short that
will drive the price of gold to the heavens. Yes, it will
move the price higher, but also create a large enough
quantity and demand for the EURO. Just what is needed for
a successful launch.

IMHO. Gold Dancer
(11/03/1998; 14:39:50 MDT - Msg ID: 891)
Need a good book
Can anybody recommend a book that can explain how the world
currency exchange system works? How nations aquire dollars
to use as reserves... how oil and gold come into play. For example... how does a third world nation aquire the necessary means to conduct international business. I'd like to understand the implications of the coming of the Euro. I hope everybody is noticing that many nations are jumping on the bandwagon.
(11/03/1998; 15:04:00 MDT - Msg ID: 892)
This may be the last chance to buy physical PM at bargin prices
Follow up on PHinLA msg.889.
Michael,can you obtain 1oz.Credit Suisse gold bars,and is it
ethical to post your premium over spot on this forum?
Also I'd like to thank everyone who posts here for the free
Question to ANOTHER,FOA,or anyone that can answer it with clearity;Why is the exchange rate for some very small countries,that cannot possibly have the wealth or the means
to produce the wealth of some of the larger countries,much
stronger than the US$? Example:Tonga a small Kingdom in the
South Pacific.One US$ equals 63cents of their money,Tonga Isl Pa'anga,also Ireland,Cypress,Cayman Islands to name a few.To get current exchange rates and conversion into other
currencies for GOLD and other PMs:
Thank You.............beesting.
(11/03/1998; 15:10:27 MDT - Msg ID: 893)
Buena Fe.....
I'm not big on technical analysis but I don't dismiss it out of hand either. A friend of the firm, now retired from the higher reaches Wall Street, called this morning to say that his reading of the charts has gold at a major head and shoulders bottom with the right shoulder complete at $289.10. If it now goes back to $302.50, he says, that would serve as confirmation that bottom for gold is complete. He went on to say that a bottom of this "proportion" calls for a bull market lasting at least one to two years. At present he does not see any overhead resistance once it breaks this figure. He said to watch XAU. It is leading the way. His parting words: "You could not find a more classic bottom."

Now do I accept this 100%? No I do not. And I wouldn't want anybody here to trade on this information. I offer it for discussion purposes only. As most of you know, I do not advocate leverage, commodities contracts, futures, et al. So this information is strictly for discussion purposes here.
(11/03/1998; 15:14:41 MDT - Msg ID: 894)
We must be connected by more than cyberspace while I was composing my last post you were posting almost the same thing.Hope we get an answer from some of the knowledgables.

(11/03/1998; 15:36:19 MDT - Msg ID: 895)
Hi Gold Dancer.....
One of the studies I read early on the euro -- at least a year ago (from a French researcher insitute) -- was what the Euro finance ministers were going to do about the surplus of dollars. It was one of the first problems posed. In fact something of a scramble may be developing already. I refer you to the reports over the weekend of China and Japan purchasing various Euro national bonds to get a jump on the euro (at InfoStream). Your last post poses problems that I have wondered about too, but I see it the other way. I think the problem for ECB will be to keep the demand for the euro down, not bolser it. I'm hoping FOA returns soon because I think he has much to say in this particular regard. Let me just say that you post an interesting argument and I would be interested to see what the FORUM has to say about it. Let me say something on the gold quesiton: I think the central banks do want it back. The problem is that it has been made into coins and bars and jewelry, etc and now Humpty - Dumpty cannot be put back together again so easily. Simultaneously, the mines are closing down due to the low prices. So there's no ready ready source for large amounts of bullion to pay them back. If the central banks want hard currency -- euro's -- the debtors might find themselves in the same pickle they're in with gold. They might be difficult to get when you are paying in dollars. Paying off their creditors will be costly indeed as the euro is driven through the roof -- a complicated set of circumstances for the hedge funds.
Buena Fe
(11/03/1998; 15:54:49 MDT - Msg ID: 896)
Thankyou for your comments re- the technicals. I have found charting to be more of an art or practice (like medician) rather than a science (like physics), and my brokerage account confirms that I still practice. But it is one more tool that helps give an edge over this market. I believe your retired friend has called this correction to the "T". We'll know for sure by Friday I would think.

PS Gold Dancer, I enjoyed your thought re- the Euro. You are probably hitting the nail right on the head!

Keep Well
(11/03/1998; 16:05:36 MDT - Msg ID: 897)
Ph in LA....Welcome Back....
Yes, gold demand is strong. It has been quieter the last two days, but the last two months have been barnburners. We are just trying to catch up around here.

The next News & Views tries to deal with this business of a two tier market in the metals and we publish a couple very interesting graphs. I don't want to give this month's issue away but let's just say that the industry is aware that there are two markets for gold: one for paper and another for the actual metal -- just as ANOTHER predicted.

I will give you one simple example because you raise the question of silver. Silver bullion was $5.20 in June, 1998 and bags of silver $1000 face ran about $4100. Today silver trades at $4.92 and a silver bag would run you $4800 or so. The demand for silver bags is coming from a public concerned about two things: a financial meltdown in some shape or form and Y2K. That demand is not going to go away no matter what the paper players do to the price. In fact a lower price is just what these people are hoping for. We have similar situations in all pre-1933 gold coins and there is even some evidence of bottlenecking in gold bullion coins. Last week, we could not get $20 gold pieces, certain pre-1933 European coins, 100 ounce silver bars, and bags were difficult as well. It's day to day on all these items.

One more interesting tidbit along these lines then I have to go:

James Turk points out in his most recent Freemarket Gold & Money that the U.S. gold reserve dropped by 273,000 over the last six months. He admits that this drop is small compared to the overall 8000 tons held by Treasury. He then points out that 1 million one ounce (new) gold Eagles sold over the same period -- all of which went to private investors. Says Turk, "The mint can only use gold from the reserve if it is unable to obtain metal from market sources. As the demand for Eagles soared, and as normal market sources of the metal had already committed to other buyers, the mint turned to the US Treasury for the metal that it needed to make sufficient coins to meet the demand."

Lesson: Artificial controls create shortages -- an old adage from the 1970s we haven't heard repeated much in recent years -- but still true. And I do believe we have an artificially controlled gold price.....
(11/03/1998; 16:09:21 MDT - Msg ID: 898)
scp and Beesting....
I am hoping that FOA or ANOTHER will answer your questions. That's more in their area of interest.
Aragorn III
(11/03/1998; 16:19:44 MDT - Msg ID: 899)
Dances with Gold...Good to see you!
We've discussed much of this in the past, in which Kiwi also took part as you might recall. It seems that much of your good offering is built upon the premise that the gold that greased the wheels of the "gold carry" deals has indeed left the vaults of the various Central Banks. This bears reconsideration. You will see the logic change when you take the view that the CB's provided only what could essentially be viewed as "default insurance" to the intermediary brokering the two sides of the forward/short sale. View this insurance as taking the form of a gold loan that did not leave the vault. It would work like this...
The forward/shorth seller approached the intermediary (third party) with his intentions to sell gold short in exchange for capital with which to pursue the "investment flavor of the day". On the other side is a party who purchased this gold on paper only. Why? Because they found that purchasing gold for delivery easily locked up the markets through rapidly rising prices (late 70's-1980). So much the better to watch the price fall over time as paper title to future gold became available through this new avenue of gold forward sales. The CB role was to give backing credibility to the paper gold.
Two decades later we find the situation taken to an unstable extreme. The banks still have the gold with few doubt you've heard about the occassional sale of only several hundred tonnes over the past years as some few banks found themselves in a situation in which arranging the official sale of gold was their most favorable option. As we now reflect upon the ponderous situation at hand, the realization is there for all willing to consider the most appealing choice left to the CB's...they will not offer up the gold from the vaults in the event of the short sellers' imminent defaults. As the third party broker is approached by the paper gold holder to now honor this future dilivery date of gold that is not forthcoming from the original shortseller, the broker finds that he must turn to the CB.
Perhaps you can see how recent agreements (EMU) in Europe will allow these banks to settle their account with cash instead. This gold may be transferred in name from the National CB to the ECB in exchange for euros to offer the paper gold holder as settlement for this "deal gone awry". In essence they are buying this gold back in exchange for euros.
This mechanism reinforces the soundness of the euro. To simply create new euros in exchange for unbacked US dollars (as some have suggested or implied) would make the euro inherently no different than the dollar. There is this important difference, as I hope I have adequately portrayed.
Aragorn III
(11/03/1998; 16:46:56 MDT - Msg ID: 900)
scp...a brief explanation, I must depart
The supplier of that which satisfies the universal desire has the greatest ability to determine that which is money, as all nations then strive to obtain the kind of money needed to purchase that which they all need/desire. In this case, oil finds itself to be universally needed. If an oil producer requires US dollars for oil, so it shall be. If they choose euros instead, then the world strives for euros.
Let's answer your question with an easy example. You are from a VERY small region that has no oil and further, cannot manufacture euros. You do, however have adequate natural resources to grow more food than is needed to sustain your country's population. The farmers sell their excess crops on the world market, asking payment in euros, so that they in turn can buy oil to operate their farming equipment, etc.
A small country need only to produce something that is needed elsewhere in the world. The Foreign Exchange markets constantly assess the relative integrity between national currencies to determine the ever-floating exchange rates. I hope this helps you to find you answer...I am now late beyond point of measure!
(11/03/1998; 16:53:56 MDT - Msg ID: 901)
Aragorn III
Well then, these boys are going to get cash from the CB's at the market price of gold right? Since 99% (I'll bet you) of the gold calls are looking to cash-out, wouldn't this prevent the predicted shortage of gold and concurent price rise and all the other nastiness associated with it?

As long as people are getting paid off on their contracts there shouldn't be any difference. Sure the shorts will be taking a loss, but cash will be flowing. The fact that it's Euros might even be a boon since the contracts are going to be paid-off in $US. Yes?


Too simplistic?

(11/03/1998; 16:56:09 MDT - Msg ID: 902)
Oh Nuts!!!
Anybody else have an answer?

(11/03/1998; 17:33:49 MDT - Msg ID: 903)
Gold coins and gold stocks
The other day I stopped at two coin shops in Bangor, Maine, and found just two gold pieces, a l982 Canadian Constitution proof, boxed, a half oz. piece for $175, and a l926 Xf/Au Indian $2.50 for $160. I thought these reasonable, less than I had paid for similar pieces 8-10 years ago. They see few pieces and out of town dealers buy much of what they get, I believe this confirms what you are saying, Mike. Take a look at the charts of such mining shares as Barrick Gold, Euro Nevada, and Franco Nevada, three of the stronger major companies. has good charts, et al. Therse shares are far higher than when gold was lastvat these levels. The junior excploration companies which have gone thru a literal meltdown almost unseen in severity the past 6 months, are beginning to perk from levels of C$ .05 to .20 for shares that have sold l0 to even 50 times as much. This fits in with the technical observations mentioned earlier. Encouraging?
(11/03/1998; 19:25:54 MDT - Msg ID: 904)
Gold up 70� on Globex....And Here's the Bridge News Report
11/3/98(Bridge News)After the Close.........

Gold saw follow through selling today and some of the negative sentiment in silver may have spilled into that market as well, with the break of $290 for the Dec contract putting the metal under technical pressure.

One dealer said forwards in London were being borrowed a little bit which may be contributing to some selling pressure on COMEX. "There is borrowing around, which usually means there are people lining up to sell it," he said.
"There's just nothing out there to get the market going. Ranges are narrow and the ranges are treacherous," the dealer added. One market player said that, once $290 was convincingly broken, some traders were targeting $288, but that support area was able to hold.

David Rinehimer, director of futures research for Smith Barney Inc., said he didn't see a lot of scope for further price weakness under $290, as there are still worries about the world economy and the latest stock market uptrend could be providing just a temporary revival of macroeconomic sentiment.

"There is still a lot of uncertainty involved, and while we're seeing some further confidence in the equity market, I don't see a big downtrend coming about," Rinehimer said. He added that when the next major piece of macroeconomic bad news hits, or when the equity or US dollar markets starts to tumble again, gold should be quick to climb back to $300 or so.

Merrill Lynch analyst Ted Arnold today said he is now pegging a spot gold trading range of US $290-296 per ounce and is doubtful bull scenarios that count on a major currency flare-up in Brazil, Japan or Asia to drive gold beyond $305 will materialize.

But New York-based CPM Group appears a little bit more optimistic. It forecasts that the average 1999 gold price will climb to $328 per ounce, which is up 9.2% from 1998 average levels. For 1998, it sees an average price of $298 an ounce, which is down 9.2% from 1997. CPM said that the trends that have been depressing the price of gold will be reversed late this year and next year.

With permission from Bridge News:
(11/03/1998; 19:53:58 MDT - Msg ID: 905)
Dec. gold now $290.50. I too believe that the junior gold market is starting to come into its own. I have seen two .03 cent juniors triple and one .11 center nearly triple in the last week. They said first the seniors and then the juniors. It seems that interest in gold exploration is coming back.
Gold Dancer
(11/03/1998; 20:02:02 MDT - Msg ID: 906)
Aragorn III
Yes, we have discussed this before. The end result of
your proposal is that the paper gold holder gets EUROs in
return. So the major point I am making is still true. That
this was set up long ago not to be a simple short sale which
would HAVE to be covered by gold. It will be covered by the
EURO. Whether the gold left the banks or not the short
position is not what some think it is: a guarantee to boost
the price of gold to the heavens. In short, what ever the
actual paper trail; the creation of the EURO is the
end result.

US GOLD: you asked the question about what was the world
to do with all the US dollars that have been created. THat
this was a concern of the Central Bankers in bringing out the EURO. May I suggest that the dollar price of gold will
have to rise? Is it really the dollar that is in heavy supply or is it credit and debt that is in heavy supply?
I guess either default on the debt or turn the debt into
actual dollars and take off a zero or two. That is what
Mexico does .

I have no idea what will be the outcome of all of this.
Or how it will be resolved. Except for one thing. The government will try and survive on the backs of its citizens;
therefore, whatever happpens, it will not be good for liberty
or truth or fairness. We can all count on that.

Gold Dancer
(11/03/1998; 21:38:30 MDT - Msg ID: 907)
Make no mistake. I am bullish on the price of gold. Someof the short position is actual with no prior arrangements.This will be enough to kick start the gold move and keep itgoing. I just don't see $10,000 gold. Unless you are talkingabout buying some piece of real estate from a bank duringa crisis which has a payments problem. Then the bank may negotiate just to get the gold coins. But in terms of a loaf of bread I don't think so. Good luck to us all in the times ahead. We are going toneed it. GD
(11/04/1998; 05:33:06 MDT - Msg ID: 908)
EURO $ Gaining Momentum against US$ - India Switching to EURO
Mark exports in euro, imports in $: ICICI Bank
Our Calcutta Bureau The India Economic Times Reports
EXPORTERS would stand to gain if they start invoicing in euro, since the new currency is likely to emerge stronger than the dollar in January 1999. And for the same reason, importers should stick to dollars. This was stated by ICICI Banking Corporation Ltd, during an interface with their clients in Calcutta on Tuesday. The bank said, the growth rates of European economies are stable unlike the US, which is believed to have reached a peak.
Besides, inflation is at more manageable levels in the continent, interest rate is stable and European banks as against their US counterparts have lower exposures in the East Asian markets, Russia and Latin America, said the bank. In India, most of the exports are in dollars, while a large part of imports is in Deutsche mark.

"With euro expected to be stronger than the dollars, exporters who would have their realisations in February/March, may opt for the new currency. There could be some gain," said P H Ravikumar, vice-president, treasury, ICICI Bank.

"Sooner or later, a corporate has to switch to Euro. Doing it now may make things easier for the client and the bank. Particularly, if the invoicing is being carried out in individual currencies (and not dollar), it is advisable to go for euro. If a company's management is passive, dollar may be a safer option, but euro could be a better choice if one is looking at a risk-reward scenario," he said.

Corporates may be seen opting for euro-denominated loans, since the interest rate is expected to be lower than dollar. However, this calls for active risk management because monitoring rupee-dollar movement is far simpler.

According to V Rajagopal, manager, forex, ICICI Bank, Indian banks can offer only a handful derivatives to their clients due to the highly regulated nature of the market.

Euro, the common currency for 11 of the 15 European countries, will come into play on January 1, 1999 and by July 2002, the independent currencies will cease to exist. Banks are currently awaiting RBI's approval on the euro norms. Besides the RBI panel, a set of guidelines have also been formulated by the Foreign Exchange Dealers Association of India.

RBI is also expected to announce opening up of foreign currency deposit accounts like FCNR and EEFC in euro.

It may be mentioned that while banks like ICICI Bank have been gungho on euro, PSU banks are yet to pursue it seriously. Most of them have, so far, declined to open even a nostro account with banks in Europe.

(11/04/1998; 05:59:07 MDT - Msg ID: 909)
Dec gold now 291.10 and will appear as uptick on NY...
freshening about 1.00 over yesterday pm close.

When will citizens of Europe start using Euros in daily transacations?
(11/04/1998; 08:03:26 MDT - Msg ID: 910)
Market commentary 11/3/98
Your assessment of the current gold market weakness is spot on ! It's a situation I know well, namely, that of the credit punter who knows he can't settle his losses next week. He's looking at the last race of the day what will he do ? Well, he's got nothing to lose by plunging on the last, if he loses - well he couldn't pay anyway, but if he wins he's out. Regards, Richbea
Buena Fe
(11/04/1998; 11:34:11 MDT - Msg ID: 911)
Boy oh Boy, "gotta like it when a plan comes together"! Glad I followed my guts yesterday and not my head.

Oh Oh, look at the weekly chart of the US 30yr Treasury bond! I smell something burning. My experience says "gold rises the most dramatically when it is accompanied by rising interest rates (ie falling bonds)". $325 gold by Nov 30th - I hope-I hope-I hope. (Remember this is not advice, I'm just a little yappy today!)
(11/04/1998; 13:35:57 MDT - Msg ID: 912)
After reading In the Footprints of Giants, I realize that we are fortunate to have ANOTHER's THOUGHTS! It's like knowing that the year 2000 is coming and will touch our lives no matter who we are and no matter where we live but still not being able to stop it. But by knowing its potential for distruction we can better prepare ourselves.

I am comfortable with investing 15 - 25 % of my portfolio in gold coins soon. My questions now are, what to do with the other 75%?
(1) Would holding Eurodollars make any sense? How does one purchase Eurodollars? Can they be exchanged for local currencies when ready to sell?

(2) Are oil stocks good long term investments?

(3) Are US Treasuries and Savings Bonds one and the same? Are they part of this "paper" ANOTHER writes about staying away from?

Thank you in advance. YB
Aragorn III
(11/04/1998; 16:47:58 MDT - Msg ID: 913)
You stated, "I am comfortable with investing 15 - 25 % of my portfolio in gold coins soon. My questions now are, what to do with the other 75%?"
Investment decisions are as unique as the person and situation involved, while money itself lets us speak the universal language of mankind. I am glad to see you speak with this common voice of gold...I have a moment to talk.
What many refer to as "investing" these days is not far from what could better be called "gambling". My term for what is to be done these days is "wealth management", a conservative view toward asset preservation with a matching view toward the unique opportunity these situations provide. Both views are accomodated through gold ownership.
Because no one future is immune to adjustments due to actions whether prudent or otherwise, it is best not to have all eggs in one basket. We might see the U.S. offer feet of gold for the dollar to stand upon in response to the euro!
You speak of Eurodollars...these are USdollars held in Europe. Their marketability is likely to be much greater on their home soil. Did you intend euro? On Jan. 1st, 1999 the exchange rates of the 11 euromember currencies will be fixed to the euro, and therefore to each other. To hold any one of these currencies today is to hold the euro by proxy. Adjustments are still underway to bring them to the point for fixing...didn't Spain and Portugal just now lower interest rates for this purpose? Some proxies might serve you better than others. I think we will witness gold to be the best "euro by proxy".
"Are oil stocks good long term investments?" The arrival of the long term will tell! Is this something you would normally pursue? The world does use petroleum! But does the world need the Company you might choose to invest in?
ANOTHER must speak to his own thoughts, but I think you will find that all paper will be revealed as contracts of nonbinding conditions and little value. What is a dollar but an IOU of another's debt? What are US Treasuries and Savings Bonds but IOU's for dollars? What are futures contracts but IOUs for price or commodity to be delivered (maybe?). What is bankruptcy and default but nullification of the contract? What do you have then to show for the paper?
Have appreciation for all that is real and all that you need. Sound money is revealed as that which enables you to obtain what you need from a willing seller. Invest in yourself! Good luck!
(11/04/1998; 20:34:36 MDT - Msg ID: 914)
Gold Up
Well the good news is that gold is up a bit in overnight trading. Gotta love it when it follows through overnight on the upside. Japan is down. SO what changed from yesterday, when Japanese stocks were on a steep rise? I'm still having trouble understanding why the world is a mess one day, and all is well the next, and that people are actually putting money into this. Aragon III, I totally agree with you-it's a casino. (Nothing too meaningful, but I've had nothing to say lately, and I had to say something!!!)
(11/04/1998; 23:05:48 MDT - Msg ID: 915)
Aragorn III
Thank you, Aragorn III. May we talk a bit more? I do appreciate your thoughts.

It does ring true to me that gold fulfills "asset presevation" as well as the "unique opportunity" to own something of value rather than an IOU. I like that.

Please forgive me if I have misunderstood you, but with preservation and opportunity in mind, what else is there to put the eggs into besides gold? You stated, " is best not to have all eggs in one basket." What other basket is there that preserves wealth and offers the opportunity of gold?

You hinted that US$ may one day be girded up by gold in response to the Euro. (And yes, I meant to say Euro not eurodollars. Thank you for being so gracious with my faux pas and clearing that up for a self-proclaimed world economics neophite.)

You went on to say that we will witness gold to be the best "euro by proxy." So gold would also be the best"US$ by proxy" then too, yes? I've tried to find other baskets to put a few eggs in besides gold for the last four months and the ones I'm familiar with are "gambling" baskets full of IOU's.

So, I was just wondering if you or the others had come up with the same conclusion. It would be IDEAL, and I emphasize IDEAL, to have gold 100% of our wealth, yes? this this time in history. The other baskets might serve as some diversification but why gamble? That may be safer in a future time? But isn't there a gamble in gold too?? The powers that be might find ways to just string it along for years or even cause gold to plummet.

Then there is the need of preserving another asset during these unsettling times.......... family peace...that is worth its weight in gold if you ask me. So diversification it may have to be. Any hints which gambling baskets are less risky during these times??

Thank you again. You are kind to speak to such a one as me.YB
(11/05/1998; 04:42:59 MDT - Msg ID: 916)
Dec. gold now $292.10
Up from NY $271.70 close. XAU up sharply yesterday. Some say XAU leads gold. Go XAU! I guess call on lower bollinger band of $288-289 being a statistical lower limit held on this down leg. Just love those indicators.

Silver Tongue
(11/05/1998; 06:00:04 MDT - Msg ID: 917)
The charts which I reviewed this morning would indicate that something big may be in the works for the gold market. The big problem apparently is that the banks remain willing to lease gold for short selling at low interest rates. This stategy may unwind soon though and gold may rise like helium. As the previous poster indicated the gold stocks generally anticipate the price of gold before it happens and I think that may be the case here. Yesterday the gold shares performed better than any of the other indexes. That to me is very bullish.
(11/05/1998; 08:15:13 MDT - Msg ID: 918)
( Aragorn III, I posted this so late last night I wasn't sure if you would see it. Sorry if I'm repeating myself.) Here it is again..........

Thank you, Aragorn III. May we talk a bit more? I do appreciate your thoughts.

It does ring true to me that gold fulfills "asset presevation" as well as the "unique opportunity" to
own something of value rather than an IOU. I like that.

Please forgive me if I have misunderstood you, but with preservation and opportunity in mind,
what else is there to put the eggs into besides gold? You stated, " is best not to have all eggs
in one basket." What other basket is there that preserves wealth and offers the opportunity of gold?

You hinted that US$ may one day be girded up by gold in response to the Euro. (And yes, I meant to say Euro in my earlier post, not eurodollars. Thank you for being so gracious with my faux pas and clearing that up for a self-proclaimed world economics neophite.)

You went on to say that we will witness gold to be the best "euro by proxy." So gold would also be the best"US$ by proxy" then too, yes? I've tried to find other baskets to put a few eggs in besides gold for the last four months and the ones I'm familiar with are "gambling" baskets full
of IOU's.

So, I was just wondering if you or the others had come up with the same conclusion. It would be IDEAL, and I emphasize IDEAL, to have gold 100% of our wealth, yes? this this time in history. The other baskets might serve as some diversification but why gamble? That may be safer in a future time? But isn't there a gamble in gold too?? The powers that be might find ways to just string it along for years or even cause gold to plummet.

Then there is the need of preserving another asset during these unsettling times.......... family peace...that is worth its weight in gold if you ask me. So diversification it may have to be. Any hints which gambling baskets are less risky during these times??

Thank you again. You are kind to speak to such a one as me.YB

(11/05/1998; 09:51:48 MDT - Msg ID: 919)
We have just received an important essay from Otto Scott titled "The Lure of the Abstract"
It is now at the Gilded Opinion page and carries this Editor's Note:

"You are about to embark on an intellectual journey. Otto Scott starts this essay as a critique on the arrogance of academia, Washington's political elite and Wall Street. The discussion proceeds with an elegant defense of gold, the gold standard and gold money, and ends with an indictment of the American electoral system -- all appropriately offered at The Gilded Opinion the week of the Congressional election of 1998. "We have been ruled, for far too long," says Mr. Scott, "by persons who have lost their way, and have led us far astray. If they cannot extricate us, then we believe we should change our electoral system and release ourselves from the trap of only two national political parties - one completely corrupt and the other completely intimidated - and create new parties who know the difference between the lure of the abstract and reality." Otto Scott is one of the elder statesmen and certainly among the most articulate spokesmen for the hard money movement and the values it engenders."

Please avail yourself of this opportunity. Your comments here at the Forum will be appreciated and passed on to Mr. Scott who does not use a computer. I'm sure he will appreciate what the USAGOLD thinktank has to say about his challenging essay: "The Lure of the Abstract."
(11/05/1998; 10:03:24 MDT - Msg ID: 920)
Also World Gold Council's This Week in Gold is in.......
Here's a thumbnail sketch for those needing a quick refresher on the yellow metals' most important events of last week.
Aragorn III
(11/05/1998; 10:44:25 MDT - Msg ID: 921)
Wealth...a reply to Yellowbird
Yellowbird, these questions of yours take us to the heart of "individual economics". Each person would do well to think for a time to discover that which "rings true" on these matters.
We have been discussing money, but to find solace we must understand and thereby find wealth! What is wealth? For each person it is but a variation on a common is that which puts distance between him and the grave. Only you know best what provides that distance for you. Resolving this question will give light to your "investment" decisions. (That is why I selected the phrase "wealth management"!) To assist with your thoughts, first imagine yourself at the brink, struggling for survival. Wealth could be reliable shelther from the weather; a full belly or reliable source of food; adequate clothing; youth, good health, or reliable medical treatment; wisdom to guide your actions in a hostile environment; reliable assistance from friends or family during times of need; etc. The key is reliability. It is not wealth if it fails you in your time of need.
Ahhh...but you always thought money was wealth. It is! Or rather, it can be. Money is liquid wealth. While your health or full belly is not transferable to another, a helping hand for assistence (labor) or extra food is transferable. Money acts as a proxy for wealth, allowing you to easily store excess wealth and transfer wealth in exchange for your exact needs.
These investments you might they build your wealth, or build your supply of money? How reliable are the investments, and how reliable is the money? What is your tolerance for risk? The US dollar has served lately as an adequate PROXY for money. And remember, MONEY is only a proxy for WEALTH if it is reliable! If the dollar is to one day receive "feet of gold", it will approach wealth as it would then more nearly approach money!
You ask, "What other basket is there that preserves wealth and offers the opportunity of gold?" Understand that in this sense, it is not gold that is the "opportunity". The opportunity is the recognition that the system is becoming unreliable and about to fail. Old proxies for money may be as leaves on an autumn day. Use gold as the seed for new leaves in spring!
Also, you state, "It would be IDEAL, and I emphasize IDEAL, to have gold 100% of our wealth, yes? this this time in history. The other baskets might serve as some diversification but why gamble? That may be safer in a future time? But isn't there a gamble in gold too?? The powers that be might find ways to just string it along for years or even cause gold to plummet." Yes, this is indeed a unique time in history, perhaps more favorable than any other to recognize the value in gold. But recall, gold itself is NOT the wealth you is the liquid proxy for wealth--money!. It is because of these " string it along" that we may find some benefit remaining in other proxies, and of course, in the real wealth itself.
But I can see from your final comment, "there is the need of preserving another asset during these unsettling peace...that is worth its weight in gold if you ask me. So diversification it may have to be." you do indeed grasp the meaning of wealth!

Buena Fe
(11/05/1998; 11:25:17 MDT - Msg ID: 922)
Notice the pickup in gold price as the 30yr t-bond gave up it's gains this morning. Placer chart is predicting gold to break 306 by Nov 13. Time will tell. Keep Well!
(11/05/1998; 13:28:31 MDT - Msg ID: 923)
FWN Tech. Trends: Technical Picture May be Improving for Gold
By Kira McCaffrey Brecht
FWN Staff Writer

(Editors note: This is one in a series in which top traders
and analysts provide FWN with their latest insights on

low in late August and recently some bullish technical
aspects may be appearing on the charts, according to Terence
Gabriel, technical strategist at IDEA Inc.
"There is the potential that we are putting in a pretty
significant bottom," Gabriel said.
Looking at the XAU index of gold stocks, which is
traded on the Philadelphia Stock Exchange, Gabriel noted
that index has been in a "pronounced downtrend from the
summer of 1996 to the summer of 1998" confined within a bear
channel. Just recently, "we've seen the first higher trough
relative to the August low," on that index. Also, "we've
reclaimed the 200-day moving average and it looks like we
are going to test the October high," he added.
The "forward-looking expectations being built into gold
producers suggest there may be hope for firmer metal prices
in 1999," Gabriel said.
Looking at the spot gold chart, Gabriel highlighted the
12-week and 52-week moving average cross. He noted within
the metal markets, a bearish cross--when the 12-week average
moves below the 52-week average--is referred to a "dead
Meanwhile, on the flip side, when the 12-week moving
average moves above the 52-week average it is called a
"golden cross," he said.
"The 12-week crossed negatively through the 52-week in
June of 1996 when prices were at $380 and it's been negative
ever since," he said.
While that "sell signal" remains intact today, Gabriel
noted that current levels are "the least negative since the
summer of 1996. We are approaching a technical buy signal on
this indicator."
"If spot gold moves above $295, it would suggest an
inevitable bullish cross in those averages," he
The current disparity between the 12- and 52-week
moving average is -$3.65, he said.
Looking specifically at the December gold futures
chart, Gabriel noted that a potential "bullish convergence"
has developed on monthly momentum oscillators. This occurred
in late August, when prices hit a new low for the downmove,
but momentum oscillators did not reach a new low.
"The degree of negativity in trend has waned inflecting
a more positive backdrop," he said.
If December gold futures can close above the $295 level
near term, just above current levels, Gabriel said that
would be a "positive sign" and would open the door for a
retest of the 200-day moving average near roughly $301 and
then the "reactive high from early October at $306.90," he
A solid settlement above $306.90 would recharge the
bulls and would confirm a near- and intermediate-term bull
trend, Gabriel said. If that were to occur, he said upside
targets would be seen at $320 and then $340.
"It's not yet wildly bullish looking--but it's the most
constructive it's been in 2 1/2 years," he concluded. "I
think there is going to be a surprise into gold into the New
IDEA Inc. is an advisory service based in New York City
and can be reached on the Internet at

Reprinted with permission FWN at Reprinted for information purposes only. We do not necessarily agree with this assessment and any investor trading on this information does so at his or her own risk.

(11/05/1998; 15:22:11 MDT - Msg ID: 924)
30 year Treasuries sale?
Has anybody heard anything on the 30 year Treasuries auction? After the big build-up this morning; then the premature unemployment data release, and now no news???
There was quite a bit of fear on Wall Street that the sale would not go well after the ten year note flop of a couple days ago. Just looked everywhere in the news and couldn't find anything. So how did it go?
(11/05/1998; 15:56:38 MDT - Msg ID: 925)
US Treasuries Sharply Lower

Wednesday November 4, 5:16 pm Eastern Time
US Treasuries end sharply lower after poor auction
*US Treasuries end sharply lower after poor 10-yr auction. *US 30-yr off 1-3/4. 5.33 pct yield highest since Sept 8. *Risk premium slashed as world equity markets rally on U.S.

mid-term election result. Democrats' gains expected to reduce
Clinton impeachment odds, foster stability.
By Ellen Freilich
NEW YORK, Nov 4 (Reuters) - U.S. Treasuries ended sharply lower on Wednesday, battered by stock gains, shrinking demand for safe-haven securities and a poor 10-year note auction.

The benchmark long bond finished at 102-18/32, down 1-23/32. Its yield, which moves in the opposite direction, rose to 5.33 percent, the highest since September 8, from 5.22 percent at Tuesday's close.

"We're washing out the quality bid," said William Sullivan, senior vice president and chief money market economist at Morgan Stanley Dean Witter.

Sullivan said the prelude to the "disastrous" 10-year Treasury note auction was written by the U.S. mid-term election results which inspired a sharp upturn in global equity markets, including the U.S. stock market.

"Most people see these election results as diffusing, if not eliminating, the possibility of impeachment, so foreign investors were reassured by the Democratic victory," he said.

The U.S. election results were significant for bonds they provided one more development that seemed to reduce the need to hold so-called quality assets, analysts said.

"You continued to see portfolio managers move out of Treasuries into stocks and into other fixed-income instruments," said Sullivan. "That reversal was so dramatic that it interfered with the (10-year Treasury note) auction."

The Treasury said it sold the $12.0 billion in new 10-year notes at a high yield of 4.825 percent. The value of bids received over those accepted, the bid-cover ratio, was a thin 1.52, the Treasury said.

"It was a disastrous auction," said Anthony Karydakis, senior financial economist at First Chicago Capital Markets.

Karydakis said bonds were under pressure from the start of the trading session because of the continuing rally in overseas equity markets.

The mood was very cautious and prices were cut going into bidding deadline for the 10-year note auction, he said.

"But the results were a shock, and people scrambled to dump securities," said Karydakis.

The 10-year note auction was the second portion of the Treasury's $38.0 billion, three-part quarterly refinancing. The Treasury sold $16.0 billion in five-year notes on Tuesday. It will sell $10.0 billion in 30-year bonds Thursday.

On Monday, the Treasury sold a total of $41.0 billion in short-term bills.

Karydakis said the 10-year auction worsened the shaky mood that has emerged in the Treasury market over the last week.

One reason for that nervousness is the perception that the Federal Reserve might not have to cut interest rates as soon or as dramatically as once thought, analysts said.

"You can't have yields at their early October lows when the flight-to-quality was at its peak," said Sullivan.

Investors flocked to the safety of U.S. Treasury debt in August and September, unnerved by stock declines and by Russia's debt default and currency devaluation in August.

That spurred a rally that sent 30-year bond yields to a 31-year low of 4.69 percent on Oct 5.

"There is an unmistakable unwinding of the risk premium that was built into Treasuries based on the fragility of world financial markets," said Karydakis. "Now that premium is being taken out. People realize the world is not coming to an end and that the Fed may be less aggressive in cutting rates."

In late trade, three-month bill rates were up seven basis points to 4.46 percent. Six-month rates were up 10 basis points to 4.45 percent. Year bill rates were up 13 basis points to 4.48 percent.

In when-issued trade, the 10-year notes sold on Wednesday yielded 4.84 percent. The 30-year bonds to be sold on Thursday yielded 5.25 percent.

Two-year notes were down 12/32 to 99-5/32 to yield 4.45 percent. Five-year notes were down 22/32 to 98-31/32, yielding 4.48 percent.

Wednesday, 4 November 1998 16:22:00
(11/05/1998; 16:01:01 MDT - Msg ID: 926)
Wonderful World Wide Webb
Michael, That is what I love about the net. Just ask and like a rocket, some responds. Regards, JR>
(11/05/1998; 16:22:28 MDT - Msg ID: 927)
Thanks, Junior.
"A disaster", as I suspected. It's going to get worse the closer we get to euro launch. We may have seen the end of rate cuts. I don't envy Greenspan. Retirement might be sounding pretty appealing right about now. How do you go about financing debt denominated in a currency facing the kind of threat being faced by the dollar? An unprecedented situation......
(11/05/1998; 20:57:16 MDT - Msg ID: 928)
Dec. gold now $294.40, was $296 at one point today...
The VSE and VSE mining index continue to inch upward. Quality juniors finding higher ground.

Heard on NPR that somebody posted the job statistics on their web page a day early. The folks in charge said, "We don't know what happened...but we are taking steps to make sure it doesn't happen again...."

I would hate to be that webmaster. You can't really fire a federal employee without cause, but reassignment to a Y2K project might be punishment enough. Maybe the person will get the governmental programming done early and save the day. At least getting done early on Y2K would be considered proper governmental efficiency.

The intraday gold chart sure did look exciting today. Pretty much looked like the North face of the Eiger. Straight up.
el St.One
(11/06/1998; 02:16:59 MDT - Msg ID: 929)
Steve H
The way Gov. really works. When someone pulls a big S.N.A.F.U., to get rid of them they promote and transfer.
Ask Arkansas.

(11/06/1998; 09:28:52 MDT - Msg ID: 930)

Hi - I attempted to read Otto Scott's article but cannot find it in the opinion section. What am I doing wrong?

PH in LA
(11/06/1998; 21:26:58 MDT - Msg ID: 931)
Out of order?
Is this forum open tonight? Nothing here all afternoon?

Heard they are trying to get a foodfight going over at Kitco. Rather stay here in case someone shows up.
el St.One
(11/07/1998; 03:52:25 MDT - Msg ID: 932)
Have I missed it or has Another not posted for some time now, only once since someone was insensitive (dumb) enough to ask him or her to bet their life. I hope to find those insightful words here again real soon. Waiting el

Penny Nichols
(11/07/1998; 08:40:13 MDT - Msg ID: 933)
Where have all the posters gone? We lurkers need to be updated!!
(11/07/1998; 15:10:38 MDT - Msg ID: 934)
Gold, Y2K, and QUESTIONS

Well the forum is rather dead for the past few days so I'll chime in. I just received this from an associate:

I have just moved to [DELETED] to obtain some rural property and cows to usher in the new millenium. I was recently working on a project with 4-digit years and management made me change it back to a 2-digit year. That is enough for me. Perhaps I will be back in Seattle in 2 years or so if Seattle is still there!
Sadus: This is not the only associate to send me such a message. Here is one more from another friend:
Its funny you sent me that.
I am working on a team for the Year 2K solutions.
I am right now concerned with all my servers in my Datacenter.
About 150 NT machines, that I have to concentrate on.
There arent enough people taking the problem seriously.
We are working as fast as we can on it.
Sadus: As for me, this coder is now focusing on more "agrarian" pursuits. In other news, I recently found myself another gold shop and picked up a few pieces. They're charging a $1.25 premium for silver rounds!!! Insane. I asked if the premiums were going up for gold bullion. He said no, but they are going up for
Sovereigns and pre-1933 stuff. He said he's moving $25K in those PER DAY to "y2k freaks". I said "that must sound pretty crazy." He said "yeah that's my opinion." Best of luck to the man.
I have some questions, if anyone is listening.
First, to any goldbugs. If I want to sell some bullion, what do I have to do? How much can I sell without the buyer having to notify the government? I'm not planning a sale but I want to know what's involved.
Second, to ANOTHER or FOA, if they still read this forum. Please tell me, what is your timeframe for the events you anticipate? I was thinking early '99 but in reading over ANOTHER's posts, I've seen mention of late '99, early '00. What is your opinion? I can say, from the Y2K perspective, that people are mistaken if they think Y2K will occur on January 1, 2000. The Y2K bugs are all different and they will trip off over a range of time. A few minor ones have already occured, and I'm expecting a large downward spiral of Y2K bugs to begin tripping off Jan 1, '99 and to continue, worsening with intensity all year. Any action taken by the government to quell civil unrest, I believe, would have to occur sometime next year before the government itself collapses. If anyone thinks I'm exaggerating on this, I think one of us needs to research the issue a bit more :P
Good luck to you all and thank you for any scraps of knowledge you can throw to a dog like me sitting under the table.
(11/07/1998; 15:23:12 MDT - Msg ID: 935)
I kept getting 11/3/98's postings for Midnight to Noon yesterday and today it is happening again. ?????????? Is the problem here or there?
(11/07/1998; 16:21:10 MDT - Msg ID: 936)
The URL:
Will commonly come up with old posts. If you want the latest posts, go to these URL's:
(Morning and evening.)
If you go to those URL's specifically, and refresh the page, you will get the latest posts. Good luck.
(11/07/1998; 23:36:25 MDT - Msg ID: 937)

Hey sadus - nice to hear from you. I believe the y2k thing is going to tank the governments also. Governments of today require two things to remain viable; control of the currency and an economy to tax. It certainly appears to me that both of these areas are at great risk. Without the ability to inflate the money supply, the current debt structure is unviable. The world looks like it is returning to gold just in time; not that it ever actually left! The news from Russia seems to be encouraging. Minting gold coins, debt repudiation, and only three percent of taxes actually collected. It sounds to me they are likely the new bastion of economic freedom. Not surprising the papers haven't pointed these facts out. Might be a stampede by others to follow suit.

Y2k is definitely going to put the governments on a budget. Without an inflating money supply, a much smaller tax base (if any), and the loss of their computer systems would seem to sound the deathknell for this round of 'not learning from past mistakes'. We can only hope that some 'heavy-handed' solution to the problem is not what these types have in mind. Political risk is probably greatest leading into the year 2000 but would likely shrink dramatically shortly thereafter.

Isn't it really starting to bother you about the level of awareness? Why is it that the Brits, Aussies, and Canadians have essentially declared an emergency while the US government hasn't even alerted the public to the potential dangers. I have to believe they are so concerned about their monetary position at the moment that they can't upset the applecart even for a disaster they know is coming. This is a huge violation of the public trust. The old greed and avarice thing.

Time to lay in some supplies. Don't wait, the backorder situation on many items is getting pretty serious. Gold is fine but daily essentials need to take precedence now. A financial meltdown followed by a simultaneous systemic computer failure will not be the time to only be holding gold. Many things are 'money'. Ask the Russians.

BTW - it's ok to come out from under the table.

(11/08/1998; 11:06:58 MDT - Msg ID: 938)
In the Footsteps of Giants
On page 42 of the book, at the end of message #33, it reads, (Ed. Note: no record of rest of sentence.)
The full sentence, and the end of the message is:
"If the gold markets lock before they reach $1,000, all mining stocks will be consumed in the paper fire. A sad day for many."

(11/08/1998; 13:25:30 MDT - Msg ID: 939)
*******FORUM BUSINESS*******NEW!*******At The Gilded Opinion:
THE DERIVATIVES MESS by Robert Chapman/The International Forecaster.
(11/08/1998; 13:26:25 MDT - Msg ID: 940)
Depression Reflections/ANOTHER-Where Are You?
I just got off after working my second 16 hour shift at the "aluminum mine".It was especially fruitful (in addition to the 4 hrs. of 1.5 and 4 hrs. of 2 time)since I acquired,in trade,2 1907 St. Gaudens $20 Gold pieces.Does anybody have an idea of what these are worth? They have some wear ,but nothing drastic,maybe an EF.

Anyhow,I remember when I was growing up,my dad would tell me things about living in The Great Depression.One of the things that I remember him telling me was that people would only take "hard currency" and NOT paper.
(11/08/1998; 21:56:40 MDT - Msg ID: 941)
"All the figures you see regarding derivative exposure are guesses, because no one really knows for sure."

This quote, along with the closing paragraph, says it all. There is so much paper chasing so much paper that no one can sort it all out. A crash is the only answer. Printing even more paper will only carry you so far. (Not far.)

No great analysis, just thought I'd point out the obvious.

I have so many friends and relatives who just smile smugly and say something like: "They've always been saying that" or "It's always been going on like this" or in another vein "They've been working on those computer problems for a long time" as though such thoughts preclude anything untoward from happening.

Sometimes I feel like I'm trying to throw a life-preserver to people who are going under for the third time and they keep saying the ship can't sink.

Arizona Hiker
(11/09/1998; 14:20:44 MDT - Msg ID: 942)
RANGY reverse split
at first, this morning, we were notified that RANGY went through a 7 for 10 reverse split. I checked with the Schwab re-org dept. and they advise that the transfer agent for RANGY forwarded erroneous information. The information will be corrected to reflect a 1 for 3 reverse split.

the new symbol is RANYD. With the security trading at about 1 7/8, it appears to be down about 30%. To illustrate: last week, 1000 shares @ .875 = $875.
today, 1000/3 = 333.33 shares @ 1.875 = 624.99. a loss of $250.01, or 28.5%

because the company did not provide shareholders with advance notice regarding this reverse split, confusion reigned supreme this morning. Much MISinformation has been posted on various gold-bug sites.

CEO Mr. Kebble is supposedly conducting a dog and pony show this week in the U.S.... perhaps someone can ask him why we weren't provided with advance notice and why they decided up on a reverse split in the first place.

The company needs to make a public clarification so that the shares can begin trading once again with some relationship to NAV.

(11/09/1998; 16:31:07 MDT - Msg ID: 943)
Arizona Hiker
I had a similer experience with SA gold mining stocks,earlier this year when ANGLOGOLD was formed.My broker gave me the number of Victor Francis of the bank of New York,I had a nice chat with him.Seems the Bank of New York,the CB for the US handles all foreign securties traded on the US exchanges,as you probobly know,they are traded as ADR's or ADS's in the US.The bank of New York does all the conversion of share price in the foreign currency into US$.
They also regulate the number of shares issued.ADR's or ADS's.IMHO the bank of New York is at fault.They won't let the foreign companies send any information to holders of ADR's or ADS's because technically the bank of New York owns the shares of all the foreign companies traded in the US and we the holders of ADR's and ADS's only hold paper issued by the Bank of New York.The South African companies put out a stream of information concerning stock splits,mergers,etc. The Bank of New York also takes a cut on all the dividends payed out to holders of ADR's ADS's.Wouldn't it be nice if people living in the US could purchase shares directly from the underwriters in the foreign countries that issue the shares.........................beesting
Penny Nichols
(11/09/1998; 20:13:32 MDT - Msg ID: 944)
It is good to see some postings here again!! Does anyone know what happened to ANOTHER and FOA? They offered us "goldbugs" a lot of encouragement about the future.
(11/10/1998; 15:24:58 MDT - Msg ID: 947)
Arizona Hiker
In case you havn't found it yet Polarbear has an up to date site everything you want to know about Randgold,updated november 10.


Aragorn III
(11/10/1998; 16:37:16 MDT - Msg ID: 948)
Notice the "brush off" need to draw undue attention, Mr. Rubin?
Tuesday November 10, 4:23 pm Eastern Time

Rubin not troubled by euro effect on dollar's role

WASHINGTON, Nov 10 (Reuters) - U.S. Treasury Secretary Robert Rubin said on Tuesday he was not worried about the prospect of a common European currency usurping the dollar's role as a world reserve currency.

"In terms of our position as a reserve currency, I guess it doesn't trouble me," he told a forum held by the President's Export Council.

He added that as long as the United States pursued sound economic policies, attracting capital to its markets would not be a problem.
[And then, "attracting capital to...[one's]" is yet another matter altogether.]
(11/10/1998; 17:01:47 MDT - Msg ID: 949)
GOLD vs. EURO, Fincks hedging agsinst the EURO...
Baron vies for vast stake in Homestake

By Thom Calandra, CBS MarketWatch

SAN FRANCISCO (CBS.MW) -- It's not every day a rich German baron seeks to buy a vast stake in one of the oldest gold companies in the United States, all because of the euro.

Baron August Von Finck, who with his brother Wilhelm Von Finck is worth about $4.5 billion, already owns 14.2 percent of San Francisco's Homestake (HM). Von Finck managed to get one of his representatives on the board of Homestake, one of the oldest continually traded companies on the New York Stock Exchange.

(11/10/1998; 20:11:37 MDT - Msg ID: 950)
*******FORUM BUSINESS*******
JUST IN! The World Gold Council's THIS WEEK IN GOLD

"Itsuo Toshima of the World Gold Council's Tokyo office said 'Gold's role as a safe haven came into the spotlight amid Japan's Big Bang financial deregulation. People are buying
gold for asset preservation. This trend is expected to continue for a while.'"

Please enter through USAGOLD HOME PAGE
Friend of Another
(11/11/1998; 09:41:11 MDT - Msg ID: 951)
ALL: I have returned from a long trip that came with short notice. As soon as possible, I will begin to post my replies and, more importantly, send in Another's Thoughts (several).
He will be joining this forum in a major way over the next few months. He has a lot to discuss, so I (FOA) will be posting only intermittently over the next few days and weeks.

(11/11/1998; 10:16:54 MDT - Msg ID: 952)
Short message:

(11/11/1998; 10:29:17 MDT - Msg ID: 953)
Freind of Another
Hey! Glad to see you're back! Things have been a bit slow for the past few days. Looking forward to the promised postings of Another.

Penny Nichols
(11/11/1998; 11:00:47 MDT - Msg ID: 954)
Friend of Another
Welcome Back!! I was concerned that we might have lost you contribution. Now I feel better!!
PH in LA
(11/11/1998; 12:27:44 MDT - Msg ID: 955)
(No Subject)
Please add my voice to the chorus that is saying:
Looking forward to your invaluable input.
Arizona Hiker
(11/11/1998; 12:28:11 MDT - Msg ID: 956)
CNBC Talking Heads...
About a month ago, I sent an email to the folks at Squawk Box, asking them whether they would consider having a precious metals analyst on as their morning guest host.

I got a sarcastic response back from Mark Haynes (sp?) telling me, "Two entire hours on gold? No thanks."

They don't find it difficult to spend thousands of hours discussing the other asset classes, such as "stocks" or "bonds," but don't want to bore their viewers with "two ENTIRE HOURS on gold."

IMHO, by the time these morons get around to featuring precious metals on their morning show, it will be time to sell it and buy stocks. One other item: many of you are familiar with Marc Faber, the well known analyst out of Hong Kong. He was speaking awhile back at an investment conference and someone asked for his opinion on gold.

He said that he remembered attending a similar conference around 1980 - 81. At that time, many of the analysts on the panel and most of those in the audience believed that gold was about to go to many thousands of dollars an ounce...that oil was headed for over $100 per barrell. Only a fool would want to buy stocks. He said that because the crowd was of one mind, you could sense that we were at a key turning point. Now, it has taken 18 years to get the pendulum to swing all the way over. His conclusion: we are at another key turning point.

Go gold...go farm land...go anything real.
Aragorn III
(11/11/1998; 17:41:09 MDT - Msg ID: 957)
Yet more evidence of a shift in the wind...can you feel the breeze?
London, Nov. 11 (Bloomberg) -- U.K. banks yielded to the
European Union and agreed to quote the exchange rate for British pounds in pence per euro, rather than euros per pound, the British Bankers' Association said.

The decision by representatives of the BBA's member banks
marks the end of an era, during which U.K. banks quoted all
world currencies against sterling, rather than the other way
around. The change also ends months of debate among banks about how to handle the new single currency when 11 EU countries--but not the U.K.--start using it after Jan. 1.
"There were a number of banks discussing the matter and
they've decided to go that way," said William Mason, the
director of the BBA's foreign exchange advisory board. "The
euro will be fixed," and sterling will move against it.

Sterling is now quoted in deutsche marks per pound or
dollars per pound; at today's exchange rates, that's about 2.80 marks, $1.66 or 1.42 European currency units, the predecessor to the euro. Next year, the equation will be flipped, making the pound worth 0.70 pence per euro.

The dollar will also be quoted as dollars per euro, as will
all other currencies. The U.K. central bank also agreed to use the euro-based quotations recommended by the European Union and the European Central Bank, a spokeswoman for the Bank of England said.

Some U.K. banks resisted, the central bank said, with many
favoring a dual quoting system whereby the pound would be quoted as euros per pound and as pence per euro. Last week, however, convenience ranked higher than status.
"If you're dealing in a hurry, you don't have time to
check" whether the rate is euros per pound or vice versa, Mason said. "The scope for confusion is quite considerable."

After all, he said, "It's only an arithmetic thing. It
doesn't actually matter."
This last quote is a bit whimsical. Understand that this "end of an era" came about only after the "U.K. banks yielded to the European Union" as stated in the beginning.
Friend of Another
(11/11/1998; 19:12:56 MDT - Msg ID: 958)
From the FT Times!

Fund managers predict euro will rival dollar
The euro, its proponents claim, will change everything. Companies are starting to merge and reorganise on that premise or promise. Many of the changes so far have been tentative. But at least in one area, a radical reorganisation is underway. It could have a large impact on the character of the Europe's single capital market. Global fund managers now believe the euro will be a strong currency in relation to the US dollar and will soon rival the dollar as the preferred currency for debt issuance.
These findings, contained in a report issued by Deutsche Bank today, stem from the largest survey yet conducted on global investor views on Europe's future single currency.
Investors were worried that a broad European monetary union, which included Spain and Italy, would mean a weak euro," said Ifty Islam, a senior economist at Deutsche Bank. However, this view has altered sharply.
Economists say the change in attitude towards the euro has come with the realisation that the euro zone will have a large structural trade surplus - estimated at $100bn, or 1.5 per cent of the euro zone's gross domestic product.
The US, by contrast, is expected to record a trade deficit of about $140bn in 1998. Italy and Spain regularly post trade surpluses, indicating their membership of the first wave of Emu could help strengthen the exchange value of the future single currency.
In addition, the European Central Bank is expected to take a more hawkish stance on inflation than the US Federal Reserve, implying that monetary policy will be tighter in the euro zone than in the US, according to Deutsche Bank.
A total of 193 global funds, including a number of central banks, took part in the survey, representing $7,500bn worth of funds, or about 25 per cent of total worldwide funds.
A large majority of US fund managers, with collectively almost $2,000bn worth of funds under management, said the euro would have a strong exchange value the US dollar.
In addition, 73 per cent of the investors polled, including a majority of US fund managers, said the euro would rival the US dollar as the preferred currency for debt issuance within five years.
As central banks are among the main investors in bonds, this implies that the euro could also rival the US dollar as a reserve currency by 2003. At the moment, about 50 per cent of all international bonds are denominated in US dollars, compared with about 25 per cent in euro zone currencies.
The report suggests, however, that the growth of a broad, US-style corporate bond market in Europe could take longer than many have anticipated.
More than 50 per cent of the funds polled, of which about half were located within the euro zone, said regulations prevented them from buying securities rated below single A by Standard & Poor's and Moody's Investors Service, the rating agencies
el St.One
(11/12/1998; 01:10:41 MDT - Msg ID: 959)
Question for FOA----Whats is your opinion on the next bond auction? I do not follow the auction closely, but I would guess if they have trouble selling them, or have to raise the rates things will begin to get much more interesting.
Ditto---- Great to have you back.

Anyone when is next auction?

(11/12/1998; 05:20:07 MDT - Msg ID: 960)
POG in the mos. of Dec. is now ...
$294.40. el St.One, don't know the answer to bond auction. Do know that gold based 280's for much of this year and now its basing in 290's. When gold rallied from low of 274 it flew over 300 to level out in low 300's only to drop some to get out of the rime ice at that altitude. With its 290's base it has potential to pop through the ice to clear skies above 305.00's.
Silver Tongue
(11/12/1998; 05:58:16 MDT - Msg ID: 961)
Price of Gold
Steve H. I'll have to agree with you on your assessment. Gold keeps retrenching but not badly. We are building quite a nice head of steam that hopefully will explode when the top is taken off the pressure cooker. I tried that once when my mother was cooking pinto beans. Lucky I wasn't killed. As it was there were beans all of the kitchen, the lid was who knows where and I had a very burnt chest. I think that the people in the equities market are going to have a burnt chest within the next 6 months. If you haven't got gold get to accumulating while it is still cheap.
Silver Tongue
(11/12/1998; 05:58:18 MDT - Msg ID: 962)
Price of Gold
Steve H. I'll have to agree with you on your assessment. Gold keeps retrenching but not badly. We are building quite a nice head of steam that hopefully will explode when the top is taken off the pressure cooker. I tried that once when my mother was cooking pinto beans. Lucky I wasn't killed. As it was there were beans all of the kitchen, the lid was who knows where and I had a very burnt chest. I think that the people in the equities market are going to have a burnt chest within the next 6 months. If you haven't got gold get to accumulating while it is still cheap.
Silver Tongue
(11/12/1998; 05:58:51 MDT - Msg ID: 963)
Sorry about stuttering on the last post.
Silver Tongue
(11/12/1998; 05:59:44 MDT - Msg ID: 964)
Sorry about stuttering on the last post.
(11/12/1998; 11:57:51 MDT - Msg ID: 965)
The Real Thing?
Gold-silver-platinum are all up nicely this AM. Could this be the real start that we all know is coming (but in our finite mortality just aren't sure of the "when")? Let's hope that after the smoke of the starter's gun has cleared, he doesn't call another false start and call us all back to the beginner's box. It seems to be past time to bring this "overexuberance" to its painful conclusion. Let's just hope for the sake of us all- even the equity bulls- that it's not TOO painful! In the meantime fill up those pockets with the real stuff- go gold!!
Arizona Hiker
(11/12/1998; 14:22:12 MDT - Msg ID: 966)
Mr. Prechter's EWT Analysis
There has been some discussion of late regarding Mr. Prechter's wave analysis regarding gold... I believe that he has stated that gold could move to the $320 area in the current uptrend, before resuming a decline to the $200 area -- where it will finally put in an historic bottom.

My own belief is that, in inflation adjusted terms, we have already reached his downside objective and that the bottom is in. Anybody know whether he has ever been asked to address the inflation adjusted prices of the precious metals and what impact this could have on the long-term forecasts?

on another point... have to love the breakout in the XAU today. the chart is right out of a textbook. in looking at the channel formed by the uptrend lines along highs and lows, I would project a target of about 100 on the XAU upcoming.

Go Gold
Buena Fe
(11/12/1998; 17:15:29 MDT - Msg ID: 967)
I still think 320+ by Nov 30 is possible.

Me thinks Saddam is betting that the Nov 17,18 Leonid meteor shower will disrupt US military capabilities enough to cause the US some embarresment (GPS & all that you know). It's a long shot I know but crazy enough for Saddam, besides I thinks he's just bored.

By the way, I don't think the metals were up today because of the standoff, the play is much bigger and more complicated than that.
(11/13/1998; 04:29:13 MDT - Msg ID: 968)
Dec. gold now $298.00...
I expect that gold will battle for $300 before NY trading commences. Gold traded 298.40 at just after midnight. It is time.

Friend of Another
(11/13/1998; 06:38:04 MDT - Msg ID: 969)
THE ECONOMIST: "the euro mightdrive down the dollar by 40%"

The international euro

The euro will, at a stroke, become the world's
second-biggest currency. But, as the fifth in our
series of briefs explains, it is less clear whether
and when it might challenge the dollar's
dominant role in the world financial system

UNTIL recently, few outside Europe paid any
attention to the euro. American policymakers
maintained a conspicuous silence, commenting only
that what was good for Europe was good for
America. Asians were too preoccupied with their
own crises to worry about a new currency half a
world away. And Europeans themselves were too
concerned with the mechanics of the single currency
to think about its international impact.

Partly as a result, there is remarkably little consensus
on what that impact will be�and even less on how to
respond to it. The one certainty is that the euro will
immediately be a major international currency, second
only to the dollar. It is striking that, in economic and
financial terms, the euro-11 countries are a close
match for the United States. Their combined GDP in
1997 was $6.5 trillion, compared with America's
$8.1 trillion. Their share of international trade outside
the euro area (19%) is a shade larger than that of the
United States (17%). Taken together, bond markets
in euro countries are somewhat smaller than
America's�although Europe's equity markets are
much smaller than Wall Street.

The dollar's role
in international
finance is,
however, far
bigger than
relative weight
would suggest. It
is the main
currency used for
the world's trade
and investment. Roughly half of world trade is
invoiced in dollars. Almost all commodities are priced
in dollars. According to a recent survey by the Bank
for International Settlements, the dollar features in at
least one side of 87% of all foreign-exchange
transactions, the D-mark in 30%, and other
euro-member currencies in only 24%.

Although the dollar's share of international bond
issuance has fallen substantially since the early 1980s,
over 50% of international notes and bonds are still in
dollars, compared with 28% for the combined euro
countries. Bank lending shows the same dollar
preponderance: 45% of cross-border loans are
dollar-denominated (see chart 1).

Almost half the world's foreign-held bank deposits
are in dollars. The dollar's weight in private
international transactions also makes it the currency of
choice for countries� official reserves. In 1997 some
57% of the world's reserves were in dollars, though
the greenback's share has fallen in the past two
decades (see chart 2).

America derives several benefits from the dollar's
dominant international role. There is, first of all, the
profits to the state from its monopoly issue of notes
and coins. Seignorage from dollars held abroad may
be worth some 0.1% of American GDP.

The dollar's predominance in bond markets also gives
America a "liquidity discount" on government debt.
The liquidity of the bond market allows the Treasury
to pay a lower premium to buyers. Richard Portes of
the London Business School and Helene Rey of the
London School of Economics have estimated that this
discount is worth between 25 and 50 basis points
(hundredths of a percentage point). Given that
non-residents hold about $2 trillion of American
government debt, that implies an annual saving of $5
billion-10 billion, similar to the gains from dollar

The third and perhaps biggest advantage that America
gains from the dollar's dominance is the ability to
finance its current-account deficits in its own currency.
Charles de Gaulle famously complained that the
exorbitant privilege of the dollar "enabled the United
States to be indebted to foreign countries free of
charge." In fact America pays interest on all the
government debt it issues. Yet de Gaulle had a point,
even so. America might have far more difficulty
running huge current-account deficits if the dollar were
not the international currency of choice.

Euro challenger

At the very least, the arrival of the euro might threaten
America's ability to continue reaping such benefits.
But is it also possible that Europe could start to take
them for itself? That depends in the first place on how
quickly the euro's international role will grow. And the
answer to that will also go a long way to answering a
related question: will the euro be a strong or weak
currency? In particular, will it appreciate or depreciate
against the dollar?

Economists considering these questions fall into two
camps. In one are the enthusiasts, who reckon that
the euro will be a strong and stable currency that will
rapidly challenge the dollar's predominance, largely
because investors will diversify their portfolios into
euros. They also think this will happen quickly�in line
with the speed of today's international capital

In the other camp are the sceptics, who think the euro
will need to establish a track record before investors
move into it. They also reckon that inertia, for instance
in reserve diversification, could benefit the dollar for
several decades. They point to the lessons of history:
sterling maintained its status as a globally dominant
currency long after Britain's economic hegemony was

Fred Bergsten, director of the Institute for
International Economics, is the most prominent
American enthusiast for the euro. He expects the
European Central Bank to pursue a tight monetary
policy. He also expects investors, and central banks,
to shift a substantial part of their assets out of dollars
and into euros, commensurate with the euro area's
relative economic weight.

Ultimately, Mr Bergsten thinks that around 30-40%
of world financial assets will be denominated in euros,
with 40-50% denominated in dollars, and the rest in
yen and smaller currencies such as the Swiss franc
and sterling. Such a portfolio shift could imply a
one-off transfer of between $500 billion and $1 trillion
into euros. And if that happens as fast as Mr Bergsten
expects, it will push the euro up against the dollar.

Mr Portes and Ms Rey are also enthusiasts, though
their analysis differs from Mr Bergsten's. They argue
that a key determinant of the euro's future significance
will be the transaction costs of using the euro in
foreign-exchange and securities markets. As Europe's
capital and securities markets integrate, becoming
deeper and more liquid, these transaction costs will
fall. Lower costs will make investment in the euro
more attractive, in turn increasing volume, further
reducing costs, and so on.

Lower transaction costs in foreign-exchange markets
will also increase the euro's attraction as a currency
for denominating trade. If there are further institutional
changes in Europe's financial markets, and if Britain,
which has better developed capital markets than the
continent, joins the euro, the two economists reckon
that the euro could easily challenge the dollar�and
again, that the challenge could come quite fast.

The sceptics� case

How realistic are these claims? Many economists,
particularly in central banks, are sceptical. They point
out that the euro is still untried, and that markets will
need time before they trust it as a stable store of
value. More important, investors have historically
shown a "home bias" in their portfolio allocation. For
a net portfolio shift towards the euro to occur, foreign
investors must hold more assets in euros than they did
in its constituent currencies.

Nor is a single capital market entirely guaranteed. As
Peter Kenen of Princeton University points out, a
single currency does not mean that Europe's bond
markets will become completely unified. Although the
euro will eliminate intra-European exchange-rate risk,
it does not mean that German and Italian bonds
become perfect substitutes. Differences in default risk
and tax treatment will mean that individual bond
markets remain segmented�though to the extent that
they are less so than now, the euro may still gain.

Sudden shifts in official reserve holdings are also
unlikely, despite the disproportionate size of the euro
area's own reserves. Once the euro is introduced, the
national central banks of the euro area will hold
relatively high stocks of foreign reserves that they will
no longer need because much of what is now
"external" trade will become intra-euro trade.
Estimates of these "excess" reserves range from $50
billion to $230 billion. Central banks will at some
point want to reduce these.

Other non-euro central banks (which hold a total of
some $775 billion of dollar reserves) might also want
to hold more euros and fewer dollars. If official dollar
reserves were sold suddenly, there would clearly be
downward pressure on the dollar; but central bankers
will surely want to avoid doing anything to destabilise
currency markets, so they are likely to move slowly.
In any case, official dollar holdings are small
compared with America's overall international assets
and liabilities, which, according to the IMF, are of the
order of $3.5 trillion and $4 trillion respectively. What
really matters, therefore, is the behaviour of private

The relationship between portfolio adjustment and the
euro's exchange rate is complicated. In theory, if
private demand for new euro assets matched the
supply from governments and firms that will borrow in
euros, there might be no effect at all. In practice,
however, a substantial exchange-rate effect can be
expected�mainly thanks to the pattern of
current-account deficits and surpluses between
America and Europe.

If demand for euro assets comes from outside
Europe, the resulting inflow of capital to the region
means that it would have to shift from today's huge
current-account surplus (1.8% of euro area GDP in
1997) to a big deficit to accommodate it. America, in
turn, would be forced to trim radically its
current-account deficit of 2.1% of GDP in 1997. Such
a swing would probably be engineered by a huge
change in exchange rates, with the euro rising sharply
against the dollar. Moreover, if the demand for euro
assets then rose faster than their supply, the euro
would continue to appreciate. To give some idea of
magnitudes, Mr Portes and Ms Rey have suggested
that a portfolio shift of $700 billion into the euro might
drive down the dollar by 40%. Such a change would,
to put it mildly, have a big impact on the global

The European Central Bank's monetary policy (and
also the fiscal policies of euro member governments)
will, of course, influence both the demand for the euro
and its price. So the biggest question of all is: will the
ECB, which has a treaty obligation only to pursue price
stability, take much notice of the euro's exchange
rate? Like America and Japan, the euro area will be a
relatively closed economy: external trade will account
for a mere 10% of GDP. It may be tempting for the
Europeans to mimic the "benign neglect" that they
have often accused the Americans of following for the
dollar. Indeed, some economists think that, with the
world's two major currencies concentrating
exclusively on domestic goals, currency instability
might increase.

Hence, perhaps, the renewed calls for more formal
international co-ordination. At its simplest, this might
mean no more than closer co-operation among the
main currency blocks�the dollar, the euro and the
yen. But there have also been calls for "target zones"
for the euro and other currencies�most recently
suggested by Germany's new finance minister, Oskar
Lafontaine, in talks with his French opposite number,
Dominique Strauss-Kahn, though the motivation of
both men seems to be to ensure that the euro does
not appreciate too far rather than a sudden conversion
to the notion of target zones for the good of the world

Formal exchange-rate targets seem infeasible, even if
some co-ordination between the world's major
currencies might be desirable. For one thing, it is hard
to see them working for the euro, given the confusion
over responsibility for it in international arenas (see
article). Nonetheless, a lesson of the 1930s is that the
existence of two semi-dominant currencies (in that
case, the pound and the dollar) can be destabilising.
Third countries, in particular, can suffer from large
currency swings. The challenge facing the Europeans
(and others) will be to harness the benefits of their
increasingly important new currency, while at the
same time minimising the risk of any such negative
global consequences.
(11/13/1998; 09:00:41 MDT - Msg ID: 970)
All:-------------------------------------- I received this E-mail from USAGOLD with thoughts and questions. To this I will
reply and more. -------------------------------------
Mr. PH in LA, you write: "I find myself wondering how much of your understanding is
based on hard knowledge and/or how much on supposition"?--------------------------------------------
Sir, in the course of human
affairs, it is a mistake to accept "intentions to act" as "hard fact or hard knowledge". The books of history are well written of our society as they make plans to travel in one
direction only to find a better path as time progresses. No leader or king has ever made a
decision that is not questioned or perhaps changed after enacted. Your own congress does
make the laws, only to change them for the better as thoughts intertwine!
In matters of finance, law and defense, orderly conduct requires a plan of action weather it be correct or
not. This is the social way our peoples require, yes? Government without a plan that is
accepted as "hard knowledge" by all does lead to chaos. As you consider this, I continue:
My "Thoughts" make supposition of the "hard knowledge" I possess, for with many years I know well the plans that are made! But, as written here, "as the course is set, it remains
for the captains of state to sail the ship through stormy seas, even as the port of call
remains the same". My years also know well how far from plan we (governments) do
often blow.

Even the Mr. Duisenberg does plan the straight path for what will become our world money. It is a good path, with order, yet he knows and I know how hard the winds of war can blow! I ask you Mr. PH, when you build your financial house at the waters
edge, do you accept as "hard fact" from a human builder his knowledge of the "true tide height"? Is it not the better choice to add "supposition" to this "hard knowledge" and build higher and stronger, with gold?

A currency war does approach that will bring wind and water into any house built on the dollar shore. The "captains of state" know this storm
is coming, but to present it as "hard knowledge" to those with a wealth foundation that may not be moved, is of little purpose.

Much of Western wealth is built this way. It will belost, without contest!

My Thoughts are for those of simple ways and worth, for their homes are small and easy to move. These persons are, and always have been "the wealth
of nations". This new Economic Ship will survive the storm, and indeed sail into it's finalport.
In that day the wealth of nations will remain intact by the actions of governments and people that trusted only gold!
more to come Thank You.
Aragorn III
(11/13/1998; 10:23:00 MDT - Msg ID: 971)
Comment to ANOTHER
The clarity of understanding and judgment demonstrated in your Msg#:970 is par excellence. You, good Sir, are unimpeachable. I hope you have an opportunity to review the Forum Archives so that you may give any necessary attention to the many questions and comments made during your absence these past weeks. As always, I appreciate your efforts to share your Thoughts!
(11/13/1998; 10:30:01 MDT - Msg ID: 972)
Mr. PH, your writing continues: ------------------------
"It has often struck me that a very important linchpin to your
scenario of a Euro poised to take over the dollar's reserve
currency status is the certainty that the major Middle Eastern oil
producers are committed to exporting to full capacity at real prices (in
Euros) in direct competition with the United States' insistence on
higher prices for protection of their strategic oil production capacity."

Sir, you may research for all of your days and never find a paper currency
that lasted without the commodity backing. During most of the past,
currencies were backed with gold. It was during your 1970s that a new
backing was found, oil! The removal of gold as backing for the US dollar
brought about the unified acceptance of pricing crude oil in dollars only. It
was considered, in that time, that the "free market" pricing of gold would
allow the dollar to be devalued in gold terms so as to represent a fair formula
(in percentage) to exchange dollars for oil. In this way, the commerce of oil
would create a demand for dollar use and as such the store of value as
contained in crude would represent the backing. As gold would replace any
lost resource of pumped reserves, the currency could be exchanged for metal
if new replacement reserves were not found. A plan, as such. However, other
motives lie behind the removal of gold from the dollar. Had oil been allowed
to stay at the low "gold backed dollar" price, all production would eventually
come from the large middle eastern reserves. Not the good strategic plan for
the US for reserves in that land required the much higher dollar price for
production. Thus the plan above was formulated and the OPEC Cartel
worked much to the surprise of many! It allowed a high dollar price for world
crude while retaining a commodity backing for the currency. Producers could,
if they wish, use dollars created from positive balance of payments to buy
gold at fair rates of exchange. The late 1980s show how the gold market was
allowed to run wild, without order. As you say, the trap door was shut! The
days of the dollar were now numbered as the European market worked to
begin a new currency. They were hurt badly by the run up in oil prices that
was not of their making. If a new Euro could be created that retained the
backing of gold in another format, oil prices could be lowered back into
Middle Eastern reserve production requirements. (I have written of this
before, please see my Thoughts!) These reserves are much larger than
discussed and can easily supply the world at lower prices. As you consider
this I add: The formation of the Euro is a return to the Old European World
Order with gold as the currency backing. And cheap oil is the agent that will
allow the shift to complete. It could never be presented as such for it would
break the financial system before a replacement was ready. The "hard
Knowledge" of lost oil production in the US due to low Euro prices will
destroy the American economy and wealth system as you know it. Also, the
loss of the ability for the US to sell debt in a native currency at low rates will
bring a credit destruction much the same as visited upon Asia. My friend, the
intent of producers is not to flood the world with oil, rather to change the way
it be priced. The natural effect will see the oil advantage for Europe and every
nation that does embraces that currency as a reserve. You will not see this
written but will feel the effects as they unfold. It will impact every equity and
currency market, worldwide. I have more to discuss of this. Thank You!
(11/13/1998; 10:46:59 MDT - Msg ID: 973)
Aragorn III (11/13/98; 10:23:00MDT - Msg ID:971) ---------------------------------

Mr. Aragorn,---------- we will discuss much in the near time of many
days. I am reading your thoughts and the thoughts of others. Mr.
Kosares has offered this forum for the use of all mouths and ears.
As events progress, it will receive the full measure of deep thinking by a world "not fully prepared" for what is to come!

Thank you for your consideration.
Aragorn III
(11/13/1998; 14:15:00 MDT - Msg ID: 974)
A few extracts of news...[with comments]
Lafontaine Drops Call for Bundesbank to Cut Rates
Bonn, Nov. 13 (Bloomberg) -- German Finance Minister Oskar Lafontaine backed away from calls on the Bundesbank to lower interest rates to boost growth and jobs, saying borrowing costs aren't likely to fall this year. "It doesn't make sense to argue about German monetary policy in the next three or four weeks," Lafontaine said in his first official policy speech in parliament. "We must look forward and see if Europe has room" to lower interest rates.
[It would seem that somebody finally sat FM Lafontaine done for that much-needed explaination of things to come.]

Bundesbank's Schieber Warns Politicians Not to Meddle With ECB
Athens, Nov. 13 (Bloomberg) -- The European Central Bank's main mission to keep inflation at bay "must not be called into question," Bundesbank council member Helmut Schieber said, rejecting calls that lower interest rates would solve Europe's unemployment problem. "No monetary policy can solve structural problems which have their origins in national trends in fiscal, economic, wage and social policies," Schieber said in remarks for a speech at the Greco-German chamber of industry and commerce.
[Looks like a good attempt at a sound monetary system above all it should be.]

EU Parliament Calls for Introduction of 100 Euro Gold Coin
Brussels, Nov. 13 (Bloomberg) -- The European Parliament called for the creation of a 100 euro gold coin as legal tender once the European Union's single currency becomes widely circulated in 2002. The coin would "add an emotional aspect to the new currency," said German deputy Irene Soltwedel-Schaefer, the idea's sponsor. "The measure could also stabilize the price of gold as the national central banks of the euro zone tend to sell their gold reserves."
[I would interject that a "properly worded" announcement of the gold purchase side of the equation would do far more to stabilize or enhance the perception of gold's value.]
In July, the European Central Bank, which will set interest rates for the 11 countries adopting the single currency in January, said 15 percent of the initial $43 billion in foreign exchange reserves transferred to it from member states will be gold, and any sales of their remaining gold holdings, collectively the world's largest, will require ECB approval.
[ECB "approval" may very well be demonstrated as they become the buyer, perhaps? :) ]
Gandalf the White
(11/13/1998; 19:21:44 MDT - Msg ID: 975)
Question for FOA and/or ANOTHER
FOA, Did I understand that you had a number of messages from ANOTHER that you were going to post. Was message # 970 from ANOTHER posted by you ? And then the TRUE response from Aragorn III in message # 971 was rapidly replied to by ANOTHER ? I am delighted to see the educational truths defined, BUT I am confused. Please explain. Thanks from one of the "ears of the masses". Gandalf
(11/13/1998; 20:49:55 MDT - Msg ID: 976)
India amnesty plan to unearth hidden gold
A news article from several days ago -
[B] India Press: Govt mulls amnesty plan to unearth hidden gold
By Bridge News
Mumbai--Nov 12--The government is finalizing an amnesty scheme to
unearth hidden gold in the country, the Financial Express reported today.
* * *
Under the scheme, the government will issue gold bearer certificates to
people who deposit their gold with it. It will also pay a nominal 2-3%
interest on the certificates.
The government will, in turn, on-lend the gold in the international
market. The gold will add to the country's gold and foreign exchange
reserves, the report said.
The finance ministry estimates Indian households have stashed away
13,000 tonnes of gold, bulk of which is in jewelry and cannot be tapped.
The ministry estimates 3,000 tonnes of the gold is in bullion or liquid
Depositors of gold will not be asked any questions about how they
purchased it and won't face any tax liability on that count, the report
The ministry is also looking at other options to free gold from its
"locked-up" status and to channel it to productive use in the economy, the
report added. End
Bridge News
(11/13/1998; 21:02:30 MDT - Msg ID: 977)
More on the Euro Gold Coin
[B] Repeats: MEP: Euro gold coin set to win EU parliament majority

By David Thomas, Bridge News
Brussels--Nov 12--Plans to mint a 100-euro gold coin along with the other coin denominations are set to win a majority in the EU Parliament on Wednesday, according to the MEP sponsoring it.
* * *

Irene Soltwedel-Schaefer, the German MEP retabling the proposal, told Bridge News that the idea of the new coin was that it would be solid gold and was not meant to be either commemorative or a gift idea, but would circulate freely and be legal tender alongside the other eight regular euro coins.

The proposal has passed through the parliament's Economic and Monetary Affairs Committee, although only by a small majority.

But Soltwedel-Schaefer is expecting a thumping majority for her proposal when it gets voted on at Wednesday's plenary session in Strasbourg. The vote will be taken at 1200 local time. She said that the proposal has won the backing of the EP's biggest single group, the Socialists.

A member of the Economic and Monetary Affairs Committee, Soltwedel-Schaefer is due to meet with euroland mint owners in 2 weeks to discuss the logistics of production. She had no details on the production volumes
involved yet.

The MEP said that one of the main motivating ideas behind the coin was that it would bolster the popularity of the euro among ordinary consumers and also support the gold price as euroland national central banks sell off excess gold reserves after the start of the euro.

As the amendment states, it will "symbolize the strength of the euro and add an emotional appeal to the new currency."

Having passed through parliament next week, the proposal still will have to win the backing of finance ministers when they meet here Nov 23.

Production is scheduled to start along with the other euro coins in mid-December. End
(11/13/1998; 23:42:52 MDT - Msg ID: 978)
Euro coins - going for gold
Cooperation procedure first reading, simple majority votes for amendments to be approved
����(A4-0401/98 - Soltwedel-Schaefer)

����On behalf of the Economic Affairs Committee Irene Soltwedel-Schaefer (D, Greens) will be recommending that MEPs approve the Commission proposal amending the technical specifications of the euro coins. The proposal means an increase in the weight of the 50 cent coin, which is in response to the European vending industry's concerns about fraud resulting from the use of manipulated 20 cent coins in place of 50 cent coins. There will also be a modification to the edges of the 50 cent and 10 cent coins, which is in direct response to concerns raised by the European Blind Union.

����Mrs Soltwedel-Schaefer is retabling one amendment from Parliament's second reading of the original euro coin proposal, calling for a 100 euro gold coin to be minted alongside the eight regular coins which would "symbolise the strength of the Euro and add an emotional appeal to the new currency". ����


(11/14/1998; 06:29:33 MDT - Msg ID: 979)
ANOTHER, I am delighted to hear your THOUGHTS again. I have grown to embrace them as "empowered winged messages" from a friend. Since your return, I feel a little like a parched desert that has been blessed with rain again. More thoughts are beginning to sprout. Forgive me if I get too emotional here today.

I feel helpless to give you anything but my heartfelt "THANK YOU!" in return for all you continue to give to me and my family. I am wealthier now and closer to being free than ever before in my life because of your THOUGHTS. If I could give you all the gold in the world I would, but even that would not be enough to repay you.

The most beautiful part of this whole experience is that I DON"T KNOW who you are, where you live, what color your skin is, what you look like, who or what you believe in, how rich or poor you are monetarily, if you are a man or a woman, old or young, who your family is, what your past experiences have been, or who your friends are (except Friend of Another, whose own thoughts are valuable nuggets too) nor any other of the usual prejudices we use to judge each other in this world. The freedom to hear the thoughts another person without tripping over my own personal prejudices is a true blessing to my life.

I desire to know that you are well and happy and most of all safe. But I'll settle for knowing that you are safely back from your journey and well enough to share your THOUGHTS with us once again. I have no way of knowing if you are happy but I would venture to guess that you know the deep abiding personal joy of realizing who you are, what your purpose is in this time of life here on earth and have . accumulated great wealth in your lifetime.......Wealth of knowledge......Wealth of a life of substance......Wealth of family and friends........Wealth of means....... Truly that must be what freedom is. You have given me a taste of what it must be like to be free of the shackles that bind my pshche to this modern world I live in when it aches to soar as our thoughts do

I send you a solid gold "THANK YOU." YB

Friend of Another
(11/14/1998; 06:55:49 MDT - Msg ID: 980)
Gandalf, --------------- Often I find post's from Another on my
system after returning from a long trip. I try not to send them all in
at once. As I am reading this forum now, so may Another also be
reading it through my private link. I never know when, it's
random. Just as Yellowbird just posted, it is sent to Another for
reading (hello Yellowbird!). When indicating he will post often
(real time discussion), I try to stay on or link often. I'm only the
conduit that acts like a firewall. Am expecting real time talk later
today (11/14/98), or if it's a no show, I'll post his last Thoughts
Msg.. That's it my friend, I can add no more. Thanks
Gandalf the White
(11/14/1998; 11:38:19 MDT - Msg ID: 981)
Thank you FOA and Yellowbird
I now understand the mechanics of the communications and shall not concern myself again with worries. I only wish that I could express myself as well as YELLOWBIRD in how I get a tingly feeling when reading FOA's and ANOTHER's posts. I look forward to reading more TRUTHS soon. Thank you all for clearing the cobwebs from a cluttered mind.
(11/14/1998; 14:57:05 MDT - Msg ID: 982)
Ramblings - Euro -US Dollar - Gold
I can't match the profundities of some of posters here, but I had some observations concerning the Euro's coming into being.

1. I saw Jim Rogers on CNBC a few weeks ago. He stated that ordinarily about 80 -90% of Japanese external holdings would go into US Dollars, Treasuries, etc. However, on the occasion to which he referred, only about 35% went to US debt, Treasuries, etc. The rest went into derivatives or other paper based on the yet-to-be-born Euro. (Apparently, there is already a trade in Euro derivatives; this is all hearsay, as I do not work in the financial services industry, or even the private sector). I have found Rogers to be an astute observer of the world scene, and I value his insight on this point. He does not believe the Euro will survive (a plausible analysis, though I disagree with him), though he pointed out the serious implications of the Japanese choosing to hold Euro-denominated debt.

2. How will the Euro impact on the price of gold? If we choose to denominate gold in US dollars, obviously the price of gold should go up. Much turns on what the Europeans wish to accomplish, and by inference what they will do with their massive gold reserves in excess of the 15% reserve requirement. If they want the Euro to be the only store of value, they may try to destroy gold by massive dumping, in addition to challenging the US dollar. Thus, if the Europeans wish to knock out all opponents, the near term could be ugly for gold. However, I believe the Europeans only wish to win on points over the US dollar (the dollar can't be knocked out anyway, and the Europeans know it, even if they were inclined to rout the US dollar - which I believe they do not want to do), by establishing the Euro as an alternative reserve currency.

What is the result of the Euro becoming an alternative reserve currency, without knocking the US dollar out? I add to the mix the opinion of Don Coxe, who is the Bank of Montreal's chief strategist and whose opinion I value because he has been dead-on right recently, both that Japan will rebound upon repairing its banking system and that gold will resume its role as a flight-to-quality asset/store of value. A previous post on USA gold pointed out that the last time there were competing major currencies (the 1930's between sterling and the US dollar), there was wild currency instabilty. Here, I believe there will be three competing currencies - yen, U.S. dollar, and the Euro.

What does this mean for gold? Another previous post pointed out that the British recently folded, and will denominate sterling in terms of the Euro. During its long hegemony, the US dollar is still quoted on terms of its value vis-a-vis the price of gold in terms of one ounce of gold - i.e., the gold ounce, not the dollar, is the constant. I believe that all the currencies will be measured in terms of the gold ounce. Gold will return, in a modern manner which recognizes the economic/political value of fluctuating currencies, to its traditional role as the arbiter among competing currencies. In short, a free market measuring system based on gold and moral/political/economic suasion , as opposed to fixed exchange rates, will govern.

Further, with reference to my first post on October 24 (thanks for the book!), this could lead to a partial remonetization of gold, in that some commercial transactions could be denominated in gold (probably paper gold) to avoid currency fluctuation risks. This will ensure some price appreciation of gold, plus ensure gold's long-term survival as a store of value. None of this will render gold edible however, so goldbugs will still need dollars/euros/yen to buy stuff like food, clothing, etc.

Just my two fiat currency cents worth. Thank You.

Friend of Another
(11/14/1998; 16:00:24 MDT - Msg ID: 983)
FOA NOTE: Reuters and Associated Press did not offer this portion of Mr. Duisenberg's speach at the Economic Club! I think that January could be the flash point?


FRANKFURT (MktNews) - European Central Bank President Wim Duisenberg
said again Thursday that the introduction of the euro in January could potentially
accelerate the on-going shift out of dollar-denominated assets held in private

Duisenberg, in a speech a month ago, said that one could not rule out a sharp
rise of the euro's value against the dollar in January as investors diversified their
holdings into assets valued in the new single European currency.

In the text of a speech to the Economics Club of New York made available here
ahead of delivery, Duisenberg noted that EMU was likely to eliminate the
segmentation of the European bond markets caused by use of differing currencies
and thus produce a broader range of bonds that meet uniform market standards.

"In this context, it is interesting to note that between 1981 and 1995 the share of
EU currencies in worldwide private portfolios is estimated to have risen from 13%
to 37%, while the U.S. dollar's share fell from 67% to 40%," he continued.

"Although this process has slowed down somewhat in the 1990s, I would
expect the introduction of the euro to lead to a continuation of this trend and,
potentially, to accelerate it again," he said.

Duisenberg did not say how this shift would affect the euro-dollar exchange


12:31 EST 11/12
(11/14/1998; 18:20:55 MDT - Msg ID: 984)
Mr. Kosares, thank you for your words. From your post of ( USAGOLD
(10/31/98; 21:07:54MDT - Msg ID:870)), I will reply. Always, it was the
intentions of the BIS for China to join the Euro world. That country is the
"key of Asia", for it does "lock or unlock" all economies on the Pacific.
America did make the great wager that the little nations of this region would
grow large and the Japan would rule this commerce. All of this for the benefit
of keeping the dollar in trade, yes? Now "The Bank" has broken Japan as
they laid upon them rules of adequate financial dealings! These new rules of
engagement find that "noble house" as a ship that sinks with a dollar cargo.
This one ship will remove the entity of the "American Pacific Order".
Please consider this meeting: "11th July 1998 The Bank for International
Settlements (BIS) today opened its Representative Office for Asia and the
Pacific in the Hong Kong
Special Administrative Region (HKSAR) of the People's Republic of China.
The office will serve as a regional center for the activities of the BIS in Asia.
Through the establishment of its first representative office, the BIS aims to
strengthen further the relations between the BIS and central banks and
monetary authorities in the
region, to improve the exchange of information and data, to facilitate the
organization of meetings and seminars and to contribute generally to
cooperation among central banks and
monetary authorities. The BIS has previously operated only from its
headquarters in Basle, Switzerland."
Now the Euro makers offer the China a path to travel that does not bring the
curse of dollar holdings. This day we see the beginnings of the "orient
express" on modern tracks. It will carry the cargo of trade that creates the
"independent economy" of Europe! Combine the oil of Babylon with the
peoples of China, then add the finance of the "Old World" and we perceive a
"New Order" of world commerce. Yes, we the China to the Euro "WITH
Please consider as this was written after the BIS meeting : " Wednesday
brought some renewed strength on recommendations that China should
increase its
gold reserves. Liu Shanen, vice director of the
Gold Economic Development and Research
Institute of the State Metallurgical Industry Bureau,
recommended that the People's Republic should
increase its gold reserves from the current level of
397 tonnes or 3% of total foreign exchange
reserves of $140.5 billion to between 1,000 and
1,500 tonnes, between 6% and 8% of external
reserves, "to prevent financial risk." The reasoning
behind this recommendation is apparently the
belief that China should cut its holdings of
dollar-denominated foreign reserves to guard
against a possible fall in the dollar on the
introduction of the Euro, the single European
currency, at the beginning of next year. China
currently holds about 60% of its external reserves
in US dollar-denominated assets, including about
$60 billion in US Treasury bonds. "Compared with
cash, gold is stable and safe," Liu Shanen said.
He also recommended that the Chinese
government should ease controls on buying and
selling by individuals in a bid to boost what he
described as "non-governmental" reserves. Liu
Shanen pointed out that China ranks third in
global consumption of gold and fifth in mine
production, but only twelfth in terms of its official
reserves in gold."
Some still say that the new Europe will sell gold. I say, these are words that
many wish for! Even the Poland does buy gold that will soon sell at $200US?
I have known these people well, they be no fools for London stories.
Please consider these words of Mr. Milling Stanley: "
"Moreover, member countries of the ECB have been firm in telling
the world that they intend to go on holding gold in their individual
central banks too. Germany, France and Italy - three of the largest
holders of gold in the world - have made it clear they have no
intention of selling."

"Europe's politicians and central bankers are convinced that
Europe's gold will be a vital factor in underpinning the
credibility of the ECB's new monetary unit, the euro, which
they envisage as a reserve currency strong enough to stand alongside
the dollar."

Sir, we will address this further at another time, yes? Thank You
(11/14/1998; 23:06:52 MDT - Msg ID: 985)
India leads off the pack towards global gold confiscation???
Reference: India Amnesty for 'hidden gold'

This nice post from Newsnugget is confirmation of some of my fears about owning physical gold. I know how rapacious and evil governments can be when their order is threatened. Will the US Govt. sit still as trillions evaporate from the investments of middle class and the rich. When the criminal elect and their bureaucratic henchmen finally realize that the dollar is only worth the
2 cents that it costs to print, they will panic. I predict that the USG will move quickly to steal the peoples wealth in gold for the second time this century by re-enacting the FDR Executive Order outlawing private ownership of gold. This will strip the wealth that they failed to steal by
ceaseless printing of FRNs, from the rest of us who saw it coming and bought gold. (Thanks to Another and FOA). What are us gold hoarding criminals to do? I hope that Europe will welcome our gold when our own government tries to arrest us for our soon-to-be crimes. Any suggestions from all you philosophers out there?? Owning gold is the easy part---what about keeping it?? THX
(11/15/1998; 08:03:18 MDT - Msg ID: 986)
ALL: A correction for my speech in #984! This " Yes, we the
China to the Euro "WITH GOLD"!" should say " Yes, WED the
China to the Euro "WITH GOLD"! Thank You

(11/15/1998; 08:32:36 MDT - Msg ID: 987)
Mr. jinx44,
it has always been the battle fought by many, this keeping of
one's money! It takes on many forms of confiscation over many
years. I submit to you that "all forms of wealth" are the "large
target" for theft. Some hold the gold equity shares with little worry
for "the tax" that will surely come. The trading of paper shares will
find "no market" when the "currencies war". After this battle is
settled, all paper will struggle to find a new value in a new world
money. Before this new value is found, the governments will reach
for the "greatest vault of gold", as such, it is "the great vault in the
I think, you know not the modern mind of your leaders. They will
wish for you to hold not the Euro and will encourage their citizens
for gold. To these young officials of Western thought, gold is the
smaller of the two evils that does soon war with the dollar! See
even the "new Euro gold coin", as they make ready for a hard
currency. The dollar makers will rush to offer your "gold dollar
eagle" to present dollar holders as events progress. I tell you now,
silver, platinum and gold shares are not the tools of this new war.
All simple persons do know strategy for conflict, we hold the
weapons of our enemies. We hold gold! Thank You
(11/15/1998; 10:08:11 MDT - Msg ID: 988)
Jinx44 - Re: Confiscation
This is my main concern at present. Keeping gold.
ANOTHER responded to a statement made by a previous poster "Your gold coins in your pocket will become the target of persecution and arrests and you will be forced to accept the world's standard will be unable to trade with your gold because they will have long outlawed both gold and old paper currency.." with the following comment "In the past many world governments and leaders, far greater than those today have embraced these thoughts. I and my fathers have done battle with such evil and won! For we have 6,000 years of history as our armor!
Another, I wonder if you could elaborate on this. Is this a battle that only Giants can fight, or could those of small wealth fight such a battle and win? Any thoughts would be greatly appreciated as always.
p.s. Another, I wish that I could as eloquently state the joy (or is it relief) I feel upon your return to the forum as Yellowbird has.
(11/15/1998; 15:48:59 MDT - Msg ID: 989)
ANOTHER :The "hard knowledge"of lost oil production in the US
due to low Euro prices will destroy the American economy.

Can you elaborate on this a bit more please?
(11/15/1998; 17:47:57 MDT - Msg ID: 990)
Another...with may be crazy...
The future you paint is extreme. Such change is seldom seen except at long intervals. Those who concur may forego great increases in paper money...which just happens to still rule the world at this time.

You encourage people to hold an asset that has shown negative worth for nearly two decades. I know no one, personally, who hold golds except for moi.

Am I the fool? Perhaps, perhaps. I know money based on debt will perish for all debt does grow to extremes only to find default. The question is my lifetime? I know not.

Who are you to tell this tale...I know you not and can not gamble my life's worth on your words. I can and do hedge my life's bet with gold...and some silver. Many call me the fool...and crazy...brothers of a like mind are we.

If you are "crazy" and dead wrong...well...I will watch this old gold market with you and follow in the footsteps hoping to not go to my grave as a "crazy fool".

I accept that gold is no ones debt but few agree and many prosper under the debt currecies of this time...something I have done in the past. I will not chase the paper for a time except with a portion of my digital wealth...we watch and wait.

I enjoy your posts...even as I fear such events if, as predicted, unfold. I now follow a simpler path...we shall see!

I wish you well and in many ways hope you are wrong.

(11/15/1998; 22:18:09 MDT - Msg ID: 991)
On a lighter note...the POG (December) is now...
$295.50. Seems to have dropped a bit since Thursday. But then this is just the paper. Do dealers still have problems with coin deliveries in the US?
(11/16/1998; 05:40:47 MDT - Msg ID: 992)
Dec. gold 296.20...
VSE and junior explorations continue to ride higher along with and independent of the DOW. VSE index at 407.75, VSE mining just under 300 at 299.44.

Friend of Another
(11/16/1998; 06:20:21 MDT - Msg ID: 993)
Will Asia drag down USA?
EMU Top Stories: Mon, 16 Nov 1998, 8:01am EST
11/16 Tietmeyer Says Dollar-Japanese Yen Exchange Rate `Acceptable'

"The U.S. currency has lost about 7 percent of its value against the deutsche
mark so far this year on expectations recession in Asia will slow the U.S.
more than the European economy, prompting the Federal
Reserve to cut interest rats"
Friend of Another
(11/16/1998; 06:40:44 MDT - Msg ID: 994)

Morgan Stanley arm to launch euro index

By Edward Luce and Vincent Boland

Morgan Stanley Capital International, the
global index provider, today launches a
bond index for Europe's future single

It joins a growing number of big US
investment banks hoping to establish the
benchmark index for bond investment in
the euro.

Salomon Smith Barney, which provides the
leading global bond index, has also
recently launched a euro-denominated
index. Other competitors are J.P. Morgan,
Lehman Brothers and Merrill Lynch.
Barclays Capital is the only European
bank to offer an index for the future
euro-denominated bond market.

Bankers say Europe's traditionally
conservative investor base is gradually
attuning itself to tracking broad
benchmark indices in bond markets. The
idea is more firmly rooted in equity

"The big fund managers have increasingly
to justify their performance to
investors," said Peter Harlow, director
of fixed income at Barclays Capital.
"Tracking an index is an obvious way of
doing so."

The big banks hope to mirror US markets
where investors closely follow bond
indices, including benchmarks for
high-yield bonds and for the mainstream
investment grade market.
MSCI hopes its euro credit index will
generate business in over-the-counter

Investors often enter into total return
swaps on indices. They pay a floating
rate of interest plus a spread to cover
administration fees in exchange for
receiving the equivalent return generated
from an index over a given period. This
saves investors directly investing in
bonds covered by the index.

However, some investors say investment
banks have overstated the growth
potential of the bond market in euros.
Although with an estimated capitalisation
of E3,000bn ($3,500bn) Europe's bond
market is almost as large as the US
market, it is considerably less liquid.

Unlike the US market, which has a strong
corporate presence, the European market
will be heavily skewed towards government
bonds. Some banks, such as Barclays, have
confined their indices to these.

There is also intense competition to
provide the benchmark equity market
index. Surveys of fund managers and
pension funds suggest MSCI is the most
widely-used pan-European benchmark
provider, but indices provided by Dow
Jones and FTSE International, partly
owned by the Financial Times, are also
gaining ground.
Friend of Another
(11/16/1998; 06:49:12 MDT - Msg ID: 995)
FRIDAY NOVEMBER 13 1998 Commodities

METALS: Market volatility forecast

By Kenneth Gooding, Mining Correspondent

Demand and prices for metals will be
volatile towards the end of next year as
consumers attempt to head off millennium
bomb problems, according to Rudolf Wolff,
the commodity trading subsidiary of
Noranda, Canada's biggest natural
resources group.

Industry worldwide will build stocks
before 2000, "switching from just-in-time
to just-in-case inventory", Martin
Squires, a Wolff analyst suggests.

The millennium bomb refers to problems
that are already beginning to arise
because older computers are unable to
recognise the date change from 1999 to

Mr Squires says a mining company not
completely certain that its mine - or
power supplier - is year 2000 compliant
would be unlikely to allow employees into
potentially dangerous areas.

(11/16/1998; 07:58:14 MDT - Msg ID: 996)
Mr. Young,
In the 1990s many investors did lose site of the reality of gold. These
persons heard the call of "stock brokers and leveraged metal sellers" as they
offered gold as "the investment" not "gold the world currency". Western
citizens purchased small amount of real metal, then proceeded to expand
return with paper gold. As such, they rode the back of an "unbroken
Arabian"! This "investment" represented the "wild side" of gold in the form
of paper money. Paper gold was offered as real gold in the modern day
perspective. Perhaps, it be the sophisticated way to impress ones piers,
socially. These same did make the great gains, only to return these same into
the fire of "trading". Your mind, it does also record these moves, yes?
I submit, that real gold, held as a currency, has acted no more or less than
many other paper moneys, both major and minor. Open your charts of past
fluctuations in currency markets, view them all. Behold how the currencies
are "volatile" with some movements of greater scope than gold. Some traders
debate with the ears of clients that gold is not used as money "anywhere"!
And therefore, it is not money, but a commodity for the trading. In this aspect,
investors have lost much wealth to the commission of brokers that trade only
metal and have no understanding of world banking of currencies. For the gold
is a currency that, today, is used to buy and sell other currency, not goods and
services! As such it be the "money of moneys". Small investors of simple
means will do well indeed to hold the gold, in good measure, next to the
native currency they possess. In time, this gold will far exceed any other
wealth held by their family.
The "Yellowbird, Truthseeker and others that "think thru these Thoughts"
will find no "claws of other motives" in this mind.

Mr. Young, with respect, if you find me crazy: I offer " bring before me the
lion that so devours my house, for this beast produces more than it destroys
------ strange pronouncements are these as the lamb in our garden has eaten
our only food"

Sir, continue on with you present flock and do count your wealth today, for
the ones with THESE crazy thoughts will compare wealth with you
tomorrow. Your days be well, Thank You
(11/16/1998; 09:03:46 MDT - Msg ID: 997)
Government Confiscation of PMs
I posted a forlorn note several days ago about the possibility of the USG stealing its' citizens gold again in the upcoming global crisis. I sincerely hope that the citizens of this country are not as trusting today as those people were in 1933. Perhaps today, people will have the will to resist the smooth talk of Big Brother when he commands us to return our private property to Washington, DC so that better men can decide our fate. Perhaps this time it will be enough to arouse the dormant desires for freedom that have slept so soundly of late. Perhaps.

As an option, I suggest a trip to to view their site and services. As I understand, they are merely a storage and transfer facility for PMs and not subject to reporting as are other entities. Perhaps having an account here and also one in say, Benelux would make the transfer of digital PM a quick one in the event of a "problem" with ownership in the US. Just a thought. Adios
(11/16/1998; 09:36:34 MDT - Msg ID: 998)
How about Silver??
The following article at is an interesting one well worth reading. Butler writes about the structural imbalance in the commercial silver market. His observations appear valid and easy to grasp. In reading the article, I could not help but mentally substitute the word GOLD for SILVER as I re-read it. Silver is pretty cheap these days. Ask Warren Buffett.
(11/16/1998; 10:30:03 MDT - Msg ID: 999)
Mr. Truthseeker (#988),
In the past, the US government did take in gold for the purpose to "restore
the dollar banking system". The laws were changed for this purpose. Today,
the US will "defend the dollar system" from "change"! This is the large
difference, yes? Understand, that the present dollar world would continue if
no "alternative currency was presented". In this circumstance, a move to
"price all international trade in partial payment with gold" would ensue. Such
would not be good for the world economy or Europe.
To this end, a Euro is created that will allow the "freemarket price of gold"
to destroy the dollar once this alternative is in place. In time, in actual buying
power, gold will rise in Euros but will soar in dollars!
Do consider that for the defense of dollar reserve system, the US political
motives will develop as such: "For citizens to change savings reserves from
dollars to Euro will be the "un-American thing" and "It will be better to hold
dollars or even gold than Euros".

Sir, for a time gold will increase in value faster that the Euro will appreciate
against the dollar. In this way many will move to gold thereby blocking the
escape of foreign dollar holders into metal. It is the "tradeoff" of
"encouraging gold buying domestically" against the "blocking of movement
in foreign dollars". Many dollar reserve banks will "freeze from buying" gold
in the false thought that it will return to lower prices. The dollar will slowly
plunge against any "Euro reserve currency economy".

With this I continue for Mr. SIOP (#989),
In time all native American oil production will become "uneconomic" even
as the dollar price of oil does proceed into the hundreds! This be seen as the
simple understanding because the coming dollar cost inflation does render
even this price as "too low"! However, oil in the hard Euro nations will
become even cheaper, creating much lower costs of production for goods and
services. It is the action of "backing the Euro with oil" by "requirement of
settlement in that currency" that will allow Europe to live as the "American
Perhaps, had the US allowed the dollar price of gold to increase in the early
70s and accepted Middle Eastern oil production as Europe does today, none
of this would have happened. However, the America would have received
much of the hardship that Japan receives today as the result. Still, seldom do
we find the voluntary destruction of over extended industry in today's world.
Always, it is in the "end of currency system" that loss is inflicted. A different
time we journey thru, yes? A history lived by your parents parents. We relive
old history with new eyes, as gold is held in a different light. Thank You

(11/16/1998; 10:42:28 MDT - Msg ID: 1000)
There was no "biting tongue" in my remarks. A bit of a high fast ball to a high fast ball Brothers in THOUGHTS...if you be be I.

You may not understand how difficult it is for most people in the U.S. to accept and appreciate what is and is not true money. Please review my prior remarks. The people of the world value currencies against other currencies...governments and central bankers value currencies against gold.

I shall not be a bird in the nest made of only paper. My nest has much weight in gold. I am not of the paper flock but for a portion of my families worth. That portion can seek gold with great speed and even if lost will not cause a tear.

May each sunrise bring you a "golden light" to brighten your travels.


Aragorn III
(11/16/1998; 10:46:54 MDT - Msg ID: 1001)
Buying currency with gold
ANOTHER, I must thank you for the helpful simplicity of your statement, "gold is a currency that, today, is used to buy and sell other currency". For some time I have struggled in my attempts to explain to others the fate likely awaiting the foreign exchange reserves denominated in dollars within Central Banks that will wish to make a conversion to euros. The euro gets no strength or advantage from such a direct conversion...euro paper for dollar paper. Such has sealed the fate of the Yen as we know it, and Latin American currencies. Therefore, only through a "gold doorway" may a dollar pass through to emerge as a euro on the other side. Thus priced, it will be gold that reveals the value of all the world's transactional currencies; not as it appears today--the dollar price showing the value of gold--a great deception! (yet one that we happily find the bullion dealer will honor in a transaction today -- something that we will surely marvel at in days to come, this "buy-of-a-lifetime"!)
(11/16/1998; 17:30:26 MDT - Msg ID: 1002)
'In time all native American oil production will become "uneconomic" even as the dollar price of oil does proceed into the hundreds!'

Dear respected teacher:

What would be the consequences of the world splitting into three trading/currency blocs (a dream of the Trilateralists I'm sure).Already Argentina is pegged to the dollar,what if the whole American continent becomes a dollar bloc?Can Venezuela,Mexico,and Prudhoe Bay provide enough oil?The US still has vast unused natural gas reserves.

Do you think that Japan will form a Yen bloc with the South East Asian countries (there has been some talk of this)?Where would China end up if this happens?What role will Taiwan play in such a bloc(they have a large gold reserve-is it more than Japans?)?

Do you think that the coming decline of the dollar will affect the NATO alliance?Do you think that India is being overlooked as an up and coming world player?

Please forgive all of the questions.

Friend of Another
(11/17/1998; 05:12:57 MDT - Msg ID: 1003)

Tuesday, November 17,1998
Bahrain Local Time
3:06:09 PM

Euro defence firms aim at integration---------------------

Europe's leading aerospace firms have agreed in
a report submitted to their Governments yesterday
to try to consolidate the industry by forming an
integrated European defence group, France's
Aerospatiale said.
The confidential report by Aerospatiale, British
Aerospace, Daimler-Benz Aerospace (Dasa),
Italy's Alenia, Casa of Spain and Sweden's Saab
pushes the European industrial project forward
amid speculation that BAe and Dasa were planning
to go ahead with a two-way deal.
Europe's fragmented defence industry is under
pressure to consolidate rapidly to compete with the
US sector, which began the process years ago and
has created such giants as Boeing-McDonnell
Douglas and Lockheed-Martin.
But the process has been slowed by
disagreements � notably a reluctance by the British
and German groups to merge with state-owned
Aerospatiale and end up as part of a big outfit in
which the French state would have a major holding.
The European companies said in a joint statement,
released by Aerospatiale, that they had reached "a
wide measure of agreement" on several issues.
"They all have confirmed that a unified, integrated
European Aerospace and Defence Company
(EADC) is the right target structure, as already
proposed by the Airbus Partners," it said.
Aerospatiale, Casa (Construcciones
Aeronauticas), Dasa and BAe are members of the
Toulouse-based Airbus commercial plane
consortium. It is scheduled to become a joint stock
company next year and would serve as the
foundation for an integrated civil and defence
aeronautics group.
The companies said the report also addressed "the
question of government rights and safeguards in
EADC" but did not elaborate.
A spokeswoman for Aerospatiale declined to say
A spokesman for the French Defence Ministry said
the Minister, Alain Richard, would explain the
Government's view on the proposed merger at a
Western European Union (WEU) symposium on
defence industries to be held in Rome today.
Defence sources said the joint announcement by
the six companies seemed to back Richard's
oft-stated view that, despite international press
reports to the contrary, British and German
aerospace giants would not forge an alliance
without France.
France has moved to consolidate its large
domestic industry, announcing a merger of
Aerospatiale with Matra High Technology, the
aeronautics business of the Lagardere group,
which has links with other European defence firms,
including a missiles venture with British Aerospace.

The domestic consolidation, expected to be
completed next year, will fold in combat plane
manufacturer Dassault Aviation, clearing the way
for the establishment of a pan-European group, the
French Government said last week. � Reuters

Friend of Another
(11/17/1998; 05:24:19 MDT - Msg ID: 1004)
CyclePro - Bank Derivative Exposure Report
"The top 8 U.S. banks hold 95% ($26.6 Trillion) of all reported derivatives. These top
banks include the following (with stock symbol): Chase (CMB) includes Chemical from
merger, J.P.Morgan (JPM), Citibank (CCI), NationsBank (NB), Bankers Trust (BT),
Bank of America (BAC), First Chicago (FCN), and Bank of New York (BNY)."
(11/17/1998; 05:46:54 MDT - Msg ID: 1005)
Dec. gold now $295.00
Today the Fed is expected to announce its rate cut. Yesterday the DOW gapped up and then ran well over 9000. Some contrarians believe that the Fed won't cut its rate. So today we might experience news discounted into the market OR a reaction of unknown negative energy on the DOW if the FED confirms the contrarian viewpoint....
(11/17/1998; 09:46:54 MDT - Msg ID: 1006)
The Spike
When you look at any gold chart, particularly on the logarithmic scale (which accurately shows the magnitude of price movement), you cannot help but see that gold rarely behaves cyclically like other commodities. Instead when it goes up, it spikes.... radically. There is a very good reason for this.

Gold is more than a commodity; it is also a monetary instrument. As the last remnant of a free economy, it is a source of concern and frustration to the socialist planners who dominate the world's major economies, including our own.

When gold is rising, it is because socialist plans have gone awry. The people become angry and invest accordingly. Socialist institutions suffer. It is not an accident that the free market loving right rose to power internationally after the socialism's last fiasco in the late 1970's -- Ronald Reagan, Margaret Thatcher, Helmut Kohl, et al. If, on the other hand, gold is idle, socialist schemes appear to have gone as planned. The people are happy. Socialist institutions appear to have delivered on their promises. They thrive. (This defines the leftist period we are in today.)

As a result of gold being a focal point for both sides in the battle over the world economy, the socialist governments expend a great effort to keep gold under control. While they are successful in this enterprise, the price does not move. But all the while, free market pressure builds underneath the control waiting to erupt. It is this building pressure that results in a spike upward when the pressure is released by gold's opponents.

If you, my fellow goldmeister, were a socialist, you would understand that to let gold operate freely would be to court ruin. You would do everything possible to control it.

Farfetched you might say?


For a good portion of the 1960's, socialist planners -- particularly in the United States and Great Britain -- kept the price down openly through the various manipulative schemes. First we had the London gold pool in the mid-1960s. Then we had the IMF/U.S. Treasury sales in the mid-1970s. Why did they do this if not for the reasons I outline? Both manipulations were part of the effort to keep the dollar king and centerpiece of the world monetary system. Now the same planners plot against gold covertly through the use of derivatives and almost daily anti-gold propaganda.

Interesting that Paul Volcker would make a statement yesterday that the current international economic problems extend back to the early 1980s just after gold's last historic rise and at the beginning of this bear market. This goes back to the time that Mexico was bailed out the first time. Since then, (it seemed that Volcker was implying), the full impact on the world economy of various countries in dire straits has been delayed, obfuscated and ameliorated. The full and real effects have been allowed to build beneath the surface like water behind a dam. Bailout begets bailout until there is no one left to do the bailing. The essential economic problems at the root never really go away because we are treating symptoms here not the disease.

The point is that eventually the dam breaks like it did in the late 1960s, early 1970s. Then gold spikes upward as the world economy spikes downward -- both in a torrent. I think that is where we are today and the event for which Europe now prepares. As Another has said they do not want to be caught in that torrent like they were in the 1970s when Bretton Woods broke down, the U.S. devalued the dollar (the world's reserve currency!), and sent the international economy into an inflationary tailspin. In short, the late 20th century attempt to keep gold below $300 will end inevitably the same way the the mid-20th century attempt did to keep it below $35 -- in failure. Of course, there is no way of knowing when this event will occur, but we can certainly as rational participants in the internationaly economy see the water building and the dam weakening.

The essential problem for most of us is how we deal with all this from an investment point of view. When it comes to gold, I do not even like the presence of the word "investment" in the same sentence with the word "gold." I do not see gold as an investment. Such references play into the hands of gold's adversaries. Once that definition is established, all you have to do is control its price. Then you have endless media copy about gold "not performing to expectations", "not providing a return," etc. It is a form of character assassination that I do not particularly appreciate and combat daily in my Market Report.

There is only way to play this gold market -- to own it, as Another suggests, in its physical form as an insurance against the economic and political mayhem our leaders are leading us towards. (Any other form of ownership is folly unless you understand it as a gamble and deal with it accordingly.) This is not a crazy notion I have just outlined, and Another is not crazy for espousing the same principles. If history is a teacher, what is crazy is not to own gold unless you want to join the masses in believing that government is your saviour.

If you play the paper gold game, you play the game of our adversaries and they will pick you clean. Only physical ownership of the metal as an adequate percentage of your portfolio, kept discreetly tucked away, provides a defense against the socialist planners. When the system blows, it will blow in a big way like it did in the 1970s with the price rising in multiples. Then you will have your day in the sun. And I mine.

If you don't own gold, you run the risk of losing a great deal of your wealth. In the early 1980s the line was drawn in the sand at 20% inflation. Already paper investors had lost a considerably in stocks, bonds and other dollar based investments, and gained considerably by gold ownership. Volcker took interest rates over the inflation rate to kill the trend. He succeeded. Had he not, we would have descended into an inflationary nightmare not unlike what happened to the Germans in the 1920s. Who's to say the next time we reach that juncture the dam doesn't break? Are you willing to risk your family's future that the Fed will somehow control the situation? Most who read this FORUM would not, and have already diversified. If you haven't, the consensus recommendation here (I am certain) would be to get started.

I understand the frustration many feel about the price not moving. I sometimes feel the same frustration. When those dark days hover over my psyche, I go back and check my premises as I just did here.

We are in good shape as gold owners. But we should not forget why we own it. Having said that, though it is a long time coming, some balancing of the books is in order and I think euro introduction, as Another and FOA have rightly pointed out, could very well be the catalyst that precipitates the squaring. Purchase physical and wait for the spike.


P.S. Incidentally, the other day I saw a bumper sticker on a car that said simply: Into Another. Anybody know anything about this?
(11/17/1998; 10:05:59 MDT - Msg ID: 1007)
Friend Of ANOTHER,Thank you for your post#1004,it clearly shows where a large portion of all the paper money in the world is.These same banks control all banking regulations in the U.S. All checks cashed at U.S.banking facilities are recorded in the local banks computer.These recorded transactions are open to inspection at any time,by authorized third parties.The banks own and control all the paper money in the world,and we the people are under the banks control thru the banking regulations.

As told to me by my college Professor many years ago:The difference between a FREE society and a SLAVE society is ownership.Please think long and hard about this.

The physical gold held by the individuals(you&me)gives us sovereignty,among each other.IMHO the ownership of gold among the simple people will give the power rightfully back to the people...........beesting
(11/17/1998; 11:45:45 MDT - Msg ID: 1008)
Really enjoyed your 1006 post and all the posters here.We are all students and at the same time we are all teachers.Anyone who ever helped to raise children knows this as a fact.

M.K.please clearify sentance#10 of your post.Free market loving right.

Thank You...........beesting
(11/17/1998; 11:47:58 MDT - Msg ID: 1009)
Wait for a spike? What do I do when gold spikes...which it will at some point? Sell? For what?

Spikes go up AND down...yes? So gold goes up and I sell and get paper that has lost value. No thanks. So I hold my gold selling only to preserve my family and me in dire times. If I do not need to sell I hold my gold for my family of today and future generations...for their crisis if one does arrive.

I will not sell my gold whether is goes up or down except to survive. Someday gold will be the currency of the world...again... and we shall see no spikes except spikes in paper currencies. I hope to see this day but do not plan on doing so. Gold and silver will be money once again and one can only plan for this eventuallity by holding the metals and not selling. Even when it spikes.

Trying to predict the end of fiat currencies is impossible. Yes, the Euro may cause this but perhaps not. I have given up worring about this. Buy the metal, put it away and go on with life.

Apparently Another took offense at my prior post. Such was not my intent. I posses gold and peers think me a fool and CRAZY. If such be the definition of crazy and a fool then that I am. I do not consider me such nor Another.

I wait and watch. When fiat currencies fail my family will be safe. The families of my peers will not. Until then I still play the only game open...paper. Somehow, people still accept that the stuff for goods and sevices. Just as you and I in our businesses.

Paper wealth has been good to can even buy gold with paper. Very cheaply I would add. The paper game is not over...yet. If anyone would care to give me the day or month when the paper game is to end please do so. Absent that, one must live in the world that is and not in the world as we wish it to be. With, however, your gold already bought and put away for the day we all know will arrive. On that day gold will not trade.


Aragorn III
(11/17/1998; 13:11:09 MDT - Msg ID: 1010)
A golden tale
Michael, I enjoyed your recent post to the forum. This one quote of yours reminded me of a story I should share. You said, "If history is a teacher...own gold unless you want to join the masses in believing that government is your saviour."

I am acquainted with an ex-Marine (but no...Once a US Marine, ALWAYS a Marine, correct?) who is young and now married with two children, and is a homeowner of less than modest income. I mention these circumstances to demonstrate that gold is not only for the "Rich and Famous" as many people are want to think.

It may be revealed that this acquintance has acquired over the years not more than five ounces of gold in total, yet what is owned is a measure of accomplishment and source of pride for this person.

I asked this person what it was that prompted the original interest in gold ownership. I was told that there was a breif period of time, that despite being young and of able body and mind, circumstances arose that allowed this (ex)Marine to collect some form of welfare and unemployment and whatnot (I do not know the details, nor are they important to this tale). It was at THAT time that the Marine realized that a profound statement was being made by the System regarding the value of our money for these payments of "free money" to be so easily doled about the population. This young person determined that after bills and living expenses were paid ANY extra money remaining had to abandon the Dollar, which was seen to be a product of a system destined to collapse under its own weight. With no influence from outside counsel, this Marine friend found gold.
I think they do indeed remain "The Few, The Pround..."
Aragorn III
(11/17/1998; 13:16:08 MDT - Msg ID: 1011)
With apologies to Marines!
Ignore that "N"!

The few, the PROUD!

Aragorn III -- the spelling-challenged!
(11/17/1998; 16:29:31 MDT - Msg ID: 1012)
ANOTHER, please clue me in.
Hello ANOTHER & FOA, glad to have you both back. I have several questions for you, namely as follows:

1) I am assuming that many of the forward hedge positions or paper trades for gold are owned by certain oil producers.

2) That a premium was paid by these oil producers when these positions were taken.

3) That these oil producers expected that eventually they could lay claim to their positions in the future in an orderly manner with a certain floor to the POG.

4) That the gold-carry trade has gotten out of hand where #3 above is now impossible.

5) That these oil producers know that delivery of physical gold is now beyond hope and that settlement can be made in a hard currency, namely Euro in lieu of physical gold by those on the other side.

6) That this has probably occurred through LTCM and is occurring as of now with others on the short end.

7) That a tremendous squeeze will be exerted on the US$ to purchase Euros to settle claims thereby giving impetus to a strong Euro versus a severe weakening of the US$.

8) That once #7 above begins, the proverbial cat will be out of the bag, gold will soar causing many more US$s needed than anticipated to settle claims which in turn will cause illiquidibility in the USA and thereby bring on substantially higher interest rates. (Whew, all in one breath)

9) That all of the above will begin after the introduction of the NEW BABY which will be in need of much breast feeding to give it life. The mothers milk will come from the owners of these gold derivitives.

Have I captured the essence of your THOUGHTS?

Thank you,

Aragorn III
(11/17/1998; 16:57:17 MDT - Msg ID: 1013)
Well, you've certainly captured the essence of MY thoughts yestday afternoon on Kitco. It would indeed be nice to have ANOTHER weigh in on this!

I posted...

Date: Mon Nov 16 1998 18:12
Aragorn III () ID#212323:
Copyright � 1998 Aragorn III/Kitco Inc. All rights reserved
Consider that those "cheap oriental currencies" are as such because their countries had been on the receiving end of US Dollar denominated loans for development and other investment purposes...payback with interest also owed in US Dollars which they have no ability to create on their own. In addition to running trade surpluses to obtain these payback dollars, imagine that they also "cheated" ( US-style! ) by printing more national currency than was prudent--to offer on the FOREX for dollars with which to repay these loans--these dollars becoming ever harding to come by because the inflation has peaked with the peak of the borrowing, and deflation sets in as the payback commences in excess of borrowing new dollars into existence. [ok, THAT was a long sentence...take a breath]
Inflation and deflation are unavoidable cycles of fractional reserve lending practices, and the wind has changed. While the non-US world may be gripped by deflation, the US will be spared deflation for one reason. The euro launch will flush out billions of dollars from various national foreign exchange reserve coffers. They have nowhere to go but home. The years of US dollar ( money supply ) inflation that has been spread thin over the globe will get thinner over the globe as much of it moves with concentration onto US shores. Inflation for US, deflation for them. It's all a matter of money supply, location, and scale. If it were not for the euro, the US would likely see deflation also. (Borrowing not as rampant as it once was ) .
But then, I got all this off the back of a cereal box...
got milk?
Date: Mon Nov 16 1998 18:58
Aragorn III (A final tip, inspired by Gold Dancer) ID#212323:
Copyright � 1998 Aragorn III/Kitco Inc. All rights reserved
The malaise suffered by gold for the past 2 years ( 20 years, in fact! ) had nothing to do with deflation in any way, shape, or form.
Someone ( OPEC and Co. ) took the long side of two decades of forward sales for a reason. This was the only way for two parties to meet their two goals at the same to preserve The System ( banking and fiat currency ) , and the other to flee that same system ( with more money than could be accomodated anywhere on earth ) into gold . Under such circumstances, there is no shame paying $300 to $600 for future gold production in a falling market when experience has shown that it cannot be obtained easily on the spot in a rising market, even at $800, which, further, jeopardizes The System.
Date: Mon Nov 16 1998 19:10
FOX-MAN (Aragorn III; You have obviously done much studying and reading on these) ID#288186:
"Currency Plays" and "Gold Plays". It is great to have someone who can assemble bits and pieces of data ( from various sources ) , and then explain them in a "bird's eye view" sort of way! I take it, one of your sources of data gathering comes from ANOTHER. I've been following his posts at USAGOLD and can see where you're comin' from. No doubt, you have many other sources as well, not to mention your own insight! Keep it up...Good reading! Fox-man
Date: Mon Nov 16 1998 19:49
Aragorn III (FOX-MAN) ID#212323:
Copyright � 1998 Aragorn III/Kitco Inc. All rights reserved
It is my pleasure to bring some degree of order/sense/calm to these unique times to the extent that I may be in a position to do so. ANOTHER has indeed been of valuable assistence...'reminding' me of things once known and of things "just over the horizon", so to speak. The history of the Seventies and of OPEC, if you have an interest to do the research, reveals very much that is applicable today insofar as it laid the foundation for what has transpired to this point. To understand money is to see what pieces the big picture is yet lacking, and enables one to direct scrutiny. The euro is the dark sail viewed upon the horizon, that as it nears you will find the ship of gold has come in. The other matters ( US currency, inflation, deflation, asian contagion, etc ) are just trifling background elements that give flavor to the soup.
You might protest, "How can you call the US Dollar a 'trifling matter'?!"
Consider this. It is a fiat currency. In the Seventies, OPEC taught a lesson that went unheeded by many to this day...petroleum makes the world go 'round. The entire history of mankind taught a lesson that gold is the only money par excellence. Combine the irresistible force with the immovable object and a paper contrivance can but bear witness.
Advice to my FRIENDS is is not so easy to get your arms around oil. Better still is to get your fingers around gold. This advice would not be given in the mid 80's through mid 90's. As the hull of the euro ship rises now above the waterline horizon, the course to follow is clear and sure. All else is, well, jetsam...or flotsam. Advice to KITCO, however, is this...Kitco has no need to trouble itself with my advice. It is simply good to visit a place where the battles are not so often fought uphill.

Friend of Another
(11/17/1998; 18:02:54 MDT - Msg ID: 1014)
Pete, Aragorn, Siop and others,
I'm waiting for some replies to your posts. When Another sends them in I'll
have some thinking to add also. I want to wait before I post. Good writing,
people! USAGOLD, nice post! Thanks FOA
(11/17/1998; 19:07:27 MDT - Msg ID: 1015)
two posts, different views, comments anyone??
I am posting two rather opposing views on the question of gold. The first is from , and excerpted as follows;

"Advocacy of gold or gold "backed" money rests on dubious foundations. The discussion that follows will reveal some of the semantic deception, half-truths, doublespeak, self-interest pleading, and historical errors employed in gold advocacy polemics.

There is a strong belief among gold money advocates that little bits of gold, especially if they are stamped with the image of some authority and numbers make better price counters than numbered pieces of paper or computer bytes. The belief involves a perception of what money is. The person who holds that belief perceives money to be something real and apparently needs to see and hold in his hand a physical manifestation of it. Gold is heavy, and refined gold is bright and shiny. It satisfies an emotional need however meaningless it is to the function of money. Money is a product of human mental fabrication. It always has been; it always will be. It is a tool that facilitates exchange. Modern society could not run without it or some equivalent accounting system.

A rational business decision would require that monetary symbols cost the least possible to manufacture. Presently, (1998), it costs around $280 to mine and refine an ounce of gold. Mining decades of tons of ore per ounce of gold has left holes in the ground measured by cubic miles. The ore is leached by toxic chemicals that have produced environmental pollution. Banks create money in any amount with the touching of computer buttons.

Abstract numbers, meaningless in and of themselves, that count quantities of amperes, wheat, gasoline, volume, distance, area, force, or any measurable, quantifiable thing, suffice in commerce, science, and technics without the clumsy inconvenience of metal counters. Why should it be different with money?

A pseudo-legal argument is sometimes advanced by advocates of gold money that a debt cannot be paid with another debt. This is semantic deception. A debt can be paid with anything that is acceptable to the payee. In addition, as long as debt in the form of deposit entries in bank accounts or Federal Reserve Notes can be exchanged for real goods and services, the payee is just as well off as if he had received little lumps of metal. Further, the multi-trillion dollar world economy runs almost exclusively on exchange of debt-money which only consists of numbers in deposit accounts at banks."

The second is from , and is here in its' entirety (hope it isn't too long)

"Johannesburg- the gold price had been artificially held down by hedge funds and lenders of gold, often central banks,had manipulated the market to prevent panic buying that would push the price up, Brett Kebble, the deputy chairman of JCI Gold, said yesterday.
Michael Coulson, a gold analyst at Paribas in London, said yesterday it was well known that derivatives trading in gold, which only started about a decade ago, had exerted continuous downward pressure on the gold price.
Kebble has repeatedly said that the extensive short positions taken in the gold market would have to result in a steep upward move in the price, as funds were forced to buy back gold for physical return to the lenders.
But yesterday he railed against the fact that, instead of winding up the short positions through buying gold - which could have put upward pressure on the price - funds and gold lenders were settling in cash to avoid panicking the gold market.
Kebble spoke at a presentation of the quarterly results of JCI's Western Areas and Randfontein Estates mines, which both reported increased earnings as a result of the falling rand and productivity improvements.
"We have it on good authority that one hedge fund, with a short position of 12 million ounces, settled off the market to a central bank lender to avoid market panic," he said.
This could mean, in effect, that the world's central banks could have far less gold in their vaults than they should.
"In the new year, when the European Central Bank takes over, we will find some worms coming out of the woodwork," Kebble said.
Coulson said the situation had been developing for 10 years and the market could have a shortfall of up to 14 000 tons of gold.
"When this whole spider's web starts to unravel it could be sensational," he said. "It's (derivative trading has) all been one way, all been shorting. No one knows what will happen if it all starts reversing."

Bon Appetit!!!
(11/17/1998; 19:19:30 MDT - Msg ID: 1016)
Pete and Aragorn
I think that your conjectures of the CBs leasing gold that they will never get back is on target. If the EU member banks and CBs are short their 15% gold reserve target, they may demand cash settlement in euros. The demand for euros will skyrocket. If the global financial community doesn't want to rock the gold boat, they will have to rock the euro boat to pay back the gold loans. If the ECB demands that the 15% gold reserve be adhered to, eventually the eurobanks will have to go to the market for gold. Then the whole manipulated fix will be broken. I can imagine that the USG will scream murder and demand stability. I hope that the rest of the thinking world tells them to go to hell. We deserve a whipping for all the bully-boy BS we've ladled out to keep our miscreants in the whitehouse and the boardrooms. Two rules may well apply---Au & 7.62
(11/17/1998; 20:10:21 MDT - Msg ID: 1017)
Dec. gold now $295.00
Nice round number. Help me out now. Gold leasing is like leasing a car except the car stays at the dealers. What travels is the paper, like a mortgage travels from the seller of paper to the buyer and servicer of paper. Correct me if I am wrong. The Central Banks lease to a second tier gold merchant the gold. The gold stays at the bank. But as I understand it, a paper collateral is given as well, such as a bond or treasury note that was bought and paid for by the second tier merchant. The second tier merchant sells a contract for the leased gold and takes out another bond or note upon which it earns interest. In fact it earns interest from the bond at the bank and from this additional bond (the first bond was purchased with capital of the second tier merchant). The second tier also pays a lease rate to the CB for the leasing of gold. This rate is higher for longer term and lower for shorter term leases. The second tier sells the leased gold paper (not the actual gold as it is still back at the vault of the CB) to a third tier merchant, who will make money on the spread in the price of gold. The second tier takes the money from the sale of the papre gold, buys the bonds, and waits while it earns interest, then pockets the difference in rates from the lease to the income from the bond or note less any costs or commissions. The CB makes interest on its non-moved gold inventory. The second tier makes money on the interest, and the third tier may or may not make money, and I imagine may or may not take delivery. Obviously if all third tier merchants took possesion the system would break down. Second tier merchants probably have to cough up some gold from time to time but not the gold at the CB. They surely must buy it on the market. If either the second tier or third tier were to default or not pay on their leased gold then the CB has its gold and the collateral. It seems that the looser here would be the second and third tier merchants, not the CB's. UNLESS, they delivered the gold for now they hold paper and no gold. So when we speak of settling shorts in gold in paper or cash and not gold the CB must then go to market to replenish its gold store or accept the cash and not replenish. So the issue becomes, do CB's when leasing gold keep the gold or deliver the gold or both? Going back to the car analogy. If the car leasee leaves the car at the dealer, the lessee can sell the rights to its non-driveable car many times over. Once the dealer wants its money then the lessee needs to pay back the lease. If the dealer kept the car and had collateral, then the lesee in a default situation would loose its collateral and its car. The dealer would be happy because they had an undriven car with no loss in value and collateral. The lessee was out the collateral. So here is where I need help. Where in the leasing of gold does this model need fixing or repaired or changed to truly reflect what is going on. It seems so simple as A leases to B who gives A collateral. B sells paper of gold from A to C who pays B. B buys more collateral to lease more from A etc. The temptation could be if the banks like a car dealer said, "Hmmm. I have all this gold that I have leased but that I still have the gold. Why not lease it again and again and again." So where are the controls, where is the gold really. Thoughts?
(11/17/1998; 21:29:39 MDT - Msg ID: 1018)
I have recently been realizing that I don't understand this gold leasing business. I've started guessing what I think you just described:.... Fractional Reserve Gold Lending.

If this is what is happening, then the POG is going to go up...... *WHEN* the CB's start calling in those loans.

Do you hear the oars of the good ship EURO splashing into port?

(11/18/1998; 01:33:24 MDT - Msg ID: 1019)

What is your prognosis on the Y2K problem for intro of Euro as stated in the above url?

Thank you,


Friend of Another
(11/18/1998; 05:25:17 MDT - Msg ID: 1020)
"reserves of 260 billion barrels of crude" !
NOTE: The offering of rights in some "form of involvement" in"Saudi's
reserves of 260 billion barrels of crude" is subject to Mr. Richardson's idea
of what "he understood"!
This item "despite Saudi signals to the contrary", leaves the door open to
Europe. So does this statement, "Prince Abdullah has not held a similar
meeting with European companies but Saudi insiders have said neither they
nor Asian oil companies are necessarily excluded from submitting

Wednesday, November 18, 1998
Bahrain Local Time 3:02:44 PM

US backs oil firms� Saudi investment

THE US Energy Secretary, Bill Richardson,
yesterday supported an expansion of US energy
investment in Saudi Arabia, the biggest prize in
world energy with the largest oil production, exports
and reserves.
Announcing a visit to the kingdom in January to
encourage US investment contacts, Richardson
suggested � despite Saudi signals to the contrary �
that this might involve the country's prized upstream
exploration and production sector.
Richardson said in London he understood some
form of involvement in Saudi Arabia's upstream
was on the cards, a development that would raise
the prospect of US access to Saudi's reserves of
260 billion barrels of crude.
"My understanding is that Saudi leaders want to
see upstream investment and joint projects. They
haven't been specific entirely yet. I think there are
discussions going on with the companies," he said.

"The US Government views this as a healthy
development. We will encourage it and that will be
one of the main purposes of my trip, to encourage
this joint upstream investment in both Saudi Arabia
and Kuwait."
Saudi Arabia's neighbor Kuwait is openly seeking
Western help in developing its large oil reserves
through operating service agreements that would
give western partners a share in the proceeds of
new oil produced with their help.
Richardson, who spoke to reporters on the
sidelines of the annual Oil and Money conference in
London, said he had discussed Kuwait's plans in a
meeting in the United States last week with Kuwaiti
Oil Minister, Shaikh Saud Nasser Al Sabah. "Saudi
Arabia's interest in opening its upstream market
has been widely repoted � hailed by industry as a
potential major breakthrough," Richardson said.
Prince Abdullah has not held a similar meeting with
European companies but Saudi insiders have said
neither they nor Asian oil companies are
necessarily excluded from submitting ideas.
Oil majors seeking big Gulf upstream roles could
lose some of the skills and assets necessary for the
job if a price-led wave of downsizing and
consolidation continues, the conference said.
Pressure from investors for better returns and
cost-cutting could result in "anorexic" oil companies
lacking the depth of skills or access to capital to
provide attractive partners for oil-dependent Gulf
states, oil executives and bankers said.
"The opportunities are likely to be more numerous
than the ability of the industry to pay for them at
current cash flows," Pierre Jungels, Chief Executive
of British independent Enterprise Oil, told the Oil
and Money conference.
"The industry will also find it can't get the people
with the ability to do these projects if the current
bout of downsizing continues," he said. � Reuters
Friend of Another
(11/18/1998; 05:46:15 MDT - Msg ID: 1021)
Toru Kusukawa, said Asian countries should peg their currencies not primarily against the dollar
Paris, Wednesday, November 18, 1998

Euro Could Dethrone the Dollar in

By Philip Segal International Herald Tribune

HONG KONG - Although the economies of Asia remain
shell-shocked, Asian countries still hold hundreds of billions of
dollars in cash and could play a key role in determining the
success of next year's major economic event: the creation of
Europe's single currency, the euro, Jan. 1.

Europe's money also promises to play a much greater role in
Asian finance.

While Indonesia, South Korea and Thailand have had to resort
to International Monetary Fund bailouts, Asia remains the
world's dominant lender, with well over $500 billion in
foreign-currency reserves, most of them in U.S. dollars.

Japan, China, Hong Kong, Taiwan and other economies in
Southeast Asia are financing America's continuous and growing
current-account deficits.

That means Asia buys a lot of American bonds, but that could
change. Asia holds a combined 40.5 percent of the world's
foreign-currency reserves, and it is the possible movement of
some of those reserves from dollars to euros next year that
could have the biggest individual effect on how strong the euro
turns out to be, analysts said. "The decision by Asian central
banks is crucial - it's key," said Lorenzo Codogno, economist at
the Bank of America in London.

The United States has a 21 percent share of the world's
economy. But the U.S. dollar made up 56.4 percent of
international reserves at the end of last year, according to the
IMF. Reserves in European currencies - including four that will
not convert to the euro on Jan. 1 - made up just 26 percent, even
though Europe's contribution to the world economy is about
equal to America's.

Should some of these imbalances get redressed after January,
there is plenty at stake.

If the euro gains in value against the dollar, central banks would
prove to be big buyers of bonds denominated in euros, analysts
said. That could put serious pressure on the value of the dollar,
because there would be lower demand for U.S. Treasury bonds
and therefore less demand for buying dollars.

The dollar could then fall, bringing renewed inflationary pressure,
which itself could reduce the likelihood of further cuts in U.S.
interest rates next year. Of course, there would also be benefits
to a cheaper dollar, which would tend to make American
products more competitive on foreign markets and thus be likely
to increase exports.

While they see it as a possibility, though, many analysts say they
do not expect an overnight movement into euros in the weeks
after the debut of the euro Jan. 1, when individuals and
businesses will be able to start using the euro for check,
credit-card and financial transactions. The introduction of the
physical currency will come two years later.

"Central banks in Asia tend to be much more conservative" than
their counterparts in Europe, said Ma Guonan, an economist at
Salomon Smith Barney in Hong Kong. As a result, he said, they
might decide to wait a few months to see how the euro fares
before undertaking major shifts in their reserve currencies.

On Nov. 1, Leon Brittan, vice president of the EU Commission
and one of a series of EU officials recently in China to help talk
up the euro, said Beijing would convert a "serious amount" of its
$141 billion in foreign-exchange reserves in 1999 from dollars
to euros.

It is clear that in 1999 and beyond, Europe's money will play a
greater role in Asian finance, as the European bloc begins
trading in a currency that will be far more liquid than the
individual European currencies are today. Governments in Asia,
which today might not look closely at lending in Irish punts or
Spanish pesetas, may well decide to buy Irish or Spanish bonds
denominated in the same euros used by France and Germany.

As for companies and governments in Asia looking to issue
new debt, "everybody's going to be looking to fund in the euro,"
said the head of origination at a European bank in Tokyo.

"The Japanese want to issue into the euro," he said. "People
want to make use of this new megamarket."

The euro may start slowly, he said, but a few large issues from
supranational agencies such as the World Bank could give a
major lift to confidence in the currency.

In fact, it is the bond market that could lead the way for a shift of
central bank reserves. The changeover may not come so much
in the shift of cash but rather in purchases of euro-denominated
bonds with the proceeds of maturing dollar bonds, as well as
with cash that is continuing to roll into central banks of Asian
countries that are running current-account surpluses.

The United States is not the only country at risk in the event of a
strong euro, however. Should the euro really take off, there is a
danger that the much larger, more liquid capital market that
results could suck investment into Europe at the expense of
Asia, according to David Carse, deputy chief executive of the
Hong Kong Monetary Authority.

"There must also be at least a possibility that closer integration
of the EU could make it more self-contained and
inward-looking," Mr. Carse said in a speech in Hong Kong last
week. "Intra-EU trade could increase, while that with the rest of
the world and Hong Kong could diminish."

In the first four months of this year, he said, Japan sold a net
$2.1 billion in stocks and bonds in Asia but bought $9.9 billion in
European securities. If this trend continues, he said, "extended
diversion of capital to Europe would undermine Asia's growth
prospects as well as Hong Kong's position as an international
financial center."

Japan has also been aware of the problems linked to a strong
euro. On Sunday, the chairman of the Fuji Research Institute,
Toru Kusukawa, said Asian countries should peg their
currencies not primarily against the dollar, as has been the case
for years, but to a three-tier basket of currencies made up of the
dollar, the euro and the yen, according to Agence

Japan may also be waking up to the fact that a move away from
dollar funding in the bond markets would give it an opportunity to
increase the disproportionately tiny amount of yen-denominated
debt in the world's reserves.

A government task force that advises the Japanese finance
minister said recently that the government should consider
eliminating a series of withholding taxes on Japanese
government paper.
Gold Dancer
(11/18/1998; 13:43:29 MDT - Msg ID: 1022)
The new 100 Euro Coin

That the gold content cannot exceed the nominal value of the coin
assures that the price of gold will rise into the year 2002 when the
coins are to be introduced. If a 100 Euro coin is to be used then
if the price of gold doubles only 1/2 of the gold has to be used in the
coin. This in effect devalues the coin without the bank having to do that
nasty stuff of declaring a devaluation. It will let the market decided
what the true value of the gold is in relation to its "paper" or nominal component which
will comprise 85 % of its value. Just like paper Euros.

If the coin were to be a gold coin based on todays prices then there
would not be enough gold to create enough liquidity. And we would suffer a large deflation with the price set so low. So this is the
first indication that the money is changing.

Now lets say that gold goes to $3000 per ounce. That will mean that
the central banks will only have to use 1/10 the amount of gold in the
coin than if they were to issue the coin today. So there will be NO
INCENTIVE AT ALL for the banks to keep the price of gold down. In fact
the opposite is probably true.

The denomination has been put at 100 as a base number, now it will be
up to the market to determine what the price of gold needs to be to
back the paper or nominal proportion. This base number was
chosen because it is not a number so much as it is a decimal
system. Otherwise they could have chosen 25 or 75.
This to me is the first admission that a fraction gold exchange standard is
coming. The US will have to do the same. They have probably
already planned for this. Then the markets will have 3 years to price
gold. Since I read that the derivitives go out this far there is a
relationship with these derivitives and the new monetary system which
is being introduced. These derivitives will make the transition more
smooth and drawn out than just happening overnight.

Gold stocks will perform extremely well under stable rising gold
prices. I would guess that the Dow and POG will come close together
around the $1200 to $1700 number by 2002. I think that is a good guess.

It is also refreshing to see that the power structure is
being forthright about what is going on. Letting the free
market set the price of gold is the only way to do it and it
is important that they are going to do this.
The price has beeen manipulated up till now but this is
going to come to a halt as soon as the market figures out
what is going on. It is doing so now, as we speak.

The end result will be gold and commodity prices being
revalued in dollar terms according to the number of dollars
in existance which will mean falling profits, a falling
stock market and rising interest rates to defend the dollar.

IMHO, Gold Dancer
Aragorn III
(11/18/1998; 14:14:12 MDT - Msg ID: 1023)
Words from Gold Dancer
Gold Dancer,
At an earlier time, you used these words, which I think should stand for your point.
"So this is really an incredible situation that the financial power structure has come clean and in full view for all to see that they are going to let the free market determine the "real" price of gold.
This is the only way to do it, of course, but it is
encouraging to see this forthrightness at his time. We will just have to forget about all the gold manipulation up till now. They had their reason's right or wrong.
On to the future which should be a revaluation of the dollar price of gold and commodities more in line with the available supply of dollars. Shrinking profits due to rising costs and a declining stockmarket. Eventually rising interest rates to defend same." --GD
PH in LA
(11/18/1998; 16:45:56 MDT - Msg ID: 1024)
100-Euro coin
Gold Dancer:
The logic of your words is overwhelming. You point to the many reasons that gold is going higher. You even suggest a cogent and logical timetable for those who want to know when. But for those who ask exactly how high is high there is precious little enlightenment.

Because, so far, we actually have no real idea how much gold would be contained in a 100-Euro coin. Until such a decision is made, all attempts to define the ratio between dollars and Euros are pure speculation. One assumes that such a detail will wait for the value of gold to become clearer at the time of issuance for the coin.

I don't put too much credence on the 15%-gold backing figure either. This comes from press releases which bear all the trademarks of public relations pronouncements without any facts whatsoever. Fifteen percent of what? The value of the reserves backing the Euro? But what value do they really have? What is the value of the US dollar now? In terms of what? Gold? And what would happen if that value should change? Would 15% still hold true? Such questions could be posed at great length to no avail. They will only be answered in their own good time.

Bankers and businesses love percentages. But they are meaningless until it is clearly defined what they are percentages of.

Nevertheless, I am greatly encouraged to see so clearly into the future direction of gold and the dollar. The writing is indeed on the wall. It's just that without the fine print few conclusions beyond general directions seem possible.

In any case, I'm sure I speak for many, even as I speak of many occasions that I have enjoyed and marvelled at your discussions with Aragorn on these themes. Please rest assured that the thoughts of you both are greatly appreciated.
Gold Dancer
(11/18/1998; 17:30:03 MDT - Msg ID: 1025)
Euro coin
The 100 Euro is, I think, representing a whole or 100% of someting. It is not a number. It is a whole. The value of
that whole will be decided as time goes on and all other
prices adjust to gold being in a free market now that there
is no reason to keep the price of gold down. That is the key
to the 100 EURO coin, I believe. It is a whole unit of
measure of which 15 % will be gold. The other 85 % represents the rest of the real wealth in the world:
oil, corn, debt, credit, military, confidence, etc.
How all this works out is for the markets to decide. Let
the fun begin.
(11/18/1998; 17:30:49 MDT - Msg ID: 1026)
Dec gold now at $298US in overnight trading...
Technical indicators show gold might break over $305 in the next seven trading days if not before. The daily chart has broken over the upper bollinger band. I expect that it should start tracking up the band with resistance at the 305 point. It might hit as high as 307 on this stretch over 300.00. I base this on the stochasitic and bollinger band indicators. Bollinger bands tend to represent the low and high trading zones and the item will generally move from one to the other; gold is definitely moving from the lower bollinger towards its upper weekly-measured bollinger band that rests at 305 currently. As far as gold goes, it fought its resistence in the mid to low 90's this time instead of in the 80's which formed a nice platform to jump to higher ground from its current zone. This appears to be the move above 300 that should actually do it. It is time. Watch early morning 6:00-8:00am trading just before NY opens. I suspect it will be at $302 at that time. NY will try to knock it back but won't have much success in keeping it under $300. IMO.
Aragorn III
(11/18/1998; 18:27:37 MDT - Msg ID: 1027)
100 euro coin...commentary....and please review the recent article I posted.
Euro tender...
Subject to unforseen changes, this is how it stands. The euro currency ( proper ) will not begin circulation until 2002. Until then it will circulate as do most american transactions--that is to say on checks or as electronic transfers. In cash transactions the Member currencies will
act as euro proxies on a fixed conversion rate.

Euro bullion...
The 100 euro gold coin is to be a pure bullion coin ( as is the current Wienner Philharmoniker coin ) that may be purchased at fair market value. The coin is principly symbolic, and would not be traded with regard to its face value. ( Much like all other modern bullion coins ) . In fact, you may choose to view this coin as a replacement for the Philharmoniker.
(11/19/1998; 04:10:58 MDT - Msg ID: 1028)
Dec. gold now $298.50, hit $298.90 in overnight...
trading. Trend is still up. $300 before NY open?

Friend of Another
(11/19/1998; 05:20:20 MDT - Msg ID: 1029)
FOA NOTE: What most analysts fail to grasp is that gold may well sell for
100 Euros per ounce by 2002! Of course, the exchange rate between the Euro
and the dollar may show gold trading at $1,000US or much, much higher! In
this event, "content of chocolate" as seen below, will be the least of anyone's

EURO COINS: Speculation supports gold

Gold fell marginally in London yesterday but found support at $293.50 an
ounce as news there might be gold Euro coins provided some support.
Andy Smith, analyst at Mitsui Bussan Commodities, said: On undemanding
assumptions, the bullion embodied in a gold E100 would exceed that in all
commemorative Japanese coins [700 tonnes], the entire issue of krugerrands
[more than 1,400 tonnes] and even that in all the Napoleons [French gold
coins] issued between 1865 and the first world war [13,000 tonnes].
He pointed out, however, that the proposal had previously been considered,
and rejected, by the European parliament. For the past 25 years European
politicians have been haggling over an acceptable compromise for the content
of chocolate. If the definition of a single European bar proves so sticky, what
chance quick progress on a gold Euro coin?
Aragorn III
(11/19/1998; 06:25:03 MDT - Msg ID: 1030)
As the numbers would now appear, there would be approximately 6 French Francs per each euro at the permanently fixed rate. Do you forsee a significant departure from that figure? If not, then let's continue this thought... one oz gold today can be obtained for approximately 1,700 Frcs. If your suggestion holds true, in 2002 that same one oz gold could be purchased for the equivalent of only 600 Frcs.
I can easily see where a DOLLAR would equate with fewer Francs or euros over time, but I cannot see the mechanism that would allow for gold to become even cheaper with regard to the eleven member currencies, and therefore the euro. Please offer any necessary correction to my current interpretation of the Maastricht Treaty. As it is, I would anticipate the purchasing power of the member currencies (and therefore, the euro) to hold similar as it is today with respect to general goods and services, but that gold would rise to its fair market value. While it can be bought today at under 300 euros (or the member-currency-equivalent), in the future it would certainly show an appreciation in value with respect to other goods and services. And certainly, the price change in dollar terms would greatly outpace the price change in euro terms. Thanks in advance for your insight.
(11/19/1998; 06:43:15 MDT - Msg ID: 1031)
Pete (11/17/98; 16:29:31MDT - Msg ID:1012)

Mr. Pete,

World based currencies that are not tied to gold do come and go. It is a
natural part of the economic social order. This is expected and planned for.
As gold has been money for the extent of civilization, paper money may be
used as "world based" as long as it uses gold for backing.
When dollar went off official gold standard, it was hoped to return to gold at
later stage. This period of hope lasted some 15 years until 1985! The events
have progressed toward a new currency from that time. The European
Economic Unit (ECU) was created in early 80s and became the accepted
format for beginning a new day. Today, we approach this change!
It is the "practical understanding" that our modern world must use a "digital
paper money" for commerce. All accept this. However, without a "gold
currency" priced daily in the "free market", and used as real reserves for
backing, any "world currency reserve" would expand using "debt only" as the
tool. This result brings the eventual reckoning for all users. The "host
country" finds all other nations supporting it's "lifestyle", even as those
country's private financial infrastructure is destroyed. It is the rising US
equity markets and falling inflation that so indicates the last days of the
dollar! Many say this is a sign of strength for America, yet they know not
what time of life the dollar has attained. The "old man" has he become even
as persons place their financial horse upon his shoulders. The world debt
structure of this "old man" is such that the true pricing of gold in a new
currency, will bring such a weight as it will end his life!
The purpose of the evolution in "paper gold trade" is offered in many
reasons. At first, it was the "deception" to hide the "life age" of the dollar.
Much as your Hollywood actors obtain the "facelift", yes? This
"deception"(low gold price in US$), to surprise of many, was created by the
"Euro makers" not the "dollar makers". To their advantage, world traders and
dollar investors were greatly fooled and, as you say, "jumped on band
wagon" to help sell paper gold down! This action did prolong life of dollar as
was needed, for the Euro was taking much time to complete.
The intent of "large long paper positions" was to create future leverage
against "dollar gold price". The cost of positions is of little concern, as any
present or historical dollar gold price will be "of little meaning"! These
positions will not be "physically covered" in any great way as this will never
be needed. The final conclusion of this action will lock the Euro into a gold
price, always moving less higher than dollar. The world gold swap market
will complete the rest (LBMA volume)! In time, the favor of oil settled in
Euros will force unwinding of dollar/gold (dollars used to buy gold in open
market). Gold will be purchased, delivering metal for Euros to settle old
leased contracts.
It has always been the desire for the "hard currency" to settle old dollar
debts. Dollar debts made "unreasonable" by the loss of "honest commerce"
by "dishonest exchange rates". As has been from the past, and will be in the
future, Gold does always settle the score! Thank You
Friend of Another
(11/19/1998; 07:33:52 MDT - Msg ID: 1032)
Aragorn III (11/19/98; 06:25:03MDT - Msg ID:1030)
Aragorn III ,
The E100 is just part of "the master plan", as Another calls it. Think about
it? For the present, political posturing will not allow the issuing of a true
circulating gold coin. Besides, why get to specific about it's use now when it
won't be needed until 2002. At that time the entire gold, Euro and dollar
markets will be viewed in a far different light. Perhaps the E100 will be used
to settle outstanding or defaulted gold loans? I never thought about it until
now, but Another never said the CB gold IOUs would be settled for paper
Euros, just Euros?? If the E100 is created as legal tender with no limits on
production ( not unlike the American Gold Eagle) and the exchange rates
bring the gold content value to within a then existing 100 paper Euro rate, the
Gold Euro would become the defacto world standard for money?? If you
really want to get your currency circulating, just allow the gold price as
denominated in all other nonEuro currencies (dollars included), explode in
price. The paper Euro (100 of them) and the E100 would come into parity!
Think about it for a while? I'll be back later to discuss this more. Thanks
(11/19/1998; 07:59:29 MDT - Msg ID: 1033)
When you least expect it...
The question is: When do tops go to bottoms and bottoms go to tops.

Markets only crash when a crash is viewed as impossible...such as now. Gold will only rise when almost all hope is lost.

Right or wrong...I expect one more big push down for gold. It is either $285-80 or $305.

We watch and wait.

Friend of Another
(11/19/1998; 08:09:35 MDT - Msg ID: 1034)
Aragorn III (11/19/98; 06:25:03MDT - Msg ID:1030)

Aragorn III,
One more thing. When I look back in past posts, Another often mentioned
$6000 gold in Euros. It wasn't intended to mean that gold would trade at
6,000 Euros. One thing I missed was that he said was that Euro gold would
eventually trade at the $6,000US value "IN PRESENT DOLLAR TERMS"!!
It now makes sense. In 2002, 100 Euros could represent a dollar exchange
rate of $6,000 gold. Perhaps 60US to 1Euro! $30,000+ gold was mentioned
if the entire currency system blew up prior to Euro launch! Looks like we will
get past that possible problem. Consider it! FOA
Buena Fe
(11/19/1998; 08:14:25 MDT - Msg ID: 1035)
ANOTHER (11/19/98; 06:43:15MDT - Msg ID:1031)
"The final conclusion of this action will lock the Euro into a gold price, always moving less higher than dollar."

Now there is the crux of the matter!! I do not think that we can assume that the E100 will contain 1oz. of gold. I would speculate that the Euro makers have a predetermined content range in mind. It is probably the most guarded secret of this century, but lets work to discover the truth. Heck, we've come this far.

PS IMHO the next 8 to 10 years will usher in more change to this planet than the flood of Noah! Keep Well

(I am new at this internet stuff but I hope I guessed right that IMHO stands for "in my humble opinion".)
Aragorn III
(11/19/1998; 09:25:18 MDT - Msg ID: 1036)
Friend of Another
Thank you for the comments in response to my question. I can indeed see some of your suggestions, while some requires additional thought on my part as it does not quite gel with my open-minded and evolving understanding of the process. Thanks also for the recent comments from ANOTHER, which do fit my conception of the things to come.
Onward and upward...
(11/19/1998; 11:13:42 MDT - Msg ID: 1037)
Thank you for your reply. Reminds me of Dr. Franz Pick and his book, "THE TRIUMPH OF GOLD", that no matter what governments do, gold always triumphs in the end. It has been a trying long time for goldbugs(people of faith, honesty & truth) and hopefully the debasers, no matter who, will get their just desserts soon.

Best regards,

Gold Dancer
(11/19/1998; 11:25:57 MDT - Msg ID: 1038)
100 EURO
Friend of Another: your have said in only a different way what I posted here yesterday. The free market is going to
determine the price of gold and thereby reprice all other
commodities and therefore stocks, bonds, currencies etc.
The 100 EURO is merely the measure, or will be the measure
for all things. It represents 100% of a whole. The amount
of gold to be in the coin has not been decided and won't be
until gold is repriced. But what the 100 Euro can buy has
been set= a 100 paper Euro=a basket of goods. So the end result is that
gold regains all it has lost over the past 30 years which
includes interest payments on paper money.

On another chat site people kept saying that they did not
understand a 15% gold backing for a currency. I ask what is
go hard about understanding the following: Right now US
goverment debts are "I owe you nothings". This means that if
you have a $10,000 Bond and the government goes bankrupt
they will pay you off in $10,000 worth of currency. THis
curency will be worth nothing, hence the term " I owe you nothing". A 15% gold backing means the following: In the
event of default the government will pay you back 15% of
the face value of the bond in gold AT THE THEN CURRENT PRICE
OF GOLD. We can assume that the price of gold in the advent
of default would be at least $6000 per oz. Therefore the
govenment would be obligated to pay you $1500 in gold or
1/4 oz per $10,000 bond. That is what 15% gold backing means
to me. And you can see why the govenment does so well under
this plan. I mean they only paid $20 an ounce for the stuff!

The most important aspect to this whole discussion is what
I mentioned yesterday also. The free market is going to set the price of gold and the governments are not going to stand
in the way of a rising gold price because they no longer have any incentive to do so. Also, letting the price of
gold rise to whatever level it has to will prevent a worst
case senario of deflation and TOTAL debt default. We will have an across the board reevaluation of the debt which will
be "fair to everyone". Of course, those of us who have gold
will be winners, taxed winners but winners just the same.

This is all my opinion but it is the simple way I understand what some are trying to make very complicated.
Of course we don't know what the price of gold will be!!
The market has yet to price anything in accordance to its
true value. We have 3 years to get this done. This is the
best of all worlds because we now have a deadline for the
reevaluation to take place: Jan 2002. May I suggest to
those interested that to have your money exposed to overprice stocks during this time frame is the height of
denial as to what is going on in the world of finance. The
only stocks to have are those that are involved in REAL assets which are at depressed prices: Oil, gold, silver,Nickle, coper, zinc, uranium etc.

IMHO only, Gold Dancer
(11/19/1998; 13:55:28 MDT - Msg ID: 1039)
Why The LBMA Made Its Big Debut In 1997
In that I do not possess the understanding that most of you who contribute to this forum, I have only been a listener to this point.I try to follow the thoughts of "Another" and "Friend of Another" as well as other a few other sources. One of those other sources has written extensively on the role of the LBMA and recently posted his thoughts on why the LBMA (which has been around for years)made itself so well known to the world since 1997. It appears to fit into what we are hearing from Another & Friend. I trust I am not taking to much liberty in posting his thoughts here, but he has requested feedback to his theory and I will pass on all your thoughts to his posting (for those of you who may not know him). I would certainly like to hear from Another and/or Friend of Another as to their thoughts.


A Possible Reason Why the LBMA Make Its Debut in 1997

I have been on a sabbatical for many months NOW - trying to
puzzle out a riddle wrapped in a mystery inside an enigma: the London Bullion Marketing Association (LBMA).

I need your aid to help me clarify something that has been bugging me for almost a year: What was the real reason behind LBMA's PUBLIC DEBUT early last year? Consider for a moment the monumental significance of this august body.

Although the LBMA has been operating for decades (if not a century or two), it was unknown to nearly all gold traders worldwide until 15 months ago. Then without one iota of fanfare, an obscure announcement was made January 30, 1997 on the Internet that a so-called LBMA trades 30 million ounces of bullion daily in old London town.
This is mind boggling. To be sure recent months the DAILY gold trading volume has grown apace (40,000,000 troy ounces) to now equal more than 50% OF THE ANNUAL WORLD'S MINING PRODUCTION. Subsequently, there began regular monthly announcements of the increasing LBMA daily turn-over of the yellow metal.
Each marketing report is made with the same boring and seemingly uneventful tone as, "the DOW is up again this morning - so what else is new?" Something is going on!

Following are some startling comparisons which highlight the draconian magnitude of LBMA's gold trading.

- LBMA is trading more than 1,200 tonnes DAILY
- LBMA is trading more than 300,000 tonnes ANNUALLY
- DAILY gold trading represents about 50% of the world's yearly mine production
- YEARLY trading is more than 125 times the world's annual mine production
- ANNUAL TRADING is nearly 9 TIMES Central Bank holdings (35,000 tonnes)
- LBMA DAILY gold trading value is about $12 BILLION
- LBMA YEARLY gold trading value is about $3.0 TRILLION at current prices


While all this is circling in the windmills of my mind, the Internet bombards me daily with talk of the emerging Euro� and the vital and tantalizing question of what percent gold backing the new currency will sport. THEN SUDDENLY LIKE A BOLT OUT OF THE BLUE I AM STRUCK WITH A MESMERIZING THOUGHT. My question to you is whether my hypothesis is feasible, or just one of those random exaggerated ideas that occasionally pop into one's head. Here it is.

It is a statistic that worldwide currency trading amounts to MORE THAN $1.2 TRILLION DAILY. I have no way of knowing, but I would make a EXAGGERATED guess that perhaps 20%-25% may be attributed to European currency trading among the countries of that continent - in addition to those currencies cross-trading with the U.S. Dollar and Japanese Yen, and to a much lesser extent a myriad of other foreign currencies. But for the sake of argument, let's be conservative and say European currencies account for only 20% of the $1.2 TRILLION DAILY GLOBAL CURRENCY TRADING. Obviously, that is $240 BILLION.

In comes the Euro on New Year's Eve 1999. No more European currency trading for the 11 EMU members. What does the DAILY speculative $240 BILLION DO?? Do they remain idle? Or will
there be another very liquid and well-know market available for this impetuous money - which will not remain idle for long? It will indeed find another vehicle for its speculations� AND WHAT HAVE WITH HERE?! The LBMA!

True, the daily trading LBMA volume of the 40,000,000 ounces is only valued at $12 billion, but that's at a gold price of only $300 per ounce. Nonetheless, the LBMA is NOW well publicized and demonstrates good liquidity. It has been methodically doing its PR marketing for over a year now. What better trading conditions could hot, speculative international money desire?! After all, gold has been
considered by the world since time immemorial as a currency par excellence. Former President of France, General Charles de Gaulle expressed it well:

"Any workable and acceptable international monetary system must not bear the stamp or control of any one country in particular. Truly it is hard to imagine any other standard other than gold. Yes, gold, whose nature does not alter, which may be poured equally well into ingots,bars, or coins, which has no nationality, and which has, eternally and universally, been regarded as the unaltered currency par excellence..."

Is my thought too far-fetched�perhaps just a romantic figment of my vivid imagination? OR does it have some semblance of logic in explaining the until now riddle wrapped in a mystery inside an enigma of WHY THE LBMA ANNOUNCED ITS EXISTANCE, AND BROADCASTS ITS MONTHLY TRADING TO THE WORLD? Will the heretofore European currency trading monies seek action at the LBMA? Remember, we are talking a conservative $240 BILLION DAILY LOOKING FOR SPECUALTIVE TRADING, once the Euro emerges.

Already the LBMA projects financial confidence, organizational structure and trading liquidity of a known
currency - vital attributes and conditions sought by
institutional traders. What else could international institutions ask for? Moreover, its notoriety has painstakingly - but ever so discreetly - been forged during
the last 12 months via the promotional "infomercials" of announcing gold trading volumes every few weeks.

Have we ALL been the unwitting targets of a very carefully and long-planned marketing campaign of LBMA?! Methinks YES.

If true, what's the probable UPSHOT? The current LBMA daily gold trading volume is approximately $12 Billion - with the yellow languishing about the $300 level for some time. Debut the Euro� nearly all European currency trading dries up. And voil�, there is a daily shift of up to $240 Billion of eager trading monies to the LBMA looking for currency action. Consequently, gold demand explodes, along with its price.

It is indeed feasible� quite possible� and most probable� as idle cash does not stay so for very long. What do you think?
Gold Dancer
(11/19/1998; 14:29:57 MDT - Msg ID: 1040)
More on 15% backing
Let me continue my argument about 15% backing. So now the
govenment is in default and gold is $6,000 and your claim is
1/4 oz of gold. Now what? Do you get the gold? Probably not.
You will get currency which still has about 15% of its
purchasing power left. The government keeps the gold.
Why? because that is just the first step to its final
conclusion which is that paper money has 0 claim on gold.
But that can't or won't happen all at once. It didn't
happen that way in Russia. There was an initial devaluation
on the exhange markets of about 80% in one day several
years ago. Now there is another 80 to 90% devaluation of
what was left from the first devaluation.(Hein is right
here. It is not really a devaluation it is a currency adjustment) But lets continue. Eventually in 5 to 10 years
or longer the dollar goes to 0 and we start over again.
Probably with 100% gold money. But by then most of us
won't be around or standing up because this is going to get
ugly and difficult and most of us are going to find it
changes our values so radically that we no longer think that
money is the most important thing in the world. It never
was. But somehow we got off track helped along by our
current economic system of scarcity and privilege.

And so we will return once more to our roots. The roots
of our Founders who first came to this land seeking not wealth but just the "hope" of a free and better life.
And so it will be that way for us once again: back to basics: freedom, honesty, faith and hope. A chance to begin again. It is coming whether we like it or not. Whether we
prepare for it or not.

"The tumult and the shouting will die, the captains and
the kings will depart. And soon will stand our ancient
sacrifice: a humble and contrite heart".

Gold Dancer

PS I do not claim that everything in my post is exactly right or that it will occur exactly as I say. I do however feel that it is close enough and that
the final outcome has already been determined by what has
already taken place: The US is bankrupt. It cannot pay its
debts. The dollar is worthless. Right now this is true.
But the Emperor still has those virtual clothes on called
confidence and denial.
Gold Dancer
(11/19/1998; 14:47:38 MDT - Msg ID: 1041)
Liked your article on Hot money. Fits in with my
thoughts. Gold is headed back into the spotlight because it
never left the spotlight. All currencies headed down in
terms of gold. Commodities headed up. Profits down. Dow
down. Interest rates up. Bonds down. All in good time but
BIG time when it happens. Small beginnings happening now.
Gold Dancer
(11/19/1998; 17:04:03 MDT - Msg ID: 1042)
Gold reserves are different than gold backing
Reserves are used to establish credibility, and to defend a position of valuation for a currency. They are not obligations for payment as with demand notes. This reserve asset is not likely to be offered in payment for the redemption of bonds.
(11/19/1998; 18:18:40 MDT - Msg ID: 1043)
TYoung (11/17/98; 11:47:58MDT - Msg ID:1009)
Mr. TYoung,
Your speech: " Apparently Another took offense at my prior post. Such was
not my intent"
Sir, I find no offense in your words. My reply to you, it was as your words to
me in past "a high fast ball offered to the high fast ball hitter", Yes? I say,
the thoughts a person holds is as their wealth. To share them is as sharing
your private possessions. We have conversed before, therefore, please continue
to share all opinions! Thank You
(11/19/1998; 18:20:28 MDT - Msg ID: 1044)
Pete (11/18/98; 01:33:24MDT - Msg ID:1019)
Mr. Pete,
I do not think this Y2K problem will impact the Euro for the extended time.
Perhaps for a time it will disrupt. For the short time, I do plan for this.
However, if a great crisis develops from operations not completed as
scheduled, the heads, they will roll, yes?
Yes! Thank You
(11/19/1998; 18:25:02 MDT - Msg ID: 1045)
Aragorn III (11/17/98; 16:57:17MDT - Msg ID:1013)

Mr. Aragorn,
I have read your thinking as it was posted. A good consideration, indeed!
May I add this:

Thoughts of personal wealth are but the "little thing" for "nation states". It
is rightly so, for they must deal with the world in a "worldly manor". This
"dealing", it does require the shifting from one side to the other for
obtainment of end result. In all of human existence, politics has existed and it
does function today as "new money" is negotiated. The "good understanding"
at the BIS holds that "no new world class currency was ever brought forth
without attachment to gold". Our history books show this to be true, yes?
The modern politics of Western money has leveraged the world assets with
debt that offers little recourse if commerce slows. These debts, held as
reserves, become as paper in a world of slow business. My friend, your
private savings should not be at "the risk" with need of "the government
guarantee" if a recession or depression arrives. This be not the way to run a
"world reserve currency". Many modern leaders know this, but the politics
prevent the rapid change. However, slowly, the change does come. Often it is
offered in the way that allows forward progress, with options to "reconsider
rational" at later date.
As such we find ourselves today. The Euro was considered some time ago
as a new "western like" currency, with little gold. It did not receive the
backing of "oil settlement in Euros". From the early 1970s, oil became the
backing for the dollar in place of gold(see my other posts, also those of my good friend). That
mistake would not happen again.
It is, indeed well understood that introduction of a new gold related currency
into the Western "no gold" world would destroy many assets and greatly
slow business. Therefore, one "escape route" was created for "nation states"
and another for the private citizen.
When the commerce does slow, most metals will lose the demand of
business. This will be true for gold, also. However, physical gold will receive
the currency demand, a demand such as never seen before. It is in this
demand that the "escape route" for private assets be found. Plan journey well,
sir, we will not travel this path again in our time. Thank You
(11/19/1998; 22:16:06 MDT - Msg ID: 1046)
BOOM, not pop, goes the weasel
I am glad that someone has linked the LBMA to the Euro. For 10 generations, there has been a family that stays perpetually in the deep shadows of the rich,(true)ruling elite. They play all sides of the fences in war and in peace. They are closely connected with the Bilderburgers and the NWO. Guess who????? (the following is an excerpt)

The House of Rothschild was founded in 1776 in Frankfurt, Germany by Mayer Amschel Rothschild - (born 1743 in Frankfurt, Germany). Mayer fathered five boys who would establish the most successful merchant banking network in England (Nathan), France (James), Austria (Salomon), Prussia (Amschel) and Italy (Carl).
From humble beginnings as a rare coin trader, Mayer quickly built a private merchant banking empire which was the choice of not only the German Prince William, but also the financier of choice of the major powers of Europe. The Rothschild name became synonymous with merchant banking quality and safety. The financial acumen of Mayer and his five sons became legendary. The acumen and the accumulated wealth of Mayer has been continually passed down to the next male generation of Rothschilds, without dilution. Their market worth has never been audited or accounted for, following from Mayer's clever accounting practices and the keeping secret books and subterranean vaults which were never the privy of auditor, legal counsel or state taxmen. Their mastery in financing both economic growth and war in Europe with both gold and fiat currencies undoubtedly continues unabated into the 20th century, though romantic auto-biographical accounts might lead you to believe that "that was history."
Their financial hand has been in virtually every major European event, including financing the Duke of Wellington's defeat of Napoleon at Waterloo, to financial aid to Prince Metternich of Prussia. The Rothschilds were the first to build the railways of Europe. Studying the Rothschild family acumen for stock markets, gold trade, and financing of nations provides an insight into how 'Smart Money' survives. The Rothschild name is also associated with philanthropy, horticulture, and fine wines (the French house). While romantic autobiographical accounts of the family suggest that their empire has dwindled since World War II, all this may be a clever illusion to avoid publicity and attention. In the words of the autobiographer Frederic Morton "the family grooms the inaudibility and invisibility of its presence as a result, some believe that little is left apart from a great legend - and the Rothschilds are quite content to let legend be their public relation"
Today, their historical ingenuity and financial acumen is undoubtedly at work building new wealth regardless of a bear or bull stock, bond, or gold market. They undoubtedly revolve in circles that include the LBMA, and possibly every important central bank board of directors, including the IMF. While even by conservative accounting, they are undoubtedly the wealthiest family in the world, though you will never see them listed in Fortune magazine.
Through the involvement of N.M. Rothschild and Sons Ltd. in the LBMA in London, I believe they benefit from virtually every transaction in financial trading, whether treasuries or gold bullion, negotiating gold lease terms for central banks and mining companies, or simply purchasing their own share of gold and gold real estate. One could even imagine that they are involved in the trading of oil for gold and dollars (as per ANOTHER's hypothesis), given their family's interests in Royal Dutch Shell, the world's largest oil company. As Count Corti in 1926, we shall examine the "reported" evidence of their past and current influence in world financial events.
Of the two major Rothschild Houses (French and English), the London House (New Court ), founded by Nathan Mayer Rothschild and operating today as N.M. Rothschild and Sons, is undoubtedly the most influential, especially as it pertains to gold and currency trading. Twice daily a Rothschild agent sits in a cloistered room "fixing" the price of gold in the world's largest bullion trading market: the London Bullion Market Association ( LBMA ). Historically, N.M. Rothschild was owner and operator of England's Royal Mint Refinery and was the primary gold agent to the Bank of England.
Nathan helped finance Britain's conquest of Napoleon at Waterloo, and benefited in London's stock market from advanced knowledge (from his superb courier service using pigeons) of Napoleons defeat at Waterloo. Nathan helped finance the Duke of Wellington's army having bought 800,000 pounds of gold from the East Indian Company for $8 million then selling the gold to the Duke to help defeat Napoleon. Hence, Nathan became chief broker and pay master general to England's most important army; the Rothschilds were England's lifeline for getting paycheques to the English army. Nathan could single handily wipe out savings of many a competitor by dumping "consols" in London driving down their share prices, as he did with the advance news of Napoleon's defeat. Nathan eventually switched businesses to "buying and selling money only."
On a daily basis, Nathan was legendary in London's markets for jumping in and out of the market with tens of thousands of princely rounds, never too early and never too late. Eventually Nathan would become richer than Prince William, his father Mayer's German client. It is said that the Rothschilds were the inventors of the courier service using passenger pigeons to relay news amongst the family and to their client beneficiaries. Nathan's ability to depress stock prices, then buy them up after people panicked was legendary.. He would use Rothschild agents to send false news which would be used by observers falsely leading the crowd astray, then he would buy up the same stock at ridiculous low prices. One of the Rothschild's first victims was the legendary Barings and Ouvard Bank which Nathan almost destroyed after their competitor attempted to wrestle merchant banking business from the House. Ironically, Barings Bank recently suffered an untimely death at the hands of a rouge derivatives trader in Singapore!
More than any other family, the Rothschilds have built and maintained an empire unparalleled by any monarchy in history. Their acumen as money changers and financier to the leaders of Europe over the past 200 years is unparalleled. No single corporation or business entity has survived with so much accumulated wealth intact.
To this day, N.M. Rothschild & Sons of London still lists as its primary business the selling and buying of treasuries and gold bullion. N.M. Rothschild helps fix the price of gold in London each day through the LBMA. A recent London Times articles explained that the gold price fix ceremony where five men (including a Rothschild) talk on their phones for 10 minutes, then lower tiny Union Jacks sitting on their desks, thereby fixing London's gold price each day. This ceremony takes place at 10:30 a.m. and 3 p.m., like clockwork, the same way, in the same place, and with mostly the same firms participating since the first gold fixing was enacted at Rothschild in St. Swithin's Lane on Friday Sept. 12, 1919. The company's name is also associated with many gold mining companies (e.g. Trillion Resources Ltd. and other Canadian mining companies).
The French House, which was most recently headed by the Baron Edmond de Rothschild, was the most powerful private merchant banking arm and the richest of all the Rothschilds and ran the Compaigne Fincanciere, a world wide organization which builds villas, hotels, pipelines, and finances other banks. Rothschild Freres, run by cousin Baron Guy Eduoard, was the largest private bank in France. The French House also controlled mining companies ( De Beers and gold mines in South Africa ) , metal plants ( Rio Tinto ), oil interests ( Royal Dutch Shell ) , and chemical industries (Morton, 1962). The Baron was estimated to be the richest Rothschild and probably the most multiple millionaire/billionaire in Europe. That wealth is now passed on to his son, in Rothschild tradition always to the males, Benjamin ( 34 years of age ) . Edmonds cousin Baron Guy Eduoard was director of the Bank of France. Baron Guy, who owned the Compagnie du Nord railway network in France, was known to use participants to join in ventures serving as initiator and packager as well as guarantor with very deep pockets of cash.
As Morton (1962) notes, the two banks in London and Paris are still probably the largest private institutions in the world. "Although the French house controls scores of industrial, commercial, mining, and tourist corporations, NOT ONE bears the family name." In the 1920s the banks of England and France were organized under the French House into a noiseless international syndicate that reached from J.P. Morgan in New York to their cousin Baron Louis' Creditanstallt in Vienna, Austria.
To appreciate the Rothschild's ability to sustain and increase their wealth and avoid the scrutiny of both the public, the markets, and the state taxation system, consider the story of the death of Edouard Rothschild, of the French House. Anticipating the death of Eduoard in 1949, Rothschild agents began to sell their majority stock holdings of Royal Dutch Shell, Rio Tinto and Le Nickel ( giant mining corporation ) to drive down the price of shares just prior to his death to reduce the value of the estate that was subject to taxation by the French Government. This selling created a panic in the world markets depressing stock prices further. A few days following the death of Eduoard, Rothschild agents bought the volume of stock back at depressed prices, and his reported estate wealth was taxed at the depressed price on the day of his death. One should never underestimate the capacity of a Rothschild to influence markets, even today.
Rothschild interests touch virtually every aspect of our lives. They helped found and finance Royal Dutch Shell and De Beers. Following World War II they invested in vast areas of resource rich properties in Canada, possibly gold rich deposits. Joey Smallwood, premier of Newfoundland, Canada, described the 50,000 square mile land purchase by Rothschild as the biggest land deal in Canadian history. Their influence extends to the Bank of England, Bank of France and most likely the U.S. Federal Reserve, and possibly the IMF. They thus have enormous influence on the world's monetary policy.
Morton (1962) noted that the Rothschild wealth was estimated at over $6 billion US in 1850. Not a significant amount in today's dollars; however, consider the potential future value compounded over 147 years!
Taking $6 billion (and assuming no erosion of the wealth base) and compounding that figure at various returns on investment (a conservative range of 4% to 8%) would suggest the following net worth of the Rothschild family enterprise:
$1.9 trillion US (@ 4%)
$7.8 trillion US (@ 5%)
$31.5 trillion US (@ 6%)
$125,189.1 trillion US (@ 7%)
$491,409.0 trillion US (@ 8%)
To give these figures some perspective consider these benchmarks:
�A little of $300 billion US buys every ounce of gold in every central bank in the world (see John Kutyn's estimate ( �U.S. M3 money supply August 1997 was $5.2 trillion �U.S. debt is currently $5.4 trillion. �U.S. GDP (1997; 2nd Q.) is $8.03 trillion. �George Soros' empire is worth an estimated $20 billion.
We shall never have a full accounting of their wealth. All we can go on is Morton's (1962) comment that their wealth is "ineffable as always." Even our conservative estimates suggest a family with staggering wealth and thus influence. In a world awash in debt and unsustainable fiat currencies subject to implosion, the power of gold and the preference of the Rothschilds to gold cannot be easily ignored.
Consider the Rothschild's profound position of influence in the LBMA and the transaction fees they are earning on each and every transaction of treasuries and 42 million ounces of gold transactions DAILY (recently reported volumes of physical, leased, forward sales). . The Rothschild business earns income from "transactions" (including transfers, calls, puts, trades, leases) and one can only begin to imagine the transaction costs associated with last reported trading of over 42 million ounces of gold per day through the LBMA (more than twice South Africa's annual gold production).
Also consider their involvement and influence over monetary policies exercised by the Bank of England and the Bank of France (and possibly the US Federal Reserve System) and in Geneva. Consider the world's above ground gold reserves is roughly 120,000 tons -- with roughly 40,000 tons or 33% held by central banks. How is the remaining "private" gold holdings distributed? Does anyone have such an account? Certainly not the World Gold Council and their statistics. If a single private owner held 5% of world's remaining gold, would that not constitute majority share holdings? If any player could have accumulated, and could afford a 5% holding of the world's gold supply over the last 200 years, it would be the Rothschilds. Could it be that the Rothschilds through their involvement in daily London gold trades are quietly amassing more of the precious metals in their private vaults, while the confidence game of the Central Banks tries desperately to avoid what Soros calls "unsustainable" fiat currency built on unsustainable debt? It was Mayer Amschel Rothschild who kept a secret subterranean vault full of gold beneath the House of Rothschild in Frankfurt in the 1770s (Morton, 1962) .
While the world is led to believe that gold is a barbaric relic of the past, a huge confidence game is being played out in fiat currency markets, illustrated by the events in Asia. In order to maintain confidence in inherently unsustainable fiat currencies and unsustainable debt, confidence in gold must be depressed, given that it is the only alternative store of value. The increasing volume of gold transacted through LBMA reflects the crescendo this confidence game has reached. These large volumes also suggest that gold is trading as currency and not as a barbaric commodity, as the press is apt to suggest. Could it be that the LBMA is being used as a testing ground for the establishment of a new gold-backed world currency system? If so, the Rothschilds are in a position of enormous influence over such a genesis process.
Consider these words of Stanley Fisher (WSJ, Nov. 12, 1997), IMF's Deputy Managing Director: "What is needed at this point in the world's economic affairs is leadership in setting up a SYSTEM more dependable than using IMF bailouts as a guide to the future value of money. Where that leadership comes from is a tough question."
Indeed, will the leadership and system Fisher is speaking come from the House of Rothschild through the central institution of the LBMA? Only time will tell.
If the Rothschilds, through the LBMA operations, are effectively cornering the world's gold supply they would undoubtedly be in a prime position to benefit from a currency crisis - which they and Soros undoubtedly expect, given Soro's claims that the Asian, and thus by implication all fiat currencies, are inherently unsustainable. This crisis of sustainability is already engaged in Asia and will undoubtedly wash over Europe, England and the U.S. And who recently announced another bailout package? The IMF, of course.
The Houses of Rothschild, more than any other players, knows the historical power of gold and importance of a gold-backed currency system. The English system they helped engineer remained resilient and sustainable for over 200 years until the early 1900s. The Rothschilds believe in gold as the ultimate store of value; always have and always will Undoubtedly they do not consider the metal a barbarous relic of the past.
We are reminded of Morton's words, "today the family grooms the inaudibility and invisibility of its presence as a result, some believe that little is left apart from a great legend - and the Rothschilds are quite content to let legend be their public relations."
What is unique about old power and money of the Rothschilds is their uncanny ability to sustain their power and wealth, and keep it within the family. While it is a tribute to the power of family, the danger is their ability to control and influence the daily lives of average human beings, with fewer resources and less power. Such power can lead to the temptation of becoming as powerful as the gods. Control over such important forms of value such as gold, as an instrument of liberty, may lead to the temptation of exercising dominion over such liberty. The maintenance of power and wealth is ultimately motivated by an anxiety of losing the security that such power has provided. The power and wealth of the Rothschilds carries with it enormous privileges and hopefully a sense of responsibility for the welfare of others. While the Rothschilds and Rockefellers have exercised philanthropy to the benefit of many, even this exercise has benefited their corporations through a tax system which rewards such "charitable" and "altruistic" organizations. What distinguishes the Rothschilds from other world power brokers, like Soros, is their diminutive "presence" in the world, in spite of their untold influence on almost every aspect of our economic existence. Their continued bullishness on gold exhibited through their activities in the LBMA and gold trading suggests that we maintain our confidence in the this barbaric relic. Ultimately, however, one must be keenly aware of the potential controlling influence over gold which the Rothschilds and their merchant banking brethren can exercise, and thus placing our liberty in their hands.
It has been said that "the wealth of Rothschild consists of the bankruptcy of nations"
The Globe and Mail (various issues)
The Wall Street Journal
Morton, Frederic (1962). The Rothschilds.
Corti, Baron Egon Caesar (1928). The Rise of the House of Rothschild.
Soros, George (1994). The Alchemy of Finance
(11/20/1998; 04:40:15 MDT - Msg ID: 1047)
Dec. gold $296.70
I read:

LBMA net daily trading clearing value rose 5.3% in October at 1,113 tonnes, September was lower. Last October was 1,306 tonnes.

Friend of Another
(11/20/1998; 06:15:42 MDT - Msg ID: 1048)
Friday, November 20,1998
Bahrain Local Time
4:08:40 PM

Euro nine plan unified stock market

The heads of nine European stock markets will
meet in Paris next week to create a Europe-wide
bourse after the launch of the euro single currency
in January, the Paris market authorities said
The announcement came after Madrid, Milan and
Brussels had said they would be interested in
joining a pan-European stock market proposed by
London and Frankfurt in July.
The SBF has invited the presidents of the
Amsterdam, Brussels, Frankfurt, London, Madrid,
Milan, Stockholm and Zurich bourses to Paris on
27 November to discuss setting up a "federal-type
and competitive pan-European stock market," the
statement said.
Paris, which had initially hoped to set up its own
Europe-wide stock market system, appeared finally
to bow to the inevitable and accept that if London
and Frankfurt were already linked there was little
chance of attracting partners to a rival system.
French Finance Minister Dominique Strauss-Kahn
said yesterday that it was perfectly "logical" for
Paris to join the alliance.
He said the idea was to set up a joint company to
run a single stock market from January.
"The stock exchanges in Frankfurt and London are
very happy with the decision by Paris," said
Deutsche Boerse spokesman Norbert Essing.
"We've wanted a pan-European solution from the
very beginning and it is in the interests of both the
clients and the markets."
After the launch of the euro, stocks on many
European markets will be quoted in euros, and the
Anglo-German plan was to set up a single market,
enabling members to deal in leading stocks on
either market. This will be made much easier by the
fact that there will be no currency conversion
problems, and allowing dealers to trade easily in
shares in several countries should also boost trade,
analysts say.
When Frankfurt and London announced their tie-up
in July, they invited other leading European stock
markets, including the market in Paris, to join but
had received no positive responses until Madrid
agreed to join on Wednesday.
The L�Agefi newspaper said yesterday that the
Paris stock exchange had signed a letter of intent
to join a three-way market allowing for
cross-membership of all three markets, and trading
in stocks on all three markets, from January 4.
Madrid agreed to join the alliance on Wednesday,
and the head of the Milan exchange, Stefano
Preda, said yesterday that he hoped "an
agreement will be reached rapidly" on such a
market, although he said he thought the tie-up
would involve only six countries.
Brussels stock market President Olivier Lefebvre
meanwhile told Europe 1 radio that he was "very
interested" in such a tie-up.
"We immediately expressed an interest" after
London and Frankfurt announced they had agreed
on an alliance in July, "because stock markets
cannot remain isolated in a European context," he
The nine markets involved had a total capitalisation
of $5.58 trillion at the end of 1997, or half the value
of the US stock markets, according to figures from
the international stock market federation.
The New York stock exchange alone had a total
capitalisation of $8.88 trillion at the end of 1997. �
Aragorn III
(11/20/1998; 10:38:12 MDT - Msg ID: 1049)
letting the cat out of the bag
consider this...
If one can put all preconceptions and prejudices aside, one can see things with clear view and be amazed as what is found just before his eyes.

Consider breifly the conditions for successful euro launch...the member states must meet specific convergence criteria (economic criteria consistent with gold standard currency)--balanced governmental budgets, low interest rates, low inflation, etc.

Eleven nations are in the news to form this European Union, yet we have seen TWELVE nations meet these criteria (13 if you witness Latvia). The number twelve nation has been...the United States. As some european nations have cut interest rates in haste during these remaining months prior to final convergence on January 1, 1999, we have seen the Fed cut rates too, even as a surprise to some. We have seen what has been touted as the first balanced annual buget in years (although the debt certainly remains). We see what is called low inflation in the U.S.
We know that Mr. Greenspan is a longtime gold advocate, and that he does not avoid the BIS meetings. He would certainly take an interest in doing what he knows in his heart to be the right thing. Even as the euro takes flight, the U.S. dollar must also return to gold. The world is not so large as to act with significance, creating a gold standard currency, without involving a partnership with the U.S.

Even as Italy has its woeful economic balance sheets forgiven for European Union on the merit of their impressive gold inventory, so too the United States shall find its way clear of decades of unpaid bills. The gold inventory may be used to set things right.

It might be natural to think of the U.S. in an adversarial and reactionary position following the actions of the European Union. I think you will find it nearer the truth that the Treasury and Fed have been working in quiet corners to mitigate the turmoil and shock from the reckoning that will be required (in regard to the national debt) as the world moves back to a gold standard. The US dollar must also find itself backed by gold (or euros as gold's proxy), but it will suffer a poor exchange rate as settling the debt will remove much of the US gold inventory, the wealth of nations. Bonds held by Japan, China, and others must be paid in gold for any hope to be maintained for an orderly transition to new currency. Or else they must forgive the debt entirely.

This morning as I prepared to make these remarks I encountered this Reuters brief from Mr. Greenspan. The nation has gold. As ANOTHER suggests, the individual person must also give thought to his personal interests...obtain gold. I think you will like what you are about to read.
Friday November 20, 11:03 am Eastern Time

Greenspan says confident euro will be a success

FRANKFURT, Nov 20 (Reuters) - U.S. Federal Reserve Chairman Alan Greenspan said on Friday rejected the idea of target zones for global foreign exchange rates and also said that he was confident the single European currency would be a success.

Greenspan told a banking congress in Frankfurt that he was extremely confident "that the euro will be impressively successful."

Greenspan was making an opening statement at the start of a panel discussion at the congress.

Greenspan nonetheless made clear that the European Central Bank had a key role to play in ensuring the currency's credibility.

"The issue of the competitiveness of the euro as an international currency will depend crucially on the credibility of the ECB," he said.

Turning to a debate in progress about the possibility of global foreign exchange target zones, Greenspan said: "It is a desirable goal. It's just not feasible."

"The presumption that we can create exchange rate target zones is an illusion," he added.

Greenspan said intervention to stabilise currency levels in such a system would simply be unworkable.

Japan, the euro zone and the United States would require huge sums of money to manage currency levels in such a system and governments could balk at such huge payments, he added.
(11/20/1998; 12:27:24 MDT - Msg ID: 1050)
Establishing Gold Value
I'm not a frequent visitor of this site. So bear with me if I repeat what is obvious to this forum. An important viewpoint occurred to me that seemed worth sharing.

Before the US dollar went off the gold standard, gold was a very modest $35 per oz. This was a two edged sword. This unquestioned value supported the US dollar while the US government maintained gold at a locked in price of $35. If gold at that time had suddenly plummeted to $5 per oz. the US currency backed by that gold would have become less stable. As I would understand it, a given denomination of currency would be backed by a precise and given amount of gold that would not fluctuate with the price of that commodity. And since the government pretty much maintained a maximum value for gold at $35, gold couldn't suddenly become worth $500 per oz and thus greatly improve the value of US currency. What was desired was stability.

Flash forward to focus on the introduction of the Euro and the possibility of backing with a percentage of gold. Gold is no longer a stablized commodity locked into a set value of $35. It has ranged to $800 + per oz and is predicted to go to a much higher figure. Some of you think of this as gold being stable while world currencies gyrate around it.

One thing seems clear to me. The parties introducing the Euro would not prefer to assign a very high priced gold to their currency and then experience gold taking a very severe correction. This would simply drag the new currency down with it. To achieve the greatest strength for the new currency, they would prefer to assign this gold at either a rock-bottom price (so there would be little risk of decline in gold and devaluation of the currency) or a somewhat median price (that might be considered a stable average).

If we assume this to be true, then it is a very fortune circumstance that gold seems to have reached a very firm base at a time when the Euro is scheduling for an introduction.

If on the other hand, the number of oz backing a percentage of the face value of a given currency were to fluctuate with the prevailing value of gold ... then ... as Gilda Radner used to say, "NEVER MIND".

Aragorn III
(11/20/1998; 12:43:37 MDT - Msg ID: 1051)
whispering low
You must rethink what you've suggested while maintaining a consistent perspective which is this: On a gold standard a monetary unit is defined by it association with gold. The money unit is of no value itself...just ink on paper. Gold is where the value is found. To say gold is worth $35/oz is a misrepresentation of the location of the value. One would more properly say the DOLLAR is worth $35/oz. See the difference? If the gold standard establishes, in your example, that the dollar is $35/oz, it is impossible for the dollar to become $5/oz without an act of government or mischief. I think you will see your question becomes resolved when reconsidered.
(11/20/1998; 15:44:26 MDT - Msg ID: 1052)

In all due respect, I appreciate your attempt to enlighten me. However, I was not aware that I had a question that needed to become resolved.

I don't mean to put either of us on the defensive, but you can't say the dollar is worth $35/oz either. I understand your meaning. Gold is the thing of value & not the currency.
Currency is a sort of guarantee that the government issuing it will honor its value as represented by its stated denomination. Gold or some other item of real value, as an exchange, can back this guarantee with collateral and can restrain the issuing government from producing more than it can provide in exchange collateral.

It is not imparitive that the exchange can or cannot actually be made. However, if the real possibility of exchange cannot be insured, then a backed currency may be only a little more stable than fiat currency. The Swiss may back their currency by maintaining twice as much gold as necessary to provide 100% exchange. Another government might decide to back their currency by maintaining only 15% in reserves consisting of paper claims on future production of gold. Obviously, that currency should be recognized as less stable or secure.

If we take the view that precious metals are stable in value and that it is the other items of exchange that fluctuate, then we can claim a CURRENCY or COINS to be stable to the extent that they are backed by or contain precious metal.

Therefore, if a new currency is being issued and that currency is considering backing all or in part by precious metal, the issuers must (first) have possession of the metal and (second) select a metals/value entry point.


(11/20/1998; 20:33:53 MDT - Msg ID: 1053)
No matter whether a government or the politicians thereof want the responsibility for maintaining the monetary discipline imposed by gold, I believe that we are on the road to this discipline by the major CBs.

These CBs realize that some sort of monetary reform is required if stabilization of any currency in terms of purchasing power and foreign exchange is to be achieved.

As Aragorn III implies, cooperation between the ECB, FRB, BOJ, BIS and others is a must if world trade is to be successful. Note the sales of gold by CBs and wonder whether this is simply an allocation of assets between various banking systems until the time arrives for the planned reform of the monetary system. Also note the forward selling of gold many years in advance by producers guarantying a continuous supply for many years hence to these CBs to bolster their reserves and allow for growth.

The currency crisis is at a point that the above is almost mandatory if stability of trade and foriegn exchange is desired by the world governments. A temporary(notice I said temporary because politicians will debase again and again and again in due time). A new period of stability would begin again and in all probability be welcomed by the public and financial community of the world.

What would this mean to the POG? IMHO, a revaluation of gold would have to occur if the limited amount of gold were to be used for reserves, say 15% of massive amounts of monies and debts currently existing. Did'nt the POG revaluate previously when we went off the gold standard?

I believe that once the Euro currency begins in Jan 1999, that gold will be allowed to float freely until a balance between gold and various currencies reaches a fair market value.

After fleecing us as much as they could, the powers that be can begin anew and continue the shell game ad infinitum till the next breaking point.

Anyone have an idea of the revaluation of gold would be if the above is not just a pipe dream?

Best regards,

(11/21/1998; 17:20:12 MDT - Msg ID: 1054)
Slow day in Tucson
I just thought I'd pop in and add some color to this pitifully empty page. The first posting on LTCM was lifted as well as the second one. I am more concerned about the second one as in due time, there go I. Ya'll see what you think...............
The Al Capone Link of LTCM

Not since Al Capone tried with Mafia-methods to hijack the American Economy during Prohibition, has anything of a similar scale been attempted.The Bank of Italy, being aware of the impossibility of bringing Italian interest rates to converge with those of Germany, in time for the introduction of the Euro next year in view of the infinitely higher risk for investors in holding a share of the highly indebted Italian state debt than that of Germany, colluded with the Long Term Capital Management Fund of U.S., for the Fund to purchase Italian bonds in order to narrow and eventually close the interest gap, between the two countries, thereby demolishing the last obstacle to the road of Italy managing to off- load all its debts on ist unsuspecting neighbours and partners in the European Union. For once the Euro is a going concern, the European Central Bank will not be able to differentiate between several classes of debtors in the Euro group; it is committed to defend the currency by seeing to it, that the debts of all members are paid, at whatever cost to its pooled reserves or the welfare of the Union as a whole or and each and every member. And this is the way the cookie crumbles. Whilst there is a full 2 percentage point difference between the short term interest rate of the two countries, in the longer term by some miracle this gap was narrowed down to an infinitesimal 1/8 %. This miracle gave rise to great rejoicing by otherwise agnostic but completely reckless Euroenthusiasts, who saw in this convergence, an Act of God. Admittedly the financial community was duly impressed and the trustful rolly -polly Germans good natured as ever noticed nothing, until eventually being asked paradoxically by the Great Wizard of Oz, Allan Greenspan himself, to take a stake in the bailing out of LTCM.(Deutsche Bank a big contributor to the rescue fund, claims it had never loaned to, nor is a shareholder of the fund). The Germans feeling frightfully honoured for being admitted this time to the inner circle of the international financial fraternity did not even demur at rescuing their own grave diggers, probably because at the time of the rescue package being established, the cause of the near failure of the LTCM was still considered to have been the Russian default. But this is the real story. Six years ago when Italy got thrown out of the European exchange-rate mechanism it was mooted within the corridors of the Italian Central Bank that owing to the ever more preponderant share of wager-like transactions in international financial markets, whether for so called derivatives or straight forward short sales, one ought to be able to influence the salient parameter of the economy by the selective, appropriate, and above all intelligent use of the power of highly geared funds, backed by a powerful respectable central banker, such as the Bank of Italy. At that time other bona fide deals representing underlying real goods or services were already being eclipsed, by the flood of speculative currency trade. An Italian academic Professore Alberto Giovannini was asked to explore such possibilities in the Mecca of Funds, namely Wall Street. There he met the supposedly highly intelligent but ineffectual Messrs. Merton and Scholes, Nobel prize laureates, who introduced him to John Meriwether, recently dismissed from Salomon Brothers as part of a deal with the Securities and Exchange Commission, in a matter that concerned a share rigging charge settled out of court for $ 70 millions. In the course of time the fund was set up with official participation by the UIC = Italian Exchange Fund and The Professore joined the the Meriwether team, building up sufficient steam in order to stabilise the lira. Owing to its Central Bank connection the fund could draw on enormously extended credit lines. As we know in it hey-day it could mobilise funds in excess of the fortyfold worth of its capital and that was the astronomical figure of $, surely a figure sufficient amongst other things also to stabilise the lira. The downfall of the fund can only be partly attributed to the default of the Russians, although of course, they no doubt also invested in the emerging markets. However owing to the American economy gathering steam up to the end of July, the hedge fund expected, a rate hike in the U.S. This would have meant lower quotes for thirty year treasury bonds a favourite with hedge funds. Therefore they sold these bonds short, in order to buy them at a subsequent hoped for discount. Only few people realise that even a small lowering of the interest rate, can have a disastrous effect for anyone short of long term fix interest bonds. A quarter of one percent rate cut, can result in a price hike in excess of 4%, or a mere < $, on $200bn. This explains the discomfiture of the hedge fund, as well as Mr. Greenspan`s dilemma worthy of that late Roman leader, Cunctator. Does he bankrupt the hedge funds by lowering the rate of interest, or does he bankrupt the debtor nations, who can no longer service their debt? There is no easy answer for Mr.Greenspan, because he tarried to long skimming the froth, the hedge funds created in the first place. Unfortunately for the world, this is no longer a private problem of Mr. Greenspan alone. Although the Mafiosi of the LTCM are not accountable to the EU, Signor Antonio Fazio, the Governor of the Bank of Italy ought certainly be asked some pertinent questions regarding the purchase of Italian long term debt by his henchmen at the expense of the other member states of the European Monetary Union, by his colleagues in that Union. P.G.Szabo Albertinaplatz Economic Consulting Unit

Copyright 1998, All rights reserved.
Albertinaplatz Communication Consulting GmbH. & Co. KeG

morbius (Doomed?) ID#35757:
Copyright � 1998 morbius/Kitco Inc. All rights reserved
What was that term? "Barbaric Relic"? I am afraid that this may be true. While gold may continue to be an instrument used by countries to keep each other honest with their fiat currencies, its use by individuals is probably impractical. The production, distribution and consumption of goods and services have become so geographically remote from each other, that only electrons can span the distances in a practical period of time. The implications of this system on freedom and privacy are monstrous. The days of any kind of "cash" are numbered. Gold and silver will be seen as instruments of drug dealers, terrorists, tax cheats and right wing Christian lunatics ( who will see the cashless society as the mark of the beast ) . In short private gold = criminality. Under this scenario, confiscation is a foregone conclusion. Our only hope is Y2K, although I fear that the attendant discomfort will only cause the sheep to surrender their few remaining liberties for the protection of the wolf.
Ouch!!!!! What is a body to do? Rule 7.62!

Friend of Another
(11/22/1998; 08:43:59 MDT - Msg ID: 1055)
Paris, Saturday, November 21, 1998

Central Bankers Rebuff Lafontaine

Led by Greenspan, They Reject Exchange-Rate
Trading Bands

By John Schmid International Herald Tribune

FRANKFURT - Some of the world's most powerful central
bankers rejected calls for currency exchange target rates Friday
and warned European governments that political pressure on
the new European Central Bank could damage trust in the
single currency.

The notion that exchange-rate trading bands should be imposed
to curb the sort of destructive flows of speculative "hot money"
that triggered the Asian economic crisis is an "illusion," said
Alan Greenspan, chairman of the U.S. Federal Reserve Board,
at a central bankers' meeting in Frankfurt.

A volley of unvarnished comments by typically cautious central
bankers suggested that the proposal, which has been a
cornerstone of economic policy by the new German finance
minister, Oskar Lafontaine, can now be called dead, said Adolf
Rosenstock, international economist for Nomura International

"That is a first-class confirmation that this initiative is coming to
an end," he said.

In recent days, Mr. Lafontaine has begun to back away from his
initiative, which his administration initially vowed to put on the
international agenda when Germany assumes the rotating
chairmanship of the Group of Seven leading industrial nations
next year.

For Mr. Lafontaine, the bankers' convention amounted to
another setback in his hopes to assert his authority over policy
in Bonn's new Social Democratic government. This week, Mr.
Lafontaine's undersecretary at the Finance Ministry, Heiner
Flassbeck, was denied the powerful post of representing
Germany at international economic summit meetings - a role
that traditionally would go to him.

Political pressure for looser lending rates after the German
elections in September gave the European Central Bank, which
will manage monetary policy for the 11 nations adopting the
euro Jan. 1, the first test of its autonomy.

Central bankers have consistently asserted the need for the new
bank to be independent, a message they reiterated Friday in
Frankfurt, home of the European Central Bank.

Mr. Greenspan called Mr. Lafontaine's call for regulation of
exchange rates flawed, saying it "is just not feasible or

Markets would view foreign-exchange bands "with great
skepticism, with good reason," he said.

Mr. Greenspan's criticism of Mr. Lafontaine was poignant, for
the German has taken pains to laud Mr. Greenspan for his
recent reductions of U.S. lending rates.

Wim Duisenberg, president of the European Central Bank,
agreed with Mr. Greenspan, saying that exchange rate target
zones were "not sustainable." Mr. Duisenberg pledged that the
European Central Bank would consider exchange-rate targets
"only in exceptional circumstances," if the euro showed a "clear
and persistent misalignment."

Eddie George, the Bank of England governor, also said it would
be impossible to fix exchange rates. Trading bands that are too
wide are "meaningless" and tighter bands are "impossible," Mr.
George said.

Hans Tietmeyer, the Bundesbank president, warned that calls
for lower interest rates - which he likened to a "political siege"
on the new central bank's autonomy - threatened to undermine
the single currency.

"The international role of the euro and global interdependence
increase the damage that such conflicts can potentially cause,"
Mr. Tietmeyer said.

The euro, which is sure to gain "international importance,"
cannot afford to be weak, Mr. Tietmeyer continued. "It cannot be
in the interests of either the United States or of Europe for each
other's currency to be weak."

The success of the euro will depend on how credibly the
European Central Bank plays its role, Mr. Tietmeyer said.

"Damage in situations of conflict is limited as long as the
markets remain convinced that the European Central Bank and
its decision makers are independent," he said.

That the euro will become a major international force after its
introduction was not questioned Friday.

"It would be completely inconceivable, not to say disastrous, if
the euro were unable to gain international importance," Mr.
Tietmeyer said.

(11/22/1998; 10:05:53 MDT - Msg ID: 1056)
FOA...Msg.#1055...perhaps ....
Mr. Greenspan has a plan. This man is neither dumb or blind. He is well aware of history and knows the value of gold and money based on gold.

It seems he speaks as one within the Euro system. He obviously understands what is to come and, I doubt, will stand by and allow the USA to crash.

The only means to stop this is to revalue gold and return to sound money...a gold standard...of which he has written. As Bill Buckler has noted, the USA did this after the Civil War...AG knows his history.

We watch and WAIT.

David Linkley
(11/22/1998; 11:01:43 MDT - Msg ID: 1057)
Y2K FEARS BRINGING GLITTER BACK TO GOLD/The Extraordinary Story Behind the Dec99 Gold Contract

THE "Y2K problem" - the need to reprogram computers to correctly recognize and store dates after the turn of the century - is generating a lot of overtime for the consultants whose predecessors created the problem in the
first place.

Now it seems that Y2K is helping to reignite speculative demand for gold.

Sorry, goldbugs, I mean "investment demand."

Some of this has been reflected in sales of gold coins. People out there in the country across the Hudson are buying them at an all time record rate. In the third quarter alone, sales of coins in the United States were up to 772,000
ounces, a 170 percent increase over the third quarter of 1997.

Presumably they get stored next to the assault rifles and canned goods that will see their owners through the financial market turmoil and general social disruption. Who knows? Maybe they'll be laughing at us, just before they
pull the triggers.

But the prospect of millenarian mayhem may be causing a bizarre imbalance in the gold pit of the Comex exchange downtown.

The gold option contract with the largest open interest on the exchange is the December 1999 call, specifically the 390 call. A call contract gives the owner, in return for a premium, the right, but not the obligation, to take delivery of a commodity, in this case 100 ounces of gold.

The 390 call lets those owners acquire gold at a price of $390 an ounce, whatever the spot price is at that time. This promise is backed up by the AAA rating of the Commodity Exchange, Inc., which the millenarians might not believe will survive the New Year.

The December 1999 call will expire on the second Friday in November of the year. As of Nov. 18, the total amount of gold call options for that 390 contract was over 3,200,000 ounces, which is over 90 tonnes of gold. The total gold calls for the whole month is over 180 tonnes. That's a lot of gold.

To put that position in context, the January 1999 call options total a little over 660,000 ounces, or about 20 tonnes.

Said one gold trader on the Comex floor, "If gold comes in $30 an ounce better (it closed Friday at $296.05 spot) it's going to be a T-Rex. Then it would be unhedgeable. The whole thing is weird. The date is all wrong. The size is all wrong. It looks random, erroneous."

By "unhedgeable," our trader means that it would not be practical to lay off the risk on other gold market participants. When market makers on the floor of the exchange sell calls, they don't plan to go into their private vault and take out 100 ounce gold bars and hand them over to you if the price moves in your favor.

They buy some call options or futures on their own from other dealers or exchanges who can get the gold from mines or central banks who have the physical gold to sell.

But the Dec 1999 calls are such a big, odd position that it would be difficult to lay off the risk. Our trader has heard the talk that this position has been built up by individuals who are betting on Y2K problems. But he's skeptical.

"Maybe 10 percent of the volume on this exchange represents retail, on average. This is a professional market, not a retail market. This just doesn't make sense."

Because the Y2K position doesn't "make sense," right now it's created a lot of inefficiencies in the pricing of gold options before and after the Dec 99s.

And those inefficiencies are the source of profit for the floor traders.

By the way, for their own account, many if not most of them are dubious about gold as an investment. "It's been the worst investment in the universe," says our trader. "The cash costs of mining keep dropping, and the supply goes up."

So where's the possibility of $390 gold? Do the Y2K paranoids know something? Or is it just a small ring of buyers. There is some talk that this is a very small group doing this.

"This isn't going away," says the trader. "It's going to get bigger and it could become a magnetic issue."

Gandalf the White
(11/22/1998; 14:15:49 MDT - Msg ID: 1058)
David Linkley's Y2K Dec 1999 Gold calls newspaper story
What do you all think that the possibility of default is for these contracts ?
Is this a "burning paper" speculation area ?
The truth gets more evident as time passes.
(11/22/1998; 20:40:25 MDT - Msg ID: 1059)
USAGOLD Argentine Auction
Michael, has there been anything further about the Argentine gold auction? I'd like to have a couple of those guys to look at.
(11/22/1998; 21:00:54 MDT - Msg ID: 1060)
Dec. gold now $296.20...
in overnight trading. Should prove to be an interesting week. I still stand by over $300 sometime during this week. We shall see.
(11/23/1998; 04:58:04 MDT - Msg ID: 1061)
Dec. gold now $296.10
seems gold still fights its sub-300 war. Like all good sub-surface battles, the spoils go to the survivors. Avoid depth charges and anti-submarine torpedoes.

Friend of Another
(11/23/1998; 05:40:47 MDT - Msg ID: 1062)
"Only 10% of gold trade is conducted on officialexchanges such as Comex or Nymex"
23 November 1998
New focus on gold

Producers band together in bid to increase
transparency in derivatives and futures

David McKay

THE world's leading gold producers, including
Anglogold and North American rival Barrick Gold,
have banded together in an attempt to increase
transparency in the speculative gold trading
market which has been blamed for the drastic
decline in the metal's price since 1996.

Bobby Godsell, the CE of the world's largest gold
producer, Anglogold, said yesterday producers of
more than half of the world's gold output, about
36-million ounces a year, were represented at a
brainstorming session in London on Saturday.
The intention was to "turn the spotlight on" gold
trading, particularly in the derivatives and futures

This is the first time major gold producers have
assembled to discuss strategies on commonly
held market concerns. The meeting comes
against the background of a poor gold price,
which fell performance which has seen bullion
slide from more than $400/oz in early 1996 to
about $260 earlier this year. It is now about $295.

A report back on progress made at the meeting is
planned for February or March. The proposals will
also be taken to the World Gold Council whose
responsibilities the producers hope to broaden
rather than replace.

"The aim of the meeting was to broaden and
deepen the pattern of co-operation between the
world's gold producers and initiate dialogue with
market makers. We want to find out who the
market players are," Godsell said. The producers
hoped to introduce smaller and medium-sized
companies to continual dialogue.

Harmony MD Bernard Swanepoel, whose
company is not a member of the World Gold
Council, said he backed the initiative. It would be
useful if it could help producers to understand the
gold market.

Only 10% of gold trade is conducted on official
exchanges such as Comex or Nymex. The
remaining 90% is conducted over the counter.
There is a body called the Commitment of
Traders which attempts to monitor these
transactions, but market traders are not bound to
report to it and its findings are not regarded as
being representative.

BOE Securities Gerard Kemp said traders
closely guarded their positions on gold, but the
producers believed they could change the
sentiment about gold. He believed this might be
difficult to do.

One of the major depressants of the gold price
recently has been sales by central banks of
portions of their gold reserves, contributing to the
common perception that the metal is no longer a
store of wealth. However, Godsell said "the fear of
disruption" caused by central bank sales
appeared to have gone away.
Gandalf the White
(11/23/1998; 10:46:02 MDT - Msg ID: 1063)
Did everyone hear the 12:30 NYSE "peak bell" ?
And the XAU held the 75 level and is "looking good", mon.
Friend of Another
(11/23/1998; 16:32:56 MDT - Msg ID: 1064)
ALL: I will have to be gone for an extended period of time. Must take care of personal family problems. Thank you all for all of your thoughts. FOA
(11/23/1998; 17:14:01 MDT - Msg ID: 1065)
Relative value is relative to common sense, maybe?
Let's see. Dow up to new high, Yahoo at 220 gold at 297. For $1000, I could buy a couple shares of internet stock with no dividends, or a car that still runs, or one mortgage payment, or a Judith Lieberman purse for the girlfriend, or a 6 minute ride in a MiG29.

Or maybe I should just buy 15 silver eagles, an SKS, 300 rounds of ammo and basic bulk staples for a year. But what do I know about value?
(11/23/1998; 17:52:44 MDT - Msg ID: 1066)
does history repeat itself ??
While the market continues to skyrocket from the octane booster provided by the Fed and as the reports of record demand for gold coins continue to turn up, I'm reminded of what Charles Mackay described in Extraordinary Popular Delusions and the Madness of Crowds regarding John Law's Mississippi Scheme circa 1720 France. He wrote:

"... The more acute stockjobbers imagined justly that prices could not continue to rise forever. Bourdon and La Richardiere, renowned for their extensive operations in the funds, quietly and in small quantities at a time, converted their notes into specie, and sent it away to foreign countries.... Vermalet, a jobber, who sniffed the coming storm, procured gold and silver coin to the amount of nearly a million of livres, which he packed in a farmer's cart, and covered over with hay and cow-dung..."
(11/23/1998; 20:23:51 MDT - Msg ID: 1067)
Not a good night...........
I have received a personal communication from FOA saying that he will be gone for an extended period. He has also had to close down his e-mail address and communication is now impossible. I cannot violate his personal communication with me so it is impossible to pass on what has caused his leaving. Suffice it to say that it is something that happened in his family, and as important as it is, it is no more than that. Please do not try to read something in this beyond what it is -- a personal matter. I hope for his safe and quick return, but, understand, my friends, we should prepare ourselves for a long time without both FOA and Another. I hope I am proven wrong on this, but I think it would be unfair to all of you to present this in any other way than as I see it. It is too bad, because I sense there is much happening within these swirling economic currents about which I am sure both would have had much to say. It is our loss.

This site will remain open for all who wish to use it. Here is something I wrote to FOA (which echoed back to me unread). Perhaps he will read it here.

"Please know that your place at USAGOLD will be kept warm..... May the God of us all bless you and ANOTHER and keep you. You have made a difference in many lives. Take care, FOA....Michael"

One thing I think I can safely say without violating our friendship: FOA says he will be monitoring USAGOLD....I know I speak for all when I say that we look forward to his and Another's timely return......

el St.One
(11/24/1998; 01:17:46 MDT - Msg ID: 1068)
Safe journey, and speedy return.

Till then el

(11/24/1998; 03:35:46 MDT - Msg ID: 1069)
Comex & Nymex Penny Annie SIDESHOWS
FOA, ANOTHER, & Michael: FOA's 5:40, 11/23/98 ID#1062 Post supports what many have known for a long time, that Comes & Nymex are but sideshows to the main event. Little is known outside the main ring of the "Real Player". Much is broadcasted about the sellers and the dumping of Gold. Nothing much is to be found about the buyers and the "Main Game".
ANOTHER & FOA: Thank you for your "Thoughts" They are appreciated and valued.
Mr ANOTHER we must meet one day and discuss the time transitions of camels, automobiles, jet planes and the return to camels, while we count our gold, Yes.
May the living God Bless you.
(11/24/1998; 03:36:57 MDT - Msg ID: 1070)
Comex not Comes
Correction to read Comex
(11/24/1998; 06:04:57 MDT - Msg ID: 1071)
Friend Of Another
You will be missed my friend. You and your family are in my prayers. Keep safe. Thank you for sharing your thoughts these many months. I hope to journey with you and ANOTHER again soon. Warm Regards, Yellow Bird.
PH in LA
(11/24/1998; 15:53:15 MDT - Msg ID: 1072)
(No Subject)
The voices of ANOTHER and his friend contributed a dimension of imagination and understanding that enriched all who read these pages.

In these last days before the Euro comes into existence, we all watch the induced lethargy in the precious metals that ANOTHER has predicted is the only way to bring about the change and new beginning that the Euro represents in an orderly way. It is sad, indeed that ANOTHER and FOA must leave now; just as these events come together.

We will watch this process together. We are sure that ANOTHER and FOA will be watching, too. They will always be in our thoughts. And we will always look forward to their return.
(11/24/1998; 19:14:11 MDT - Msg ID: 1073)
Another and FOA
Well I haven't posted for ages, I know, although I have been keeping up by reading while at the gym ( a new client has kept me unbelievably busy) My hope is that all is well with Another and Friend of Another. Their input and wisdom will be missed. While that is definately selfish on my part, I honestly wish both the best
(11/25/1998; 10:09:55 MDT - Msg ID: 1074)
Since it is REAL quiet here w/out A or FOA I'll post a few oldies now and again....Yes? We watch this old/new gold market together.

Date: Sat Apr 25 1998 22:55
Copyright � 1998 ANOTHER/Kitco Inc. All rights reserved

Mr TYoung:
Please read and consider this thinking person, as many do read your thoughts!

One must take this thought into consideration when deciding weather to hold dollars or the Euro. "The United States Government does not hold any reserves against it's currency". Truly, this can only be the case of the world reserve money. Indeed, all other currencies have reserves of US$ to back them, yet only the dollar has nothing! Yes, the USA does hold many billions in foreign exchange, to use in the defense of maintaining exchange rates against the dollar. However, these holdings are not reserves.

When the US government does not take in enough taxes to meet expenses, it sells treasury debt to make up the difference. When no one bids for this debt at an "acceptable" interest rate, the Federal Reserve bank buys the debt, outright! It gives printed cash to Washington and then, "holds the new treasury debt ( bond ) as backing for the issued cash!

Everyone understands the implications of this. Or do they? In reality, when the US government needs money, it doesn't sell debt! It "TRANSFERS" the obligation of it's citizens to pay future real production ( taxes ) as a "backing" for it's newly printed currency! As this process has been going on for decades, it has built up a debt of "real production payments" that it's citizens can never pay. Further, as the world reserve, this currency is held thru proxy "by every single person on this planet" that uses paper to trade anything!

It is true, that in times past when a currency is inflated ( over printed ) to a point of only 10% real gold backing, the government could revalue gold 90% upward and the currency was 100% backed again! A terrible blow to the holders of this paper, but at least the money system survived! Today, the worlds currency, the US$, by default, would require a gold price of many, many thousands to back it without using it's citizens as collateral! The only problem with this is the US gold stock is so small, that even at $10,000/oz, a large deflation would be necessary to decrease the outstanding US currency to this gold backing level!

Now, consider the Euro. It will have much real gold backing from the beginning. Even at 10% to 30%, the Euro will be the equivalent of a 100% gold backed dollar, when the world comes off the dollar standard! The selling of old dollar reserves, alone will reprice gold in US$ terms of at least $6,000/oz! It's present interbank reserve value.

Read the BONN report again:

""BT 1 APR 1998 BONN

Buba seen transferring gold to new Euro central bank

THE Bundesbank, which must provide about one-third of reserves of the new European Central Bank ( ECB ) , may decide to transfer most of its share in gold, providing a windfall for the German budget, analysts said.

Such a move would raise public confidence by backing the new currency with gold, and would support gold prices by reassuring investors the Bundesbank won't sell excess reserves on the market, an analyst said.

In addition, the transfer would be recorded at market prices, whereas the gold is now valued at less than one-third its market value. That would mean a multibillion-mark paper gain the government could book against debt.

"It would be a neat move," said Alison Cottrell, economist at PaineWebber International in London. "There's the psychology factor of the ECB holding gold, the government would benefit from a revaluation and it should, at the very least, put a floor under the gold price."

The European Central Bank will go into operation on Jan 1, the same day the euro becomes the currency for an expected 11 nations. Germany, because it's the European Union's largest economy and most populous country, will have to provide about one-third of the 50 billion Ecus ( S$86.5 billion ) the new bank will need in its role to set monetary policy.

The Bundesbank, Europe's largest holder of gold, has around 95 million ounces, valued on its books at 13.7 billion marks ( S$11.9 billion ) . The market value is about 55 billion marks.

A Bundesbank spokesman wouldn't comment on what the central bank's plans are, saying that won't happen until the member states for monetary union are named and the members of the European Central Bank are appointed. -- Bloomberg""

Mr. Young,
The German CB will not be selling gold to the new ECB for dollars! This "TRANSFER" will be in terms of "German Mark reserve requirements" that will soon be the "German Euro currency reserves"! Soon, European oil purchases will be made in, partial gold backed Euro's that "in US dollar terms", will be the same as 100% gold backed currency! As Another would say: Gold and oil will never flow in the same direction!

you think long and hard on this: in USA , this paper currency, it show not the true wealth of persons assets!


Thank You


(11/25/1998; 10:30:48 MDT - Msg ID: 1075)
U.S.Government revaluation of gold
This is a long article written by Red Baron,to long for me to post,but a must read for all goldbugs.

PH in LA
(11/25/1998; 11:14:09 MDT - Msg ID: 1076)
Repost by TYoung
Thanks, Tom, for posting that monster post by ANOTHER. With everything so quiet (and depressing) these last few days, it seems almost spooky to reread the words of ANOTHER as the moment for his predictions to either happen or fall flat draws near.

Not even any comments from Michael's daily commentary page today.

Incidentally, did you (or anyone) see the final results of the poll at Collin Seymour's page on the identity of ANOTHER? Last I saw, Michael Kosares was winning by a big margin. He did not have my vote, though!

Although often sparsely populated, this site has just as often provided the most thought-provoking comments I have ever heard (or seen)...either on or off the web. With the (hopefully temporary) departure of ANOTHER and his friend, it will be up to all of us to keep it going. It is hoped that Michael will step up to the plate from time to time with his usual stimulating comments. And it goes without saying that Aragorn III's comments will also be anticipated as well as all the other fine posters we have enjoyed since this site opened.

At the very least, we should all try to keep things going so there is somewhere for ANOTHER and FOA to return to should the opportunity and circumstances arise.

Although there are many that would have us think so, I am still not at all convinced that gold is dead. (In fact, like the famous Farfel, I'm buying even more!) There will be much for all of us to consider as events unfold in the coming days. Let's all do our part to nourish these pages with our thoughts and comments. Chances are we'll soon enough be glad we did!
(11/25/1998; 14:19:42 MDT - Msg ID: 1077)
Another re-posts....
Now you folks have to know that I do not invest or buy based on others THOUGHTS or statements....

However, how many times can I post about gold shares being bought at $280-5 or $305. So, here come ANOTHER one from the past....

Date: Sat Jan 17 1998 20:45

For those of simple thought, such as I, gold is good to own.

But, for those of need for reason, read from one who speaks to me:

The Cornering of Gold!

The final outcome of "Too Much Oil", "Too little Gold" and "Worldwide Digital Currencies".

For years the governments could create currency out of nothing. But, during the last eight years, the modern currency systems have taken the final step. As digital charges in a computer, they have become but "emotional thoughts" of trading value. This is to say, "a currency unit exists only during the moment of trade". During this time, when real things are in transit, paper currency has value as an expected "trade completion". It exists as a human thought. Complete the transaction and the thought is gone, the currency unit dies.

Think about it? If for a time the world commerce stopped. All would live from what they had for, say a week. During this week, all currencies and the debts that back them would not exist! Without trade, modern currencies have no use, no value, no purpose.

During our modern age, a currency can be anything. Corn, lamps, cars, tables, anything could be used as a concept for a digital currency. You see, it exists in concept only. Even gold could be used as modern money. The real item is not used, only the concept of "how it would be used during the transaction of commerce". "Real value is not needed for modern money, as it is only used as a trading unit"!

What does all of this have to do with oil and gold? For most people, nothing. But for some people, everything! You see, some persons do not want to hold an "operating business" and the present value that represents, as their wealth. Nor do they want to hold encumbered assets or debts of others. Wealth, to these people, is not represented by a "digital trading unit of commerce".

History has shown how many persons, or groups of persons, have tried and failed while trying to corner a commodity. Greed was always the factor, as acquiring real wealth to pass on to family or country was never the aim. Using paper currencies ( or debts of the same ) to purchase these commodities, always brought on the undoing of the scam. During some years, even gold was used as a purchasing unit, as gold was the currency of that time.

But, today we come to a different period, with a different factor and circumstance. For during no period of history has an entity used a commodity to corner another commodity! The intent is not to "corner", but the result will be the same. This action is coming about because of a gross, huge mismatch of the value of gold and oil! We are not talking about the price of these items ( in any currency ) . We speak of the total amount of physical gold, worldwide and the total amount of oil worldwide. During the last twenty years, the world has made oil an absolute necessity for life as we know it. During the same time, gold has been degraded to a "kind of commodity that we may need sometime but, I'm not sure". With the public, government and the business community holding these thoughts, it is easy to understand which item is needed first and which would be dumped. In this day, people would sell gold for oil, no contest!

Consider the amount of oil that is used daily. Consider the future value that this consumption places on reserves in the ground. Compare this to the amount of gold consumed daily. Notice I said "consumed daily", not "traded daily". Clearly, the consumption of oil compared to the consumption of gold places a much higher value on oil reserves than gold reserves. With no replacement for the use of oil ( at present to lower prices ) and no "needed" use for gold in today's thought, we have the ingredients for a mismatch in value of epic proportions!

The supply of oil was a problem in the 70s. Several nations actually cut off the supply to make a political point. Many thought that the "embargo" was an attempt at "cornering" the oil market. We may never know the true reasons for the large increase in the price of oil, but one thing is clear. The value of oil in today's economy is of far greater importance to maintaining present "asset values" than at any time in the past. Today, the future value of all commerce is "well bid" into every asset value! Without oil in good supply , at a currency price that allows a reasonable lifestyle, all assets would lose much relative value.

This "need" for supply is not lost to governments or their Central Banks. No single asset class or segment of the economy, by itself is more valuable than the supply of oil. This brings us back full circle, to the problem of "digital currencies" and the "mind set" of much of the simple ( and rich ) third world persons. To many of these people, wealth is the surplus of life's work that you pass on after death. Currency is something you, spend, trade or hold for a few years. It isn't wealth.

Gold ( and silver ) is "on the list", so to speak.

This same mindset creates a worry in the back of many a mind in the oil states. It is clear to most, that even a small amount of gold in the asset mix, makes one appear "less western" and therefore "less foolish" when the concept of value and currency are discussed. But, the problem has always been that oil is "so large" in relation to gold that any attempt to convert, even a portion of ones assets creates a distortion in the markets. Of further concern is that; everyone knows that western minds don't like or want gold, but if they think you like it they will trade it up in price for the sake of "sticking it to you".

Enter the world of "paper gold".

Yes, gold just like currencies has been "digitized". If you brought gasoline, made from oil sold under $20/bl, you are part of this system! For just as the "digital currencies" are created for trading only, paper gold was created for the trade of oil. In a very broad sense, it was created as an "extra" or "kicker" to allow the purchase of small amounts of cheap gold in return for a full supply of oil. In reality, this gold paper represents the future production of gold ( from the ground ) to balance the reserves of oil ( also in the ground ) . The huge amount of "paper gold" traded and outstanding today is now in excess of all the gold in existence above ground! In essence, it is of the same value as the currencies, "the thoughts of nations, blowing in the wind". The Central Banks gave value to this paper by selling and lending some of their gold stocks. But, as economies became hooked on cheap oil, and demanded more of the same, these same CBs had no choice but to use fractional reserve gold lending" to pump the gold market.

Now we approach the final act.

There is one oil state that no one will play for a fool. The CBs will sell all of their gold or the nations will nationalize all mines and operate them at a loss. One way or another, most of the paper gold market will be honored. Why? Because oil will bid for gold if they do not! We are not talking about an oil embargo or rising oil prices. Indeed, oil will become very cheap for those that can supply physical gold. This deal will not require the agreement of all oil states. Only one can start this, the others will gladly follow.

A large oil producer, with plenty of reserves and unused capacity, can say: We now value gold at $10, $20 or $30,000/oz.. That is the rate we will use to sell oil. We will go to "full" production and offer at $10.00us/bl.. Pay us in physical gold and USD ( or EUROs ) as a 50% mix to the above rate to equal $10/bl..

It would be a deal like none other! Oil, worldwide, would drop to $10.00/bl and every economy would do very well, IF they had gold. All gold would immediately be arbitraged to the above prices thereby creating a "world oil currency" large enough to handle oil. This creating of a new "specialized currency" will be the result of the first "commodity corner" that ever succeeded!

But what of the current currency/debt structure? We will cover that in a later article.

Tom.....happy T-day
Aragorn III
(11/25/1998; 15:46:53 MDT - Msg ID: 1078)
Holiday regards to all, present and departed...
The THOUGHTS! of ANOTHER will certainly be missed as we move with careful yet deliberate steps toward the launch of the euro. Although the roadmap has been presented, it is not surprising that many people struggle (or fail) to see what lies before us, as it is very often witnessed that the path already travelled is as a mystery to many--even in hindsight!
These two re-posts of ANOTHER's THOUGHTS! by TYoung are very timely and fortuitous. (Thank you, Tom) They serve as the lesson-plan, and your assignment is this: If you have the good fortune to gather with your family over this Holiday period, discuss with them the nature of money. Ask questions that you know the answers to--people participate better and think deeper when faced with a question rather than a lecture. Discuss their ideas of money creation. Compare and contrast U.S. money creation with that of other nations, discuss loan reapayments with interest, discuss deficit spending, and discuss balance-of-trade settlement. Discuss the "free ride" for the nation issuing the world reserve currency in a world of fiat currencies. Discuss the meaning of fiat currencies. As you do this with your family, REFRAIN from interjecting thoughts of gold. The more you talk about the nature of money and the current state of affairs, the more you try to avoid gold in the discussion, the more clearly you and your family will realize that returning to a global gold standard is not only in EVERY nation's best interest, but that it is the only way out of the helpless debt-predicament created by the past 27 years of fiat currency usage.
Only when you have knowledge of the road just traveled will you be capable to understand where you now are, better enabling you to "see" where we are going. While there does remain flexibility and uncertainty in the *precise* route ahead, the destination remains the same. As all experienced travellers know, you pack your bags with the destination in mind, but also with some thought toward the needs of the journey.

Enjoy this time with your family, and listen to their thoughts, too.

A final word: a gift of gold this season will in time reveal you to be a generous person, indeed!
(11/25/1998; 17:02:17 MDT - Msg ID: 1079)
AND the all time post...just for t-day...THOUGHTS....
Make what you wish of this. My views go a different direction but "food" for THOUGHT(s).

Date: Sat Mar 07 1998 13:08
Copyright � 1998 ANOTHER/Kitco Inc. All rights reserved

The Management of Gold, A Simple Tool for the 90s
For any currency to maintain a "reserve" status, it must be, in some fashion, convertible into gold! In the past, the US$ was freely exchanged for a "fixed" amount of gold. $20 dollars was equal to one ounce. If the country wanted to make it's money stronger, it would lower the amount of currency units fixed to one ounce. $10 dollars per ounce made the currency more valuable in the market and it would buy more things. Also, a country could decrease the value of it's currency by raising the number of units to the ounce of gold, say $40. The problem with the "fixed" gold system is found in matching the amount of gold in the treasury to the "fix"! To make the money stronger, one had to bring in gold, as it took twice as many ounces to back a currency "in circulation" at $10 as it did at $20! The reverse is true when lowering the money value to $40. Then, one half the treasury gold backing had to be removed as only half was now needed to back the dollar.

You have probably not read this "slant" on the past gold standard because it was never quoted in quite that way, nor looked at in that fashion. If you allow your mind to perceive the above, one will clearly see that it was gold that gave the currency value. In that time one did not look to see how many dollars gold was valued with, rather, how much gold was bid for each unit in circulation!

Today, the world reserve currency is not on a "fixed" gold standard, it is on a "freely convertible" gold standard. One may, anywhere in the world, convert US$s into gold. This new "freely convertible" standard does still allow the dollar to be backed by gold for those who still demand a gold "fixing". That requirement is enforced by a certain commodity, oil. Yet, there is a price for the benefit of having all oil sales settled in US$. Yes, even in this modern era, for the US$ to remain on an "oil standard" it must be on some form of "gold standard"! Regain the perception in the top paragraph. Then understand that for oil to back the dollar, the dollar must find value in gold. And the dollar finds more value if it is fixed by the "freely convertible" gold standard, to buy more gold!

This convertible gold market is old from the mid 70s but is new from the early 90s. It is old by the 70s because it is "freely convertible", but it is new by the 90s as it "is not" "freely tradable"! The US$ price of physical gold is no longer "fixed" from supply and demand, rather it is "created" through the market action of "paper gold". Truly, it is the US$ has become the "item traded" in the "paper gold" market, not physical gold. Participants have yet to realize that the gold futures, gold options and gold forward markets, worldwide, have become little more than currency trading arenas. The percentage of gold delivered against these markets has grown so small as to be nonexistence when compared to actual metal settled at closing. Physical gold does still move, and in size, but this is little or nothing compared to the "paper gold" traded.

We are brought to this point for a purpose, but how did we get here? The largest producers of gold were introduced to the use of large scale "forward contracts" by the Bullion Banks. Once the process started, good business required it to expand. Shareholders want maximum profits at all price levels and "forward deals" were good at any price of gold. Once hooked on "hedge profits" during the good times of a high gold price, the mines now "must have at all cost" "forward deals", just to survive. Some say the mines will not forward sell at these, break even prices. However, the shareholders say it's better to hedge now, for a lower price will bring doom! With the US$ price of gold holding at just above average break even levels, and the ensuing virtual bankruptcy of several well known companies, it appears that the mine owners are correct.

Understand, that many entities lend gold, but it is the CBs that started and do most of it. Their purpose was to create a "paper gold" market that would allow them to manage the "freely convertible" price of gold. The CB lends the gold to a bank that sells it on the open market.

( Usually, the gold is placed privately as it must go to the correct destination. ) Then the bank holds the money and draws interest as incremental payments are made to the mine for new gold delivered against the contract. Over the long period that a mine takes to produce and repay the gold, this money grows. To grasp the fact that the CBs had a plan, is to know that they lend the gold for only 1% or 2% while the proceeds set in a Bullion Bank and grow with interest for the benefit of the BB and the mine! And further, the lenders allow the return of the gold to be extended out for many years, as in "spot deferred". The CBs allow public opinion to think of this as "typical government stupid", it's not!

Now that the gold price in US$ is around production cost, most mines must use "paper gold" to survive. The gold industry is coming under world bank domination, without signing away any sovereignty! Slowly, the CBs are gaining the ability to manage production and price with this simple tool.

"If they want new mine supply on the market, they roll over the contract to the BB. If they want new supply off the market, they allow the BB to pay for and take delivery of the gold and return it to the CB vault." "Also, by offering ( or withholding ) vault gold from lease, they affect the lease rate and thereby control private lending as well"

Understand that the second sentence action is used because gold lending is done by many different entities. Many times a mine isn't even involved. Sometimes, gold isn't even involved, just paper. But, it's still based on the gold price! The paper price, that is.

thank you

Now, off to the family....Yes? Yes.

(11/25/1998; 18:14:24 MDT - Msg ID: 1080)
Class action lawsuit............Comments welcome
I wrote this many months ago,but never posted it,it was originally intended for the brilliant legal mind of Mr.Mozel at the Kitco site...Here goes:

Draft of class action lawsuit initiated by we the people of The United States of America.

Because the Congress,Senate,and Presidents of the United States of America have made and are currently making We the People of the United States of America indebted to the Federal Reserve System(a privately owned entity)to the approximate sum of six trillion paper dollars;We the people of the United States of America feel Amendment XIII of the United States Constitution,has been and is being horribly breached.We the people of the United States of America feel interest bearing debt in the above mentioned sum of six trillion U.S.paper dollars places our lives,our childrens lives,and yet to be born childrens lives into a state of involuntary servitude and is illegal.We the people of the United States of America and our children and yet unborn children,are being forced,and will be forced to pay off the debt thru excessive taxation,and other methods of extortion hence Involuntary Servitude.

Amendment XIII:
Section 1:Neither slavery nor Involuntary Servitude except as a punishment for crime where of the party shall have been duly convicted'shall exist withen the United States,or any place subject to their jurisdiction,etc. etc.etc.

In order to rectify this monumental wrong doing we the people of the United States of America demand the national debt,the above mentioned approximately six trillion U.S.paper dollars be paid for thru the sale of the approximately 8000 tonnes of we the peoples gold currently kept under safekeeping by the United States department of Treasury.To do this the 8000tonnes of gold would have to be revalued in U.S.paper dollar terms,this is not a precident,the United States Government has revalued gold in U.S.paper dollars before.
The formula would be divide six trillion by 8000.Which would place the reset value of the gold to $700,000 per tonne,exchange the revalued 8000tonnes of gold from the U.S. Department of Treasury vaults to the banks of the Federal Reserve System for the current U.S.paper dollar debt approximately six trillion dollars.The federal reserve system then ownes the gold and We The People have paid off our national debt.Furthermore We The People demand a Constitutional Ammendment to guarantee an annual balanced budget to perpetuity.

(11/25/1998; 22:04:48 MDT - Msg ID: 1081)
correction on math in previous post
6,000,000,000,000 divided by 8000 should be $750,000,000 per tonne,not $700,000.

Thank you
(11/26/1998; 06:47:02 MDT - Msg ID: 1082)
Fort Knox Leasing Gold?
For those who have not yet read it, there is an excellent commentary given by Bill Murphy at the following URL:

Has anyone else heard anything about the US of A leasing its gold. What is your take on this?

Happy thanksgiving all

(11/26/1998; 10:12:31 MDT - Msg ID: 1083)
Another, FOA
Re: post 1076 from PH is LA and the survey by Collin Seymour, could someone post the location of that survey. Thanks. I have been following quite closely this past year the unfolding events on the global stage and trying to understand what moves are being made and who the main players are. As all the posters on this forum have already said, the words from Another and FOA have been most insightful and helpful in seeing this unfolding picture. My thanks as well to them both, with hope that we will continue in the future to hear from them again.
I have noted recently that there is currently a meeting with the OPEC nations, which I feel these people are involved with. ( I almost said gentlemen, but am not sure that they might be ladies). It is at these times that they often have to leave for awhile.
There will have to be much work to do in the next while, with the introduction of the euro, and the shifting of the oil exchange to this currency. I have been rereading Another and FOA's posts trying to gain more insight into how this will all be played out over the next few years, and how quickly these events might happen. I have been playing the market with the gold mining companies, but am beginning to think that this might be quite risky, based on the speed that this could all happen. Any further comments on this would be helpful, as I am considering withdrawing money from my RRSP and converting to gold coin.
As I believe that Another has said, there is quite a currency war going on at the moment. I find the new article by Jay Taylor, posted on the Gold Eagle site, very interesting
Might this be Another's family, one that is not too well at the moment, at least economically speaking. E-gold is mentioned in this article. Any thoughts on the safety of this, in uncertain times. There is something about gold that makes one want to hold the physical. However the E-gold concept has a certain appeal, in not having concern about the storage and safety of the gold.
In closing, just a thought about family, and the broader concept as mentioned with the above. As the world goes through the great changes that we are currently experiencing
and which I believe we will see much more of soon, new ways have to be developed to live in the world. In the past, the nuclear family was quite important as a support network, in times of trouble as well as times of joy and happiness. In recent times, the state has taken over many of the roles that used to be provided by the family, and traditional family roles have been eroded. Many voices have been calling for a return to the past. I don't believe that this is ever possible, but we can draw from the past to map out the future.
With the rise of global capital as the dominant force in shaping our lives today, and with the power of the state being eroded by this force, we very much need to find new ways of support and community. I think these forums tend to fill some of needs, based on similiar interests and ideas.
I look forward to visiting with all of you at this site, and learning so much. There is a very high quality of discussion, and I hope that it will continue. I will miss Another and FOA, as they are taking on roles of 'family'.
They have helped greatly in expanding my vision of the affairs of the world, as have you all at this site.
(11/26/1998; 10:33:08 MDT - Msg ID: 1084)
Re: Alchemist Message
The survey you mentioned is no longer posted on the net, at least on Colin's page. Personally, I feel it might be wise to respect Another's wishes and not attempt to identify him. I feel I owe this person at least this much. For more info. on the Dinar, Colin's page, if you scroll down to the articles section, has a wealth of information on the subject.
As to the speed with which things will transpire, I too am concerned. My original plan was to wait until Jan/99 to withdraw MORE funds from my RRSP, however, I am starting to believe that time is running out quickly.
A friend of mine recently purchased a mere 25 1oz gold bullion bars from the bank and was surprised that the stampings on the bars were from 4 different locations. We tried to speculate as to why this could be - could there already be a shortage of bullion bars, or possibly others had redeemed their bars at a different location - I can't help but think that the banks would want to cut down on as much paper work as possible and it would be easier to give consecutive serial numbers.
Would appreciate anyone else's thoughts on these matters.
Regards, truthseeker
(11/26/1998; 12:38:14 MDT - Msg ID: 1085)
Alchemist and E-Gold
Reference your morning post, I have spoken to the E-Gold principles, read their literature and used their system in test mode. I think they have really done a thorough job and have a good system. The only problem I have is that my gold is not in my hands. When the USG decides that we are all criminals, they will freeze accounts and monitor all data traffic. What do you do then?? Also, Another and FOA have said many times to hold your own, don't let someone get their greasy mitts on it. 'Nuff said for my peace of mind. THX
(11/26/1998; 16:33:01 MDT - Msg ID: 1086)
Soros as PR man
Here we are. Since 1946, the ordinary people in the world have been defrauded by the Bankers. The world today runs on fiat money. Money that costs about 2 � cents per note � 100FRNs or 1FRN. They created it out of the vacuum left by Adam Weishaupt, Woodrow Wilson, FDR, Nixon, Bush and our current leader, Clinton. They expect US, that's you and me, to pay for it. Why not just use Monopoly money, its� got more colors? The only stand to take to salvage our wealth is to hold onto things that have VALUE. I choose GOLD!
Goerge Soros has been very visible lately calling for an international bank and credit insurance and control organization. This world organization would rescue countries and NGO's who have lost our money. This group would also monitor all the financial transactions of every country and every corporation in the entire world.
If the middle eastern OPEC countries have indeed been selling oil in exchange for physical gold for the last 5-10 years and the ECB has gathered what gold they need for the birth of the Euro at 15% fractional reserves, then the last sucker to fleece with major gold holdings is the IMF. If Soros can scare the G7 Gwhizzes into selling the IMF gold, then the new order can begin. How does George do this? Earlier this decade, he wrenched over a billion from the UK markets. If there is a danger of "persons unknown" dumping Tbills, say $3-400 Billion on the world markets, wouldn't that get the attention of the IMF and the G7? I wouldn't be surprised if Mr. Soros even has a buyer lined up already. Perhaps through the LBMA? After that, all the gold will be in the possession of the true believers.
(11/26/1998; 16:56:49 MDT - Msg ID: 1087)
From Gold-Eagle a few months ago.
This would appear to be a posting unrelated to ANOTHERs POV

Introduction -
Following is an imaginary meeting taking place in London on the 10th anniversary of Wall Street's worst meltdown. It was exactly 10 years ago (October 19, 1987) the Dow plummeted 508 points for the worst ever one-day 23% loss. This real occurrence created the background for the imaginary meeting of world financial leaders and representatives of Middle-Eastern crude oil producers.
The attendees of our imaginary meeting are numerous chairmen of world leading Central Banks and the financial spokesman of the oil-producing Middle-East, Sheik Abu Bekr al-Rashid. As was the initial meeting of this august body on October 20, 1987, Sheik Abu Bekr al-Rashid will again preside.
Sheik Abu Bekr al-Rashid:
"Gentlemen, exactly 10 years ago we met in London to discuss the grave concerns of the oil-producing States in the Middle-East. We showed how the oil-producers were subsidizing the economic growth of the rest of the world by maintaining low crude oil prices. Moreover, we also expressed our worry that the economic health of the oil-producers was dependent upon only ONE-COMMODITY. Furthermore, that one-commodity was finite in that it is subject to depletion. And at the rate the more industrialized countries are guzzling our oil, we fear for the longer-term economic stability of the Middle-Eastern countries - especially when India and China get up steam."
"Gentlemen, it gets even worse for us. For years we have been accumulating US dollars -- as world crude prices are always quoted in the greenback. The ever growing mountain of $US has been reinvested prudently in a diversified fashion. However, the amounts are so immense, the bulk of oil revenues have been invested in financial or paper assets... predominantly in the US stock market. Herein was the cause of our dilemma, which turned literally into a financial nightmare on October 19, 1987."
"For these reasons the oil-producing States convened the meeting on October 20, 1987 - the day after Wall Street's debacle. On that momentous day the members of the oil-producing States hammered out the historic agreement with you gentlemen -- Chairmen of the world's most prominent Central Banks. And today we meet to determine if our plan was effective. Let us review the concerns -- and positions of negotiation of both sides in 1987."
Middle-East Concerns:
1. Sale of a depleting asset at low prices.

2. Vagaries of the world stock markets.

3. Inevitable loss of purchasing power of paper investments.

4. A rapid rise in gold prices if we purchase on the open market.

Industrialized Countries Concerns:
1. Unstable long-term crude oil prices.

2. Inability to control negative effects of inflation.

3. Inability to control the public's expectation of inflation.

4. Need to maintain low interest rates to finance the US Federal Debt and create wealth by "feeding" the financial markets.

5. Political motives beyond the scope of this discussion.
"Gentlemen, you will recall that the plan had to necessarily address ALL of the CONCERNS of the oil-producing States, and those of the Industrialized countries. The oil-producing States agreed to maintain stabilized crude oil prices over the long-term. THIS WE HAVE DONE, except during the short 1990 "Desert-Storm" unpleasantness, when Hussein became unruly. In exchange for stable energy costs, you gentlemen would "facilitate" our acquisition of gold at low or diminishing prices. THIS YOU HAVE DONE."
"Gentlemen, it pleases me to present the following charts, which clearly demonstrate the successful results of our careful planning."
CHART 1 - $US Price of Gold
"On the day our plan went into effect spot gold was $472 per ounce. Exactly 10 years later it is $325. Exemplary gentlemen, that represents a compound annual price reduction of 3.66%. Admirable. It allowed us to accumulate substantial quantities of the noble metal, which as you all well-know is an important part of our cultural need and long-term planning."
CHART 2 - $US Price of Crude Oil
"On the day our plan went into effect spot crude oil was $19.02 per barrel. Exactly 10 years later it is $21.02. Exemplary gentlemen, that represents a compound annual price increase of ONLY 0.97%. LESS than One Percent per annum. That is less than half the world's population growth rate. Admirable. It allowed you to economically build your economies and industries with cheap energy costs."
CHART 3 - Gold Cost of Crude Oil
"Through the mechanism of our plan the oil-producing States have sold their depleting asset to the rest of the world at an ever-increasing gold price. On the day our plan went into effect the Gold Cost of Crude Oil was 4.04 ounces of gold/100 barrels. Exactly 10 years later it is 6.67 ounces of gold/100 barrels. Exemplary gentlemen, this represents a 4.82% compound annual gold-price increase of our crude oil. In sharp contrast most world commodities have NOT done nearly as well. Well done gentlemen, well done!"
"Gentlemen, may I congratulate US ALL. The plan has BEEN A RESOUNDING SUCCESS FOR US,... that is until now. It appears our covert agreement has leaked, resulting in a growing demand for gold. The all important question the oil-producing States have to you Central Bankers is the following: How long can the Central Banks continue to hold down gold prices, so our plan may continue to function to OUR EXCLUSIVE BENEFIT?"
"Gentlemen, the crucial and pressing situation is best captured by an American expression, "...the cat is out of the bag," what happens now?"
"Gentlemen, I leave you to your devices."
Assalamu Alaikum
Sheik Abu Bekr al-Rashid
LONDON, 20 October 1997,,vronsky@netrox.netCopyright � 1997 vronsky and westerman

(11/26/1998; 17:19:18 MDT - Msg ID: 1088)
Is it just me???
Another posting that isn't mine.......this one from The Winds.

In recent months there has been an overwhelming deluge of scandalous information disseminated worldwide. When reading this information and contemplating its implications, one can become weary, to say the least. One can become disheartened since no believable solutions are forthcoming.
Over the past 100 years the world has undergone a gigantic transformation and it will never be returned to its previous state. The leadership of the country over this time has steadily marched toward the Utopian dream of a single world society. While some of the goals of this class have sounded wonderful and made many in the world and our own nation hope in a glorious future, what has actually transpired is a degradation few comprehend even now.
In the early part of the century great changes were put into effect regarding our currency. We used to use money in our own country but money was eliminated a generation ago. Now we live on a fiat currency. No real money is used these days. An illustration of this can be seen in a simple illustration. Let us suppose we were using gold for money. We might spend an ounce of gold for a set of new tires for our car. Suppose the president of the country stood up and announced that the economy has collapsed and the money is of no value. One could still take his ounce of gold and trade it for a set of tires if the tire company had a use for gold. While it is true he might not take your gold and want some of the trees you have to trade instead, gold still has some use.
But, suppose you are using our current fiat money and the president stands before the cameras and says your money is now worth nothing. All you have is paper with the picture of dead presidents on it. I suppose one could stuff a pillow with it, but there are other materials more useful for that. The more shocking reality is that most of the "money" in use today is only recorded on electronic tape. All your savings or stock holdings are no more than some ones and zeros on some computer's storage drive. That can disappear like a puff of smoke. This may have something to do with the low rate of savings in this country since one cannot really save money because there is none. One can only save smoke.
The final death stroke to the money came during the Reagan years when the national debt was driven up to over five trillion dollars. This locked the country into a slavery of debt and on the basis of a fiat system of money. In other words, people have to spend the rest of their lives working to pay back nothing.
It may be helpful to simplify this illustration. When real money was in use, a person might decide to build a house for himself. He may get a friend or two to help. Mom was in the kitchen and everyone was fed while they worked together and the house was built. These folks might also go on to build the homes of the ones who helped them. In a relatively small matter of time all the families had a home and no one owed any money for it.
Today, when one gets a home it is usually from a home seller. He finances the home at the bank. He pays the principle and also about 400% interest over thirty years. He may pay for the principle in a few years and the rest of the time he is paying the interest having become a slave of the bank. That is the reality of going to a system that creates money out of debt rather than using real money. It doesn't cost the bank a thing to loan you money. It is still all in there where it started. You get a loan and the numbers show up on the computer screen. You pay the builder who has some numbers show up on the same computer screen. All the money still stays on the screen. In all of this the bankers make a huge profit on your labor and your transaction and they did nothing to earn it. You promise to work for them for twenty years just for the privilege of having a place to sleep. Pretty slick!
Silver Tongue
(11/26/1998; 18:53:05 MDT - Msg ID: 1089)
Jinx 44
Very interesting material you post. Could someone though explain how gold is transferred by the central banks to the oil brokers without hurting the banks. This theory, which I think has been posited by Another, is very fascinating in its subtlety.
PH in LA
(11/26/1998; 21:21:11 MDT - Msg ID: 1090)
To: Alchemist who asked about Colin Seymour's poll on the identity of Another
The poll in question appeared for about a week at: (well worth a bookmark as he offers a quick overview of interesting news items)

and (the poll) offered several possibilities to choose from including several high-profile Arab sheiks/investors/ministers, George Soros, Michael Kosares and a noted MIT professor of economics (among others?).

In spite of my own past speculations on the identity of Another, I, too, would never betray his identity without his consent should such information ever fall into my hands. Of course, there is very little likelyhood of that ever happening. Another has never even hinted at his personal identity. That said, it is very clear that his knowledge is based on very extensive knowledge and careful thought. The kind of knowledge and thought few of us are privileged to enjoy. The number of individuals possessing this combination of knowledge and thought processes cannot be large. Nor has his motivation in sharing his thoughts ever seemed anything but honest.

The results of the poll showed that most participants (which numbered fewer than 100) thought that Michael Kosares was the most likely candidate. Certainly, Another's appearance at USAGold gave a certain logic to that view. But most participants at Kitco (where Another used to post before coming to USAGold) thought that Bart Kitco was Another, too.

I don't think I betray any confidence by quoting Michael's words from a recent private communication to me: "I am not Another, as you probably know. Though we are close intellectually, spiritually and philosophically, he is miles ahead of me as anybody who reads and understands these pages knows. I am in his shadow and in his debt -- as are we all."

After "thinking long and hard" on this I must say that I agree completely with Michael. I have no suspicion whatsoever that he is Another, or that he even has any concrete knowledge about his identity. It would be very difficult to pull off such a prank, and ultimately entail an enormous amount of work and thought that someone as busy as Michael Kosares simply would not have time for.

Whoever Another is in the real world, and regardless of how his predictions turn out, there can never be any question but that he has enriched many lives. His thoughts and ideas have taught us much and stimulated our own thoughts. What more can be said about a man than that he made a difference? Another already has made a huge difference. I personally wish him the best in his own voyage and look forward to reading his further thoughts as events unfold should that again be possible.
(11/27/1998; 10:36:49 MDT - Msg ID: 1091)
PH in LA---identity crisis
There are several little clues (maybe) about the identity of A and FOA. News clippings they have posted are from the ME, primarily Bahrain. Their english sentences use terms and allegories from Sufi or Qu'ran teachings. Their absences coincide with ME oil business and meetings. Otherwise, I don't have the foggiest notion who the hell they are. Their understanding of the economies of the world seem real, so I pay attention.

(11/27/1998; 10:58:28 MDT - Msg ID: 1092)
Trading Lite on a turkey hangover
The Barclays news is great. Another Billionare Banker is poisoning itself. Another Japanese bank admitted it had fraudulently transferred 1.2Trillion Yen to another corporate entity to hide it off-balance sheet. I believe that there is a very big ongoing demand for gold and silver that is being met by CB selling, either directly into the market or through leasing. Are governments really this stupid???? I guess they can afford to be, since they can turn around and confiscate whatever they want when it's over. I'll be real interested to see what the final outcome is of the rumored leasing by the USTreasury of its' Ft Knox gold(originally stolen from our grandfathers in 1933). Do you think that there really is 260 Million oz. like they say?? I think that leasing is the same as selling outright. When the gold leaves the vault, you cannot count on ever seeing it again. When the lease expires, where are all these knuckleheads going to buy physical??? Is there a some secret I'm missing here?? I don't want some offmarket cash settlement bullshit. FRNs are only worth a max of $.025, the cost of printing. I can't even wipe my rectal pore with them, they are slick, just like french tp. Too small to wrap fish in also.

I am hearing an increasing amount of other people and news groups saying that the Euro will be a big deal and not good for the US$. Nicely confirms what A&FOA have been saying all this time. I think the game is getting closer to the last quarter($s and football) It will be quite a show to see as trillions burn and the guilty go unpunished. The ones who have prepared for this - physically and spiritually - will likely be scapegoated and eliminated in the interest of 'fairness' in the New World. I'llbe interested to see when they shut down the forums like this one. After they have taken the addresses of all the subversive posters, I suppose. Happy Thanksgiving everybody.
(11/27/1998; 15:08:52 MDT - Msg ID: 1093)
Vista Gold
I'm looking at Vista Gold as a possible investment. Anyone following this company?
(11/28/1998; 05:51:05 MDT - Msg ID: 1094)
Having nothing original to post AND since it is a long weekend...her is another ANOTHER
This one I tend to agree with as far as currency problems and people in the USA being w/out a clue.

Date: Tue Feb 24 1998 21:46

One of my favorite sayings comes from Another, "this thing of life, it is a hard game we play, yes?". It does seem to cover all the emotions, I use it often.

But, this game of gold, it is not only hard, but will cost anyone dearly if they try it without all the facts! Do we have the facts, or is this really just a game? I think, for many investors, the precious metals have become a game of such, even "a gamble that they never intended to take". Conservative persons, trying to protect a life's savings entered

this arena with a clear direction, that of protecting their assets from uncertainty. Far too few made it to this end. They read the numerous gold books and newsletters from the last 20 years and came to a solid conviction that, "I can make a fortune at this" or "at least a small killing"!

The gold market is made up of a very broad spectrum of investors. At the very farthest ends of this spectrum lie the persons with the largest influence on the physical bullion. The super wealthy at one end and the "third world no ones" at the other. The middle is occupied, mostly, by the "investors with western thought". The far ends buy bullion. And they don't buy it as a gamble or a game! It is a way of life that has worked, through thick and thin, even before the West was "The West".

Now, on the other hand, this "modern day middle of the spectrum"! Well, they have read why we need gold, but they have never "Experienced" the need for gold! Until that day, when they gain "Experience", most of them will make "A Gamble That They Never Intended To Take". Yes, they do invest in all forms of paper and or leveraged gold and all the while, expounding from the roof tops the coming currency crashes and stock market declines. Even looking for bank closures and bank runs, as they cling dearly to comex options and gold stocks!

Anyone, from the outside looking in can clearly see that "westerners" do lack "experience". What does this have to do with the current market? Let's move on.

As Another has said, "this market is like none before". That is so, very, true. There is a "flaw" in this modern market that many do not quite grasp. In time, they will! There have always been people and companies that make a living dealing in gold. It is an ages old business. Today, we see a phenomenon that is "as none before". It is mostly done by the investors at the middle of the spectrum. The "trading of gold" has grown to a level never seen in history! You read every day, that no one wants or needs gold! In a way those statements are very correct! No investor wants to hold gold, but everyone and his brother ( and sister ) want to trade it! The volume of paper trading, worldwide, on and off market is beyond belief! It has created a type of "Parallel Paper Gold Universe", existing side by side with the physical. The major "flaw" in this system is found in the makeup of the "traders" of this "paper gold universe". Without fail, the majority is made up by those in the "middle of the spectrum", those without "loss of currency "Experience" ". Mostly, they are of "western thought".

Without the experience of " the destruction of currency" as a mental control, the "paper gold universe" will expand! I will not begin to list the types of paper gold available for trade, but from comex gold options to huge corporate derivatives, the overriding motive with gold is clear. "I will trade gold, up or down and make currency on it"!

Ladies and gentlemen, today, the paper gold market is larger than available, tradable physical gold, by a factor of three! This market will continue to expand until we reach a massive gold derivatives failure. This will come about as those, who had no wish to gamble, but traded paper gold anyway, make a mad rush to dump paper and buy gold. Very, very few of them will succeed! You see, the largest bulk of the tradable physical gold will never come back into the market, "in terms of currency"! It will return as a trade for "another commodity"! OIL!

What do we look for to see the coming end of this present overleveraged economic system? The complete and total destruction of the world gold trading system!

From Another: " the destruction of the present currency system will be preceded by the total unlinking of all gold for currency trading" "gold may find a price of $50US/oz or $50,000us/oz, but the truth will not be known as an open market" " yet gold will find an increase of value of biblical proportions"

Thank You

PH in LA
(11/28/1998; 11:47:39 MDT - Msg ID: 1095)
Stasis in the gold markets
Yesterday, November 25, the spot gold price opened at $296.00 with a high of $296.50 and a close of $296.50. The price of silver echoed the same theme: open @ $4.91, high of $4.92 and close of $4.92. The same pattern has been evident for several weeks. The gold and silver charts at look like time-lapse night photography of the freeway with squiggly lines running in quasi-parallel lines down the same path.

Can any intelligent commentator explain such observed phenomenon?

Most scientific disciplines contend that nature abhors stasis.

Any sailor knows how often things break. (This writer will spend the rest of today finishing the installation of a replacement anchor windlass because the last one did.) In fact, since no human construction lasts forever, once made, all need constant maintenance. Otherwise, they fall apart. No stasis.

Any athlete knows that he is either getting stronger, or getting weaker. His state of training is never static. It is always either improving or deteriorating. Always! No stasis here, either.

No stasis anywhere.

Except in the gold/silver markets? Are we really to believe that market forces are at work here? that every day exactly the same number of investors are selling their positions as are buying new ones? that this co-incidence goes on day after day after day? In spite of gigantic hedge funds reported on the brink (or over it) of default? of huge amounts of leased metal (or metal-backed currency loans) that must be repaid? in spite of reports that the US Mint has used hundreds of thousands of ounces of gold from the US Treasury to satisfy coin demand, something that by law is only allowed when gold becomes unobtainable on the open market? Etc.

Not likely! To this writer it is obvious that some big-time maintenance (read manipulation) is going on here. Is this confirmation of ANOTHER's contention that preparation for the Euro launch demands this kind of stability until the euro is in place as an escape route for a financial system in serious trouble?

Or would the conventional-minded, everything-is-sound-in-the-banking-sector (just look at those soaring stock prices) commentators please step up to the plate and reassure us (and themselves) that all really IS well? That the stock market really IS healthy? That buying Yahoo stock really IS a good investment? Now seems like a good time to do so. Next month might very well be too late!
PH in LA
(11/28/1998; 21:11:14 MDT - Msg ID: 1097)
Bank Derivative Exposure Report - $28 Trillion!
Derivatives were interesting enough to be in the news a few weeks ago. Now it's Furbies, Internet Stocks and the DOW (not necessarily in that order). For anyone who still might be interested in derivatives, though: (BTW, where is everyone tonight?)

By Steven J. Williams, CycloPro,From J.E.T.
(Updated 11/14/98)

The activity information from all banks. Each bank must prepare a "Condition and Income" report from which the OCC gathers its data. The most recent report available is currently the 1998 Q2 report from which the data herein was obtained (the Q3 report should be available soon).

What is a derivative? The OCC glossary contains the following definition: a derivative is a " contract whose value is derived from the performance of assets, interest rates, currency exchange rates, or indexes. Derivative transactions include a wide assortment of financial contracts including structured debt obligations and deposits, swaps, futures, options, caps, floors, collars, forwards, and various combinations thereof..."

Perhaps the most striking single piece of information in the report is the fact that the total amount of derivatives held by U.S. banks is $28,176,000,000,000 -- in case you did not count the zeroes, that's $28 Trillion!!

This staggering sum is comprised of $10 Trillion in futures and forwards, $11 trillion in swaps, and $7 Trillion in options. The rest is a fairly insignificant $129 Billion in credit derivatives. $20 Trillion is concentrated in interest rates and $8 Trillion is in foreign exchange derivatives.

The top 8 U.S. banks hold 95% ($26.6 Trillion) of all reported derivatives. These top banks include the following (with stock symbol): Chase (CMB) includes Chemical from merger, J.P.Morgan (JPM), Citibank (CCI), NationsBank (NB), Bankers Trust (BT), Bank of America (BAC), First Chicago (FCN), and Bank of New York (BNY).

When looking at the percentage of credit exposure to risk based capital, JPMorgan has exposure of 728%, Bankers Trust has 373%, Chase has 334%, Citibank has 194%, and First Chicago has 175%. The other big banks are exposed for less than 100% of their capital. Up through Q2 (June 30, 1998), the banks have made money on their derivative positions, as follows: $1.4 Billion from foreign exchange and $930 Million from interest rates.

JPMorgan derives 23% of all of its revenue from trading derivatives compared to the next closest bank, Citibank which derives only 7% from its derivative trading. To be up-front, not all of the $28 Trillion exposure is currently at risk. Actually, when looking at only interest rate and foreign exchange derivatives, only $11 Trillion is at risk with an expiration horizon of less than one year and another $11 Trillion exposure for a 1-5 year expiration horizon. Whew, that's a relief!

It should also be pointed out that only $109 Billion in derivatives is exposed for less than 1 year for equities (stock market). Commodities (including gold and precious metals) are only $71 Billion for less than one year to expiration.

The following table demonstrates the breakdown by category of risk exposure for the 8 banks with the highest derivative positions held. The columns have the following
meanings: Assets is the total assets of each bank, Derivs is the total derivative exposure (all expirations), One Year is the total derivative exposure that expires in less than one year, Equity is the banks exposure to the stock markets, and 30% Corr is the amount of derivative loss if the stock markets suffer a 30% correction within one year.

Bank Assets Derivs One Yr Equity 30% Corr Chase 367B 8,299B 3,635B 7.8B -2.3B JPMorgan 281B 7,447B 2,487B 53.9B -16.2B Citicorp 331B 3,299B 2,067B 13.8B
-4.1B NationsBk 308B 2,325B 331B 8.5B -2.5B Bk Trust 172B 2,203B 963B 17.8B
-5.3B Bk Amer 264B 1,709B 781B 0.4B -0.1B 1st Chicago 120B 1,199B 469B 4.5B
-1.3B Bk of NY 63B 264B 19B n/a n/a

One you can see, if Chase were to suffer a 10% loss in the derivative exposure which expires in less than one year, their entire asset base would be wiped out. For JPMorgan it would only take an 11% loss to wipe out their asset base.

For the banks exposure to only the stock markets, JPMorgan leads the pack. If stocks suffer a market correction of 30%, JPMorgan could stand to lose $16.2 Billion. And, that's only their equity derivative exposure with an expiration of less than one year. If the stock markets entered into a long-term bear market lasting 5 years or more, JPMorgan's exposure would be $76 Billion and a 30% correction over that time could result in a loss of $22.8 Billion.

It appears to me that several of these banks have been in a difficult situation for the past few quarters. Many of these banks participated in investing in the LTCM hedge
fund, in addition to directly holding derivatives, which magnified their exposure to market fluctuations. The near collapse of LTCM would have been a disaster for many of these banks. First, the forced liquidation of the derivatives held by LTCM would have certainly caused the markets to fall even further. Second, the leveraged exposure these banks had to the markets directly though their own derivative positions, would certainly have added to their losses. Third, with a portion of derivatives expiring on October 16, 1998, it is no wonder that the FED stepped in to assist in a multi-participation bank bailout of LTCM and announced an emergency rate reduction on the day before many derivatives were set to expire.

In prior articles, I mentioned that JPMorgan holds controlling interest in the stock of the Federal Reserve Bank, and the FED has been instrumental in making market-moving announcements over the past few quarters -- it does not take much effort to suggest that ulterior motives may have been at work to influence the FED's decisions.

The main problem currently being faced by the FED and the banks is what to do next. If interest rates are lowered again, it may cause rate-sensitive derivatives to generate extreme losses for the banks. Chase has $2.2 Trillion in derivative exposure that expires in less than one year, JPMorgan has $1.6 Trillion exposure.

In addition, adjusting interest rates will also affect currency exchange rates. Chase and Citibank each hold $1.4 Trillion of foreign currency derivatives, and JPMorgan holds $829 Billion, all expiring in less than one year.

If you have ever wanted to witness an ultra-high stakes situation where the players were literally "between a rock and a hard place", this has got to be the very best example that you will ever see. Unfortunately, none of the information will be made public (if at all) until well after the major events have taken place.

(11/29/1998; 20:57:32 MDT - Msg ID: 1099)
Dec gold (almost upon us) is now...
$296.00. GC99G is $298.50.

(11/30/1998; 04:40:33 MDT - Msg ID: 1100)
Dec. gold now $295.50
but it would seem mid-next year golds over $300. Anybody know what the symbol on is for January gold?

My guess is gc99g ($298.20).

(11/30/1998; 05:00:25 MDT - Msg ID: 1101)
I figured it out. GC9F is January Comex Futures. It doesn't seem to be trading overnight. HHG is Handy and Harmon Gold spot. SL8Z is Silver December Future. SL9F is Jan. Silver. Do note that GC9J (April Gold) is at $300.80!!!
(11/30/1998; 05:17:27 MDT - Msg ID: 1102)
Deutsche Bank and Bankers Trust in the news from CNNf

Deutsche, BT seal $10B deal

German bank's $93 a share offer for
Bankers Trust to create world's biggest

November 30, 1998: 6:39 a.m. ET

Deutsche, BT set
the terms - Nov.
29, 1998

Jobs to go in
Deutsche deal -
Nov. 24, 1998

Deutsche Bank

Bankers Trust
LONDON (CNNfn) - Deutsche Bank has
announced it will pay $93 a share to buy Bankers
Trust in a $10.1 billion deal that will create the
world's largest bank, the companies announced
Monday at a joint news conference in Frankfurt.
The deal comes at some cost, however. About
5,500 jobs are expected to be cut, most of them
in New York and London. Job cuts will be
shared equally in Information Technology, global
markets, global equity and other areas.
Deutsche (FDBK) also announced it is setting
aside $400 million to offer incentives to retain key
staff over the next few years.
The bank claimed the merger would generate
annual cost savings of 1.7 billion marks ($1
billion) by 2001.
The combined bank will have more than $800
billion in assets, making it the world's largest
banking company, ahead of Switzerland's UBS.
Deutsche plans a capital increase of 4 billion
marks ($2.3 billion) to finance the purchase. It
will fund the remainder through existing bank
funds and other instruments including a bond
Deutsche supervisory board chairman Rolf
Breuer said the capital increase would not be
He also said the bank has no further plans for
expansion in the United States.
The supervisory boards of both banks
approved the deal in New York over the
weekend. Two-thirds of Bankers Trust's (BT)
shareholders still need to give their support, along
with regulators in Germany, Europe and the
United States.
The banks last week confirmed speculation
that they were in talks .
Deutsche said it hopes to complete the deal by
May 1999. It has applied for a listing on the New
York Stock Exchange.
Analysts said the deal is unlikely to be the last
in the banking sector, although future deals won't
be as big.
"We will see further consolidation both in
Europe and the U.S. , whether we will see more
transatlantic transactions of this size is far more
questionable," said Matthew Czepliewicz,
banking analyst at Salomon Smith Barney in
(11/30/1998; 05:21:34 MDT - Msg ID: 1103)
Hong Kong from the web:
HONG KONG (Reuters) - Hong Kong
confirmed the depth of its recession on Friday,
with the economy shrinking by seven percent in
the third quarter compared to a year earlier -- the
territory's biggest ever quarterly fall.
"The sharp volatilities and price falls in the
financial markets during the quarter, continued
credit stringency and high interest cost all severely
hit domestic demand," a government spokesman
It was the third consecutive quarterly
contraction for the economy, which has been
battered by the financial crisis that has swept
through Asia for more than a year.
The economy contracted by 2.7 percent in the
first quarter and by 5.2 percent in the second
"The performance of the year will be quite
unsatisfactory," said government economist K.Y.
Tang."This present economic adjustment is more
difficult than the one we had during the first oil
crisis (in 1975)."
Speaking for the government, he said more
hard times were ahead, with no hope of an
economic revival for the rest of this year, but he
declined to comment on prospects for 1999.
Tang said the government predicted the
economy would contract by 5.0 percent for the
year as a whole, compared to its previous 4.0
percent forecast.
But he said an anticipated fourth quarter GDP
fall would be limited by better sentiment and a
lower base in 1997. The government forecast that
CPI (A) inflation would grow 2.8 percent in
1998, compared with earlier forecasts of 3.2
Economists said the sharp third quarter fall
was expected but the seven percent decline was
at the high end of predictions this week.
"It came out pretty much in the ballpark of our
expectations. We were looking at roughly 6.5
percent, so it came out slightly worse than our
expectation but within the ballpark," said Sun Bae
Kim, an economist with Goldman Sachs.
He said the figure did not come as a huge
surprise because a lot of the indicators such as
consumption and retail sales had been performing
Kim said that while the economy itself may not
have bottomed out, the worst in terms of
quarterly contractions may be over.
But Andy Xie, an economist with Morgan
Stanley Asia, said the third quarter was worse
than expected.
"I had expected around 5.5 percent, and now
it turned out to be seven percent, much worse
than originally anticipated," he said.
He attributed the GDP fall to deteriorating
consumption, sharp plunges in property prices
and the dramatic fall in local stock prices during
(11/30/1998; 20:39:22 MDT - Msg ID: 1104)
PH in LA
Hi- catching up on my reading. OK PH in LA- I agree that there's got to be major manipulation going on. It's the reasons and the outcomes that worry me. Assuming most of our collecive thoughts are along the same wavelength,we'll all be fine, but what if..... and that's the part that worries me (perhaps as 1999 and the Euro are now so close, I worry that the timing and the ideas have all been wrong, and that as a gold bug, the whole thing becomes a major disappointment. Hey the market didn't exactly chug upstream today, and neither did gold. It makes no sense to me that the printing presses are going full blast, but the market keeps going (today being an exception), that rationally there should be no confidence at all in paper currencies but gold stays low, I mean my list can go on and on. Deep down I agree that that there will be a day of reckoning. But the manipulation continues, and can't it just continue indefinately? My Dad (also a gold bug and generally a little more sure of things than I) says no way, at some point it all has to come crashing down. Fundamentally I agree. But the problem with this game is that the average person (like me) is not privy to the rules. I probalby have more questions than answers- I've been very wrong now for a long time. Any enlightenment would be great.
(11/30/1998; 20:47:53 MDT - Msg ID: 1105)
Hey, a piece of good news!! Today, Bundesbank governor Hans-Juergen Koebnick said that Germany would not be seeling its gold reserves next year, nor did he expect any of the other eurozone central banks to either. Last week China said that it wanted to increase it's gold reserves. Maybe I'm missing something, but that sounds bullish for gold to me.

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