@ TestBoo - No Gremlins

www.kitco.comDate: Wed Sep 01 1999 06:35
rhody (@ Nick: Do you mean that China has already bought the) ID#410367:
Copyright � 1999 rhody/Kitco Inc. All rights reserved
600 tonnes or so of gold they needed to bring their gold reserves
up to 1000 tonnes? This amount of gold is one and a half times
the total annual CB sales, and the same factor of magnitude
larger than the BOE sale. They did all that without moving
the spot price????? If they can do that, then GS should
hire these guys to orchestrate the covering of Goldman's short
position in gold.
Several posters have pointed to the fall in the USD as
bullish for gold. True, in a normal market. This whole
gold bear is about protecting the status of the USD as a
world reserve currency. I will make a prediction. As the
USD comes under pressure, the POG will also. You will see
lease rates climb, but not POG. FWIW. I'm no expert, but
this pattern has been in place since July 1.

www.lemetropolecafe.comAugust 31, 1999 - Spot Gold $255. 40 up $1.70 - Spot Silver $5.15 up 6 cents

Technicals

The "Rinky Dink Express" eases on up the road and is on track. Gold has now closed higher 4 days in a row, just as I anticipated. The volume is very light and there is little interest in participating in this rally by the public. The "Hannibal" press and "gold cartel" have done their job well and continue to control the price of gold so that it has become one of the most boring markets in history - at least, for the time being, that is.

But not so fast "Hannibal." Your leash ( lease ) is growing shorter and the obvious nature of what you are doing grows by the day. You are an open book now. It will not be long before the book cover is slammed down on your exposed fingers.

When you read this, Midas Caf� members, I would like to make one thing clear. I am not bitter, I am very angry. There is a big difference. The manipulation of the gold market is an outrage and many innocent people are being ruined to accommodate the big money crowd in New York. It is a scandal of deeply disturbing proportions that not only is ruining many gold industry participants and unknowing, innocent shareholders, but also threatens the free market financial system when all is said and done. This manipulation is criminal in nature and the " gold cartel orchestrators" are no better than street thugs.

No sense talking about the bullish consensus, open interest, chart patterns, etc., today. The only technical market observation that is worth noting is that the $2 rule was put in place once again. Doesn't anybody wonder why the price of gold is NEVER allowed to go up more than $2 in any given day? Curiosity only kills cats!

The $5.05 support area for silver is solid as the "Rock of Gibraltor." Midas' long standing very bullish outlook for silver remains in place. One of these trading sessions, we are due for a 50 cent up day.

Fundamentals

Bridge News - GOLD BUREAU OFFICIAL SAYS CHINA'S GOLD RESERVES ARE TOO LOW - Shenzhen--Aug 31--China's gold reserves are too low in relation to its population of approximately 1.3 billion and its forex reserves of US $146 billion, deputy director of the Gold Bureau under the State Economic and Trade Commission, Ai Da Cheng, says. Ai told Bridge News that China's gold reserves of 394 tonnes could rise to at least 1,000 tonnes. Gold currently accounts for just 2.3% of the country's total reserves, he said.

This may be an important comment. All we hear about from the bullion dealers is that phantom central banks are selling gold. The problem is the dealers never say who "it" is. Now we have talk about central bank buying. In the past we have monitored World Gold Council comments about potential Chinese central bank buying, but this is the first mention I have seen on the subject from a Chinese government official.

Why don't the bullion dealers spread central bank buying rumors?

Maybe some important silver news out of this Shenzen conference. Bloomberg: "The government is also considering how we can push the reform process. I think the first step is to deregulate our silver industry, to allow manufacturers and users of the metal to purchase directly from the producers."

This may be an important development, according to the Caf�'s John Brimelow, as he notes the Chinese have historically been big silver consumers. Perhaps this tidbit of news buoyed the silver price today.

The dollar was shellacked right from the git go: the yen closed at 109.55 ( breaking the key 110 resistance level ) , the euro at 105.70, the swiss franc at 151.40 and the pound at 160.50. The dollar index has technical support at 99.75 and 99.30 and closed today right below 100. A break below both technical support points would be very bearish from a technical perspective.

The yen is filled with intrigue. There is daily talk about more yen intervention, but $30 billion of yen intervention has already failed to do the trick. Treasury Secretary Summers has berated the Japanese for intervening while the Japanese themselves are calling for some kind of concerted intervention. A move below 105 in the yen would be a "signal" failure and dangerously bearish for the dollar. The commercials are mega short the yen while the specs are long. A move below 105, a peak for the yen earlier this year and a major yen resistance point, will blow the commercials out of the water and cause a yen buying panic according to some highly regarded technical analysts.

Technically and fundamentally, the dollar has put in a major league top. That can only be bullish for gold demand as gold becomes relatively cheaper around the world when the dollar slips against foreign currencies
........ ( more )

Potpourri and the Gold Shares

The XAU clawed its way up again, finishing nicely at 67.34 up 2.09.

The six month lease rate remains very firm at 3.42% and tells us that gold lease supply is still very tight.

From Caf� member ERLE: "I posted on Kitco the nub of the conversation that I had with a bullion/coin dealer. He used to be a big enough dealer that Credit Suisse entertained him and gave him the grand tour of the vault. He said that they had 50,000 bags of sovereigns @1000 pc./bag. All of that is gone, as are the 20 Franc coins. They have no more. Try to get Austrian 100 Corona now."

Bill King of M. Ramsey King Securities, Inc. reports this morning in his Market Comment: "Today's Dallas Morning News says the U.S. Attorney in Waco has documents that detail FBI use of military gas at Waco; with hand-written notations that question if the details should be revealed. The US Attorney wrote Reno on Monday, "individuals or components with the Department of Justice" may have perpetrated a cover-up on Waco.

I spoke with Marty Zimmerman, Business Editor of the Dallas Morning News, awhile back and he told me "they did not believe in conspiracies around there." Have to call him again - maybe he will reconsider talking to me now.

Why is it that Lewinsky and Paula Jones matters can be covered up, Waco can be covered up, Watergate was covered up, but a cover up of a gold market manipulation is too far fetched to be discussed or looked into by the mainstream press? Who are the real wackos here? It is a shame that we do not have an inquisitive and free mainstream press in the United States. Only when the cat is let out of the bag on some scandalous story do they run like sheep to hop on a sensational bandwagon. Then, they can't wait to point fingers and howl moral disgust.

The National Purchasing Managers Survey, scheduled for tomorrow, was released today by mistake on a government web site. The index, a measure of economic strength, increased from 53.4 to 54.2. The real surprise was the prices paid component which increased 5.1%. In laymen's terms, it means there is a good deal of inflation in the economic pipeline.

Since it was a surprise announcement, it caught the market manipulation crowd by surprise. They were not ready to tell the troops what to do. Thus, the stock market cratered fast, the bond swooned and the price of gold exceeded its $2 rule boundary by 40 cents. The "squad" regained their composure later and calmed things down a bit.

The central banks want to sell all their gold according the bullion dealers and their apologists. With what we reported about today's market action, does that make any sense to you? Are these bankers really selling? Is Hannibal just making it up? Or are the central bankers that stupid to sell gold no matter what the circumstances?

Take the Bank of England. Truly a sad sack situation. Either The Bank of England are a bunch of dummies or. as is the most likely case, the British politcos forced them to announce the gold sales in response to a request from the likes of former Treasury Secretary, Robert Rubin, President Clinton, Alan Greenspan and some desperate bullion dealers.

On May 6th, the price of gold was headed towards around $320, breaking through $290 resistance. In unprecedented fashion for recent times, the Bank of England makes this devastating announcement that knocks down the gold price $29 to $261 before they sell any gold. Had they waited and decided to sell gold like any other normal central bank, they might have received $60 more per ounce on the first 25 tonnes of gold they sold. In addition, they reported that they took a good amount of the proceeds and invested them in U.S. bonds. The bonds are tanking and the dollar is swooning lower too. How good a trade is that turning out to be for the British?

Commodity markets are flying, the dollar is in trouble with its burgeoning trade deficit, bonds are hurting as yields rise, the U.S. stock market is way over valued and there is record demand for gold while future gold supply will sink below trend.

Central banks, like the Chinese, should be lining up to BUY GOLD not sell it - if in fact the phantom central banks are doing so.

One way or another, the gold market fraud will be exposed and so will some of the participants in this scandal. In the meantime, the shorts are getting more behind the 8 ball every day that goes by. Five tonnes of gold shortage "8 balls" every day; that is what the daily supply/demand deficit is - every single day at these low gold prices.

That is why I say buying gold, silver and the precious metals shares now is the best risk reward trade I have ever seen. The longer the "Hannibal" crowd fights on in their desperate gamble to hold down the price of gold, the bigger will be the eventual move ( remember the "sling shot" ) They are fighting a desperate battle that they will eventually lose.

The price of gold and silver will soar.

When that happens, we will all make fortunes.

Midas

Gentlemen, Thank you for your "Thoughts" it was/is kind of you to share your knowledge and insights of this troubled and confusing precious metals, currencies and equities markets. Many posters here and at other forums are increasingly expressing their frustrations, axieties and despair. It appears that many thought that inside information would be revealed, dates given, and action plans would be clearly stated by Another & FOA.

I for one am pleased to have listened and learned from you Gentlemen. I have concluded that swift action is required:
I have sold the aircraft, and I am selling the Mercedes. We are buying a herd of Camels, Mountains of fresh water, and bags of precious metals including gold and platinum. We must cash-up with Au & Pt, sit on our hands and wait for the storm to pass.
Another & FOA, I invite you to sit and wait with me and my camels in the Great unspoiled North/West Region of Australia, where we can gaze at the Indian Ocean near the town of Broome. From Paradise Found, Cheers and Good night, JR.

Peter, Tom, Junior and others,
Thanks for your ideas, comments and support. For anyone that is contrary to my thinking, feel free to jump on it (hopefully in a constructive / conclusive way). Rest assured, someone a lot stronger than you is poised to cut me off if I spout off again! I will be back a little later today with some replies and more discussion. I think the markets are starting the long awaited "final convulsion"! I'll try to point out what my side of the river sees as significant to watch (if only Jeff/Usagold can remember to change the oil and check the radiator on schedule, smile). FOA

http://www.iht.com/IHT/TODAY/WED/FPAGE/fecon.2.htmlParis, Wednesday, September 1, 1999

As Europe Grows, France's Jobless Rate Falls to 6-Year Low

------The latest data underscore recent signs of stronger growth throughout Europe. France's main trading partners - Germany, Britain, Spain and Italy - are all undergoing economic revivals. Indeed, Italy and Spain reported separately Tuesday that factory prices jumped by a greater than expected 0.6 percent in July.--------

-------Based on the improvement in industrial output and continuing high consumer confidence, the government predicts that economic growth will accelerate next year to between 2.6 percent and 3 percent, up from estimated growth of 2.5 percent this year.-----


-----Although the latest economic data raised fears that the ECB might increase interest rates, inflation seems firmly under control in the EU. Consumer prices in the single currency zone rose at an annualized rate of 1.1 percent in July, well below the 2 percent limit for countries that have adopted the euro.-------

Knights & Ladies.. A thought comes to mind. Is the trading of Gold derivatives not unlike the practice of banks loaning out paper dollars, many times more in quantity than actually exists. Is this not the creation of Fiat Gold?
The Scot

i did go to western....played football in case you degenerates did not make it....sounds like crap it is crap....won it all ...beat toronto in toronto ...at the CNE...that's how old this story really is....

http://www.usagold.com/cpmforum/archives/3019998/default.htmlIf you missed the posts from midnight to 17:14 Mountain Daylight Time on Monday before they were unceremoniously wiped out, you can now read them in the archives at the link above. Some REAL good stuff was in there!

Hi, AREM....

Somehow, despite all the downtime, I managed to read your impressive post. I wanted to comment before this, but the site kept going down. I guess you just picked a bad time to make your debut.

Wow, what a great opener. How did you hold all of that in for so long? Anyway, I will check out libertarianism, per your suggestion, and hope to see more from you as time goes by. Thanks!

http://www.worldnetdaily.com/bluesky_williamson/19990901_xcawi_an_inconve.shtml
Ha! - and you wonder why free markets have taken so long to emerge in Russia. The fleecing of the West. Great story!

From World Net Daily;


An inconvenient history


By Anne Williamson
� 1999 WorldNetDaily.com

As newspapers blast details regarding what will
prove to be the tip of a Russian money laundering
pyramid, U.S. policymakers and the West's
Russian advisers are tap-dancing madly across
America's editorial pages in order to stay one step
ahead of public accountability. Professing to be as
shocked as Claude Raines ever was by the goings
on in the Russian casino that their careerism,
opportunism and criminal stupidity built with
taxpayers' billions, this crowd is simultaneously
adopting a world weary and sophisticated
attitude.

After all, everybody knew, or so they imply, that
corruption is rampant in contemporary Russia.
What could self-advertised market wizards or
earnest public servants possibly do to restrain the
Russians' destructive behavior? Conveniently --
just days before the revelations of Aug. 19 -- a
profusion of well-tailored journalistic memoirs
recalling seven years of Russian reform inspired by
the anniversary of Russia's Aug. 17, 1998,
meltdown appeared. All the big papers ran major
articles. Two of these efforts in particular deserve
a close look.

The Washington Post trotted out eminence grise,
Robert Kaiser, the Post's Moscow bureau chief in
the early 1970s, whose piece did get its headline
right, "Pumping Up The Problem." The New York
Times shrewdly hired the job out and imported a
Brit for their write up. John Lloyd, who was the
Financial Times' Moscow bureau chief from
1991-1994, delivered a drab story with no new
information, a real disappointment coming as it
did from one of journalism's most astute observers
of Yeltsin's Russia.

Worse, the Time's story showed just how clever
Western handlers were to keep their "eager young
reformers" available to potentates of the
self-reverential "quality press." Ironically, the one
Lloyd selected for his story's bittersweet coda
turned out to be none other than Konstantin
Kagalovsky, a well-known opportunist and
Russia's first representative to the IMF, whose
connection to the $15 billion Bank of New York
money laundering operation the Times was
compelled to report on its front page just four days
later.

Kaiser, however, being an eminence grise, did
contact two now retired State Department
officials, E. Wayne Merry and Thomas Graham,
who reported sordid details regarding U.S.
policymakers' ends over means approach to
Russia. They told how cables filled with
information of what was really going on in
Moscow were blocked by higher-ups at the
Moscow embassy and by emissaries from
Washington. Lloyd reminded the public of Albert
Gore's nixing of CIA reports detailing Russian
corruption involving his best Russian pal, Viktor
Chernomyrdin, and that Sweetheart of Harvard
Yard, Anatole Chubais. Thomas Graham told
Kaiser that the Gore-Chernomyrdin Commission
was "Sovietized" immediately, meaning its success
was declared mandatory. Diplomats,
policymakers, pundits, aid consultants and
contractors were told to put a happy face on all
aspects of U.S. policy.

Western journalists in Moscow played along,
using the government's basic methodology; any
information that questioned the success of the
reform effort was squelched, ignored or
downplayed. Any alarming developments were
massaged away by members of the "aid
community" in Moscow, and by
assistance/policy/government retreads stashed at
various think tanks in Washington and Moscow.
Journalists built their stories based on quotes and
information from these active players and shapers,
from whom their editors, in turn, sought their
views in published editorials. Russian dissenters
were tagged with the "Communist" label and
dismissed. In these ways, the party line was
woven into a web of almost seamless propaganda
despite none of Russia's complicated reality
actually corresponding to the parallel universe
U.S. policymakers, Washington pundits and
collaborating journalists inhabit.

But the Post's and the Times' stories were
important as signals; it is now permissible to
discuss U.S. failure and the collapse of the
"Washington Consensus." About bloody time.
Having been given many billions and years of
freedom to pursue their ideas without scrutiny or
accountability, Clinton's foreign policy apparat
has delivered the world a debacle. But citizens
should be cautious in evaluating today's
increasingly unavoidable revelations; many shoes
are left to drop. As one CIA man put it, "Clinton
made sure they all got something and then they all
stole something more, so nobody wants to get to
the bottom of what really happened."

The current spin is to fob blame onto the banking
oligarchy whose members the "reformers" in the
Kremlin selected and whose development Western
lending fed and nurtured. It's helpful too to hurry
past the crime of voucher privatization, which
Harvard economist Jeffrey Sachs and his team
designed in cahoots with Anatole Chubais in
1992. Better to focus on the secondary stage of
privatization, the loan-for-shares scheme, an
insiders' feast of Russia's juiciest assets, which was
cooked up mostly by the Russians themselves.
Most especially, a wise memoirist skips any
discussion of Russia's market in short-term
government bonds, GKO instruments.

The improbable yields (290 percent on
three-month paper at one point) on Russian GKOs
were paid with U.S. taxpayers' money via IMF
loans. Guess where all investment went? By
yielding those kind of non-market returns, the
bond market insured that all the country's
resources and all that it was capable of attracting
went to the support of the state, just as Czarism
and Communism had done previously.

So lush were the bond market's rewards that
dubious market participants included the Russian
Central Bank itself through an off-shore firm
known as Fimaco. The involvement of the
Harvard Institute of International Development's
(HIID) honchos in the same conflict-of-interest
activities has already been admitted publicly and
remains the object of a Boston grand jury's
scrutiny. The Harvard Management Corporation,
which invests the university's endowment, was
also an avid purchaser of Russian bonds, a
dubious and unsettling history since there is no
legal separation of HMC and the university itself.
According to the Russian Interior Ministry's
Department of Organized Crime, Western
employees of Russian banks, Western bankers and
consultants, Russian bankers and anecdotal
evidence, other likely participants include certain
employees of the U.S. Treasury, of the multilateral
agencies (most especially the World Bank's
Moscow offices), of bilateral aid agencies, and
policy and program consultants acting through
accounts established in their wives' maiden names
with non-U.S. reporting brokerages in Moscow.
Even the Ford Foundation's Moscow office
sponsored its own internal Russian bond shop for
which the unthinking Russian managers once
asked this reporter to drum up U.S. investors.

But Russia needed direct investment, not
speculative debt traders. Why then did
international lending and bilateral aid programs
work overwhelmingly to the international debt
merchants' benefit? Actually, all aid programs are
meant first to advance globally the Fed's money
monopoly through IMF lending and the private
banking sector and secondarily, the subsidized
expansion of U.S. firms into foreign markets.

Unsurprisingly, it was George Bush who got the
money monopoly's ball rolling in Moscow. In early
1992, the "Bankers Forum" project was wheeled
into place by a former New York Fed chief, Gerald
Corrigan, who at George Bush's direction sent in a
group of experts from the Fed, commercial banks
and the Volunteer Corps on an off-the-books
mission to teach the Russians at the Central Bank
the bond game. The Western banker who
explained the project's background remarked,
"Basically, when Corrigan asks, I guess no one
turns him down, because people reacted
instantaneously. It was done by private investors,
who were doing a public service, who were asked
by a person you can't say no to" (my emphases).

But from the first day of Clinton's presidency, the
new president's administration worked
aggressively to capture the political support of the
financial sector, offering up heretofore unseen
gobs of government favor. (A disproportionate
number of firms receiving Overseas Private
Investment Corporation guarantees,
Export-Import bank lending, and participation
from International Finance Corporation and
Russian Enterprise Fund were high-dollar
contributors to both Clinton campaign coffers and
the DNC.) The basic formula was simple, it's not
rocket science as Russia's Harvard advisers would
like the public to believe: The bread and butter of
all equity markets are bonds. Wall Street wanted a
debt market. You build it and we'll come, they
said.

The aid program delivered best it could what was
in reality a flimsy contrivance, which -- in turn --
was really only an exotic venue through which to
pass public funds to select Russians of the
Clintons' and HIID's choosing and to Wall Street
investment banks the Clintons hoped to entice
permanently into their orbit of supporters and
contributors. In short, the Russian bond market
was influence peddling at the highest levels, not
unlike the Arkansas Development Finance
Authority, a public fleecing machine the Clintons
built to benefit their political supporters and
contributors years ago in their home state.

The Clintonites' new spin admits that many
Russians have the idea their current misfortunes
are the intentional work of the U.S. Allowing that
the Russians' theory "is built on a certain logic,"
Kaiser still managed to conclude that the
"catastrophe was probably made inevitable by the
policies adopted by the last Soviet government, but
Russians rarely grasp the subtle points of
economics."

Say what? Subtle points of economics? Looting
and political racketeering are hardly subtleties apt
to confuse any Russian, though American
taxpayers were certainly misled successfully.

The Clinton apparat is quick to whine that
somebody had to keep the communists at bay. But
there were no communists in Russia by late 1991,
only nascent investment bankers looking to nail
down a stake any which way. Communism had
evaporated by late 1987, the year in which the
Russian people were allowed to hold convertible
foreign currencies. Overnight, the power of money
displaced the power of ideology.

Bill Clinton's foreign policy is best understood not
as a collection of new era efforts at "nation
building," but instead as an utterly irresponsible
form of colonialism. It's mind-boggling just how
opportunistic U.S. economic policies were in
Russia.

What a free lancing Harvard economics professor,
Jeffrey Sachs, and his team of flying graduate
students managed to set in motion in 1992 insured
that absolutely nothing was ever going to work to
the Russians' benefit no matter what they tried.
The possibly intentional sabotage of Russian
reform was the result of three egregiously
wrong-headed policies; a forced inflation, tariff
reductions and voucher privatization.

In late 1991, vast amounts of gaseous blathering
were published regarding something called "the
ruble overhang," describing the burden of it and
the urgent necessity of doing something about it.
This was all nonsense, of course, since the dreaded
ruble overhang was nothing more insidious than
the collective national savings held by Russian
households. The Soviet economy focused almost
entirely on the defense sector, leaving nothing for
the people to buy. Therefore, the Russian people
had accumulated a large stock of savings.

In July 1991, the Supreme Soviet passed legislation
mandating the privatization of the Russians'
national legacy. Despite that, the
Harvard-connected advisers reasoned just months
later that since there was nothing to buy
immediately, the national savings -- that pesky
"ruble overhang" -- would have to be eliminated.
Free market types went blue in the face pointing to
the national property fated for the auction block
as the most useful and appropriate sponge for the
people's savings, but to no avail.

Hang on, free market economics Harvard-style
gets even nuttier.

Yegor Gaidar insists to this day, John Lloyd was
good enough to remind us, that "he had no choice
but to let prices rise to increase supply and to
scrap trade barriers so that foreign commodities
could begin to fill store shelves."

Say, huh? The Soviet Union was economically
self-sufficient except for bananas, coffee and
coconuts. Foreign commodities weren't required to
fill Soviet shops. And even though the ruble was
not convertible, that characteristic had nothing to
do with the sudden shortages in late autumn
1991, which were only slightly worse than those
normally encountered in the last sputtering years
of Gorbachev's perestroika.

No one had stopped producing, so why were
shops suddenly nearly empty? Producers had
begun hoarding, as had fearful consumers, but
why? Yeltsin did announce in November 1991
that the government intended to free prices, but he
also announced the exact date on which prices
would be freed. Predictably, producers withheld
their product from market and rubbed their hands
together like flies awaiting the coming feast which
Yeltsin's newly announced policy guaranteed.
Within a week of the ill-considered speech,
Muscovites' needs were being rationed.

However, Gaidar really was under pressure, but
the pressure was coming from the West to open
Russia to unrestricted imports in return for
multilateral lending. Gaidar soon delivered a trade
policy that was 100 percent back-to-front,
accommodating as it did the self-serving demands
of both the West and Russia's nascent banking
oligarchy; Russian manufacturing was to take the
brunt of unrestricted foreign competition, but
domestic banking was to be protected from
competition! Even Russian Central Bank
Chairman Viktor Gerashchenko protested, but
Yeltsin's boys got what they wanted and the IMF
continued lending. So much for the "leverage"
foreign policy elites claim foreign assistance
programs provide the U.S.

In 1991, there was no hope whatsoever that
wheezebag Soviet industries could compete with
the West's shiny, alluringly-packaged and, to
Russians, exotic products. For decades, prices
were set by Gosplan (State Ministry of Central
Planning), any enterprise profits were claimed as
Soviet tax revenues, all customer bases were
guaranteed and therefore no enterprise had a
financial incentive to compete. Without
competition, there was never any need to improve
quality.

How could freeing prices alone change this
equation? Free prices only work to the benefit of
consumers when producers compete with one
another in the marketplace to satisfy customers'
demands, leaving consumers positioned to reap
the most benefit at the lowest price. Clearly, an
equitable and transparent privatization that
would have delivered property widely to Russia's
many eager hands should have preceded the
freeing of prices. And during privatization, native
producers should have enjoyed some
protectionism at least, as did developing American
industry and manufacture in the 19th century.

But why was banking alone protected from
foreign competition? Could it have been because
the former Communist Youth League or
"Komsomol" leaders who'd been selected to
become the captains of Russian banking were the
private-sector allies and beneficiaries of Yeltsin's
"eager young reformers" and their HIID advisers?

Competent advisers would have known Russia
never did develop an effective banking sector and
system of credit in 1000 years of her history. The
story of Russian banking -- ancient and modern --
always has the same plot, only the names and the
dates change. S.Y. Borovoi's easily obtained history
of 18th century banking outlines a typical episode
involving a certain "Suterland, who received 2
million pounds for transfer to London, but instead

... the rest of the story;

Competent advisers would have known Russia
never did develop an effective banking sector and
system of credit in 1000 years of her history. The
story of Russian banking -- ancient and modern --
always has the same plot, only the names and the
dates change. S.Y. Borovoi's easily obtained history
of 18th century banking outlines a typical episode
involving a certain "Suterland, who received 2
million pounds for transfer to London, but instead
lent the sums to Prince Potyomkin (800,000),
Finance Minister Vyazemsky, Foreign Minister
Bezborodko and even to the future emperor Pavel.
The debt of these honorable people was, according
to the custom, forgiven and paid by the state."

Certainly eager Western banks should have been
given admission to Russia. By working initially
with more developed and well-capitalized
Western banks and later by competing with them,
Russian banks could have developed quickly and
today be mediating capital responsibly and
profitably. No good economic purpose was
achieved by foisting subsidized billion dollar loans
onto Russia for the purchase of Western consumer
goods and the sustenance of Yeltsin's Komsomol
pirates and parasites.

When Chubais and his Harvard pals belatedly
turned their attention to privatization, no one
asked how it would be possible to privatize
property in a country without property rights. (A
similar error was once made by the Soviet aid
establishment, which trained railroad engineers
for Laos, a country with no railroads.) In fact, it
wasn't possible.

There was no privatization, but instead a very
expensive, exhausting and destructive program of
paper title transfers. At best, a manager could gain
personal control of an income stream, but he could
not function as a responsible proprietor.
Consequently, asset-stripping was and is rampant.
And Yeltsin, a Soviet usurper masquerading as a
democrat, saw to it that the paper property titles
were transferred to key citizens, institutions and
long-term cronies so they would have a vested
interest in sustaining his power.

But what about that troublesome "ruble
overhang"? Jeff Sachs let the cat out of the bag on
a spring night in 1991 when he told a colleague
from the Hoover Institution and his wife that it
was his and Yegor Gaidar's intention to remove
from the market all "competing claims," meaning
the people's savings. How then to do it?

Easy. In the Soviet Union's monopolistic economy,
freeing prices guaranteed that state monopolists
would raise prices without restraint. On Jan. 2,
1992, Yeltsin freed prices throughout all of Russia.
Poof! The subsequent 2,500 percent inflation
Russians suffered in 1992 dissipated those noisome
"competing claims" with an efficiency that the
Russians hadn't seen since Adolf Hitler's blitzkrieg
50 years earlier. Tellingly, property auctions
gained steam only in 1993.

The only investment capital of which any country
can be certain is the national savings. Why then
did Harvard-connected advisers set about building
a market economy by first removing the only
money Russians had to participate, thereby
leaving foreign and Russian criminal wealth to
command the new market? And why was the
follow-on to put the Russian Federation's
property, the legacy of the long-suffering Russian
people, up for sale to a population made
kopeckless by the four-digit annual inflation the
Harvard advisers' first reform initiated?

Imagining the consequences isn't necessary;
impoverished Russia is reeling still.

Yabloko leader Gregory Yavlinsky once mused
aloud, "Any child could see what would happen.
Why then didn't the Harvard professor?" Good
question.

Rocket science, anyone?


Anne Williamson has written for the Wall Street
Journal, The New York Times, Spy magazine, Film
Comment and Premiere. An expert on Soviet-Russian
affairs, she is currently working on a book,
"Contagion: How America Betrayed Russia."

Fun that's all we want...

http://biz.yahoo.com/rf/990901/lx.htmlAverage DAILY add need for the banking system's current 2-week reserve period has been estimated to be $8.7 billion.
--------------
The Federal Reserve subsequently reported that Wednesday's overnight system repurchase agreements totaled $6.078 billion.

http://biz.yahoo.com/apf/990901/russia_ban_1.html"There are plenty of tricksters in the United States who are ready to push their own financial scandal onto our side." --former Prime Minister Viktor Chernomyrdin

http://biz.yahoo.com/apf/990901/economy_2.htmlIndex of Leading Economic Indicators has gained in nine of the last 10 months.

http://biz.yahoo.com/rf/990831/82.htmlFeel free to poke this one all you want.

MARKET REPORT (9/1/99): Gold retraced a little of yesterday's gains in the early
going. Yesterday's action was a reflection of the strong physical demand for gold and some
short covering. A Chinese government official reiterated the developing Chinese position
that its gold reserves are too low relative to its population and that there reserves could rise
from 394 tons to about 1000 tons. Gold physical demand is being helped as reported
yesterday by the Greenspan speech last week indicating that the bubble stock market will
begin affecting monetary policy in the United States. Translation: Be on the lookout for a
series of interest rate increases in the months ahead.

Reuters published a summary of International Monetary Fund internal documents that
concluded agency gold sales would greatly harm fifteen poor countries and cost them nearly
half a billion dollars in lost gold export earnings. This study had to be available before the
United States and Britain publicly backed gold sales from that agency. One has to wonder
what motivated the Clinton and Blair administrations to be so adamant about the sales even
in the face of obvious opposition within the IMF -- sales which have been blocked by a
disagreeable U.S. Congress. Reuters points out that: "The IMF's plan to sell 10 million
ounces of gold on the open market to fund debt relief for the world's poorest nations was
slammed by U.S. lawmakers and gold lobbyists who said the sales would harm those
countries it aimed to help.The plan came under more criticism after gold hit a 20-year low in
July when the Bank of England sold 25 tonnes of gold as part of its plan to cut its reserves
by 415 tonnes. The IMF and U.S. Treasury have been considering alternatives to open
market sales in recent weeks, effectively acknowledging that open market gold sales were
no longer being considered." We have maintained all along that the BOE and potential IMF
sales are tied together and that what could be involved is a bailout of British counterparties
who owe gold to some lender. This would explain the consistent push on the part of the
British government for gold sales from any party. The gold market supply situation remains
very tight. Lease rates jumped dramatically again today up .25% reflecting the tight lending
market. By the way, the gold lobbyists mentioned to a large extent were U.S. citizens irate
at the Clinton administrations gold policies.

We would like to apologize for the recurrent problems at the USAGOLD Forum. Our
technical people are working on the problem and we hope to trace down this infernal bug
and squash it. Please be patient with us. We are dealing with new technologies here and in a
sense pioneers. Hopefully, our problems are behind us but we won't know until the Forum
runs for awhile.

That's it for today, fellow goldmeisters. We will update if something major happens.

The October edition of News & Views is a major you-don't-want-to-miss-it, highly
informative, and slightly irreverent blockbuster. We revisit our Five Horsemen of the
New Apocalypse -- the euro challenge, Y2K, the Asian contagion, the bubble stock
market and rising oil -- none of which have taken the summer off. We also preview the
Ten Reasons Why Main Street Worldwide Is Returning to Gold and Short &
Sweet (as is our custom) rambles with a hint of cynicism through a litany of world
political and economic events. You won't want to miss our look at the world of gold to kick
off the Fall investment season. The Season of the Yellow Metal? Just might be so...........

Please call 800-869-5115 (Ask for Mary Conway) if you have an interest in receiving
a trial subscription to our widely read newsletter, News & Views: Forecasts,
Commentary and Analysis on the Economy and Precious Metals. Or you can
go to our ORDER FORM and submit your request by E-Mail. You will also receive our
introductory packet on investing in gold.

Nice knowing you Junior...The kids congregate over at AOL somewhere. Why don't you have a look?

This is from Yourdon's forum from one 'Gordon Gecko'. He posts there on occasion and his analysis is always fun to read. He touches on many subjects that have been mentioned here.

Post follows;

Rising Sun Rises On Y2K, Yen Goes Home, Part Deux

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread


Lets play connect the dots shall we. When last we left off, the Japanese government was
facing a liquidity crisis with two many JGB's comming to market, and bunch of buyers
who were scared off thei ass regarding JGB end of year liquidity. Everyone was afraid
that this auction would be a disaster. I posited that the Govt of Jap. would step in and NO
MATTER WHAT this auction would go smoothly. Guess what? It did. 2.93 bidders per
bond according to one report. However,traders did report that it wasn't stellar and that
the only reason that it came off at all was the strong rumor that the govt would be taking
extraordinary measures at year end to make this thing OK for all. Fast forward to the
currency markets where the dollar is experiencing a record slide. I mean this thing can't
eve SEE the floor right now. The herd generally believed that the Govt. of Jap. would
step in once it got below say 110 to 113. But guess what, those stops came and went just
like all those boys yucking it up out at Jackson Hole with big Al over the weekend. In his
market wrap segment today, Bill Fleckenstein had an excellent section on the Yen/Dollar
situation. Here it is for fair use research and educational purposes only:

SNIP August 31, 1999 Market Rap with Bill Fleckenstein www.stocksite.com (go to this
site and learn something) The big news last night was the fact that the dollar-yen broke
pretty hard through the 1.10 level. It traded down to just about 1.09 even, nearly a 2
percent move. Asian markets didn't like it, with Japan leading the decline, down about 2
3/4 percent. This is a big deal, and a story on one of Japanese news services stated that
Japan was prepared to see it go to 1.05 and lower.

Colin's dollar-yen commentary... My friend Colin Negrych had some comments
specifically about the dollar and the yen that I'd like to share with you. I think they are
pretty on the mark and worth reading.

"People keep telling me the Treasury...the G-3...somebody is just going to have to do
something to prevent the dollar and U.S. asset prices from falling...to avoid a global
recession. Complete crap. (1) The dollar was abandoned by the U.S. last summer and
global investors now see this. (2) The best way to avoid a global recession or lessen its
severity...is to deflate the U.S. asset bubble...in particular by raising U.S. rates. The
more the Fed raises rates...the more "monetary capacity" it will have to offset the
balance sheet damage which will result from the U.S. stock market "normalizing"...and
by raising rates N-O-W the Fed can "cap" the balance sheet damage at the current
embedded... inevitable...level...and obtain maximum wherewithal to counter the
"economic" consequences it will produce.

"Folks still do N-O-T understand the Japanese wanted the yen to strengthen...(it
did)...and they want it to strengthen more...(it will). I have heard private estimates from
Japanese officials W-E-L-L U-N-D-E-R 100. These folks view the U.S. asset markets
as I-D-E-N-T-I-C-A-L to their own in 1989...and, consequently, they do not want their
asset managers to invest here, particularly in stocks. Also...these same officials are
determined to impede offshore investment, in general, in favor of encouraging domestic
investment...particularly in the JGB market. Most "Americentric" analysts simply refuse
to accept the idea Japanese investors could prefer to own historically low yielding JGBs
rather than U.S. bonds...which offer the highest real yields in the G-7.

SNIP

Fleck and Colin think that the Japs(not meant as a slur)have figured out that we are in a
bubbl economy which is certain to burst soon. They have part of the puzzle in place, let
me give you some other pieces to complete the mosaic. There's a thing called the real
price of crude. Although most all crude oil transactions are transacted in dollars, currency
rates do play a rather large role in the global oil markets. Platt's publishes a nifty little
document which lays it out quite nicely I think. Check it out, the Japs are buying bonny
light at TEN BUCKS A BARREL currency adjusted. Yeehaaaa! Did I mention that they
are a net importer of approximately 5.4 million bbls per day? Did I mention that they will
probably try to add to their already hefty reserve balance (currently 3 months of supply in
tank at this time)ahead of Y2K? Did I mention that if they hadn't allowed the currency
slide to occur, they would have faced higher oil prices to the tune of $2.268 billion yen in
only a month? (yen slid from 122 to 108? by tommorrow = 14 X 5.4 milln bbs per day X
30 days.) If the yen fits, you must acquit.

For educational and research purposes only: SNIP

45--Real crude price -- USD vs international currencies New York
(Platt's)--30Aug1999/517 pm EDT/2117 GMT BONNY INDEX REAL DUBAI INDEX
REAL BRENT INDEX REAL LIGHT PRICE PRICE PRICE DMK 21.22 110.9 19.14
20.44 110.9 18.44 21.46 110.9 19.36 YEN 21.22 212.3 10.00 20.44 212.3 9.63 21.46
212.3 10.11 STG 21.22 103.8 20.45 20.44 103.8 19.69 21.46 103.8 20.68

(PRICES USD) INDEX -- SHOWS THE DAILY FLUCTUATION OF EACH
FOREIGN CURRENCY AGAINST THE USD. IF INDEX > 100, CURRENCY IS
STRONG AGAINST THE USD AND REAL PRICE PAID FOR CRUDE IS LESS
THAN ACTUAL USD PRICE. IF INDEX < 100, CURRENCY IS WEAK AGAINST
THE USD AND REAL PRICE PAID IS HIGHER THAN ACTUAL USD PRICE.
--Platt's Global Alert-- [0045] [GE] [C] [GU] [GF] SNIP (PS anyone who wants to
know what's up in oil should read Platt's Crude Oil Marketwire daily)

And here's the market assuming no intervention.

PLATT'S: Financial News: Dollar lower against yen and euro - PGA046 New York
(AFP)--31Aug1999/1203 pm EDT/1603 GMT The US dollar was lower against the yen
and losing ground against the euro in New York by mid-morning Tuesday. Traders
expected the greenback to continue to fall against the Japanese currency as the Bank of
Japan stuck to its policy of non- intervention. The dollar dropped to Yen 109.56 by 1400
GMT compared to Yen 110.60 late Monday, while the euro rose to $1.0572 against
$1.0471. The yen was expected to keep gaining against the dollar as markets no longer
expect the BOJ to intervene, said Dennis Heidt, a trader for Paribas in New York. The
dollar also lost ground against other major European currencies, trading at SFr1.5127
compared to SFr1.5292 late Monday, while sterling was at $1.6062 against $1.5894.

[PGA] [NSAM] [JP] [ASIA] [EEC] [PLTN] [LEN]

And last but certainly not least, the JAPS are picking up the freight market for VLCC's
themselves. Yeeehaaaa! You now should have all the pieces. Do you see the pattern?

139--Dirty tankers: VLCCs continue to climb London--27Aug99/1151 am EDT/1551
GMT The improved demand for VLCCs reported this continued to boost the AG market,
brokers said. Rates for AG-Japan cargoes were talked up to w50-52.5 as supplies of
modern units, especially for 1H Sep loadings, was described as "tight." One broker added
that owners were taking a "tough" position on levels, and were now looking to push rates
towards w60. However, the low w50s were seen as a more realistic level for the next
fixture. Aframaxes remained firm, with both the AG and Indo markets talked around the
w100-105 level, depending on timing and approval status. But there was little such
encouraging news for the Suezmax market. Both WAf-USG rates and cross-Med levels
struggled to attract more than w52.5, as owners continued to suffer from a heavy
oversupply of tonnage. --Platt's Global Alert-- [0139] [C] [GS] [GE] [GF] [GM] [T]

This is the begining. Watch the freights, they're always 2 weeks ahead of physical
tightening. Freight rates, going up. Crude oil, going up. IT HAS OFFICIALLY BEGUN.
THE SIGNS ARE EVERYWHERE.

Now if I was really devious and suspicous like, I might expect Slick Meister and his oil
friends (if he has any) to roll out some physical bbls. about now in some way. For
example, if they had possibly encouraged some friends in OPEC to store physicals ahead
of 2kay then as our old CRB starts to overheat the US markets and inflation, I'd be telling
them to "Roll out the barrels". Or maybe fudge up the stats a little and show some
phantom build etc. We'll see.

-- Gordon (g_gecko_69@hotmail.com), August 31, 1999

This is from Yourdon's forum from one 'Gordon Gecko'. He posts there on occasion and his analysis is always fun to read. He touches on many subjects that have been mentioned here.

Post follows;

Rising Sun Rises On Y2K, Yen Goes Home, Part Deux

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread


Lets play connect the dots shall we. When last we left off, the Japanese government was
facing a liquidity crisis with two many JGB's comming to market, and bunch of buyers
who were scared off thei ass regarding JGB end of year liquidity. Everyone was afraid
that this auction would be a disaster. I posited that the Govt of Jap. would step in and NO
MATTER WHAT this auction would go smoothly. Guess what? It did. 2.93 bidders per
bond according to one report. However,traders did report that it wasn't stellar and that
the only reason that it came off at all was the strong rumor that the govt would be taking
extraordinary measures at year end to make this thing OK for all. Fast forward to the
currency markets where the dollar is experiencing a record slide. I mean this thing can't
eve SEE the floor right now. The herd generally believed that the Govt. of Jap. would
step in once it got below say 110 to 113. But guess what, those stops came and went just
like all those boys yucking it up out at Jackson Hole with big Al over the weekend. In his
market wrap segment today, Bill Fleckenstein had an excellent section on the Yen/Dollar
situation. Here it is for fair use research and educational purposes only:

SNIP August 31, 1999 Market Rap with Bill Fleckenstein www.stocksite.com (go to this
site and learn something) The big news last night was the fact that the dollar-yen broke
pretty hard through the 1.10 level. It traded down to just about 1.09 even, nearly a 2
percent move. Asian markets didn't like it, with Japan leading the decline, down about 2
3/4 percent. This is a big deal, and a story on one of Japanese news services stated that
Japan was prepared to see it go to 1.05 and lower.

Colin's dollar-yen commentary... My friend Colin Negrych had some comments
specifically about the dollar and the yen that I'd like to share with you. I think they are
pretty on the mark and worth reading.

"People keep telling me the Treasury...the G-3...somebody is just going to have to do
something to prevent the dollar and U.S. asset prices from falling...to avoid a global
recession. Complete crap. (1) The dollar was abandoned by the U.S. last summer and
global investors now see this. (2) The best way to avoid a global recession or lessen its
severity...is to deflate the U.S. asset bubble...in particular by raising U.S. rates. The
more the Fed raises rates...the more "monetary capacity" it will have to offset the
balance sheet damage which will result from the U.S. stock market "normalizing"...and
by raising rates N-O-W the Fed can "cap" the balance sheet damage at the current
embedded... inevitable...level...and obtain maximum wherewithal to counter the
"economic" consequences it will produce.

"Folks still do N-O-T understand the Japanese wanted the yen to strengthen...(it
did)...and they want it to strengthen more...(it will). I have heard private estimates from
Japanese officials W-E-L-L U-N-D-E-R 100. These folks view the U.S. asset markets
as I-D-E-N-T-I-C-A-L to their own in 1989...and, consequently, they do not want their
asset managers to invest here, particularly in stocks. Also...these same officials are
determined to impede offshore investment, in general, in favor of encouraging domestic
investment...particularly in the JGB market. Most "Americentric" analysts simply refuse
to accept the idea Japanese investors could prefer to own historically low yielding JGBs
rather than U.S. bonds...which offer the highest real yields in the G-7.

SNIP

Fleck and Colin think that the Japs(not meant as a slur)have figured out that we are in a
bubbl economy which is certain to burst soon. They have part of the puzzle in place, let
me give you some other pieces to complete the mosaic. There's a thing called the real
price of crude. Although most all crude oil transactions are transacted in dollars, currency
rates do play a rather large role in the global oil markets. Platt's publishes a nifty little
document which lays it out quite nicely I think. Check it out, the Japs are buying bonny
light at TEN BUCKS A BARREL currency adjusted. Yeehaaaa! Did I mention that they
are a net importer of approximately 5.4 million bbls per day? Did I mention that they will
probably try to add to their already hefty reserve balance (currently 3 months of supply in
tank at this time)ahead of Y2K? Did I mention that if they hadn't allowed the currency
slide to occur, they would have faced higher oil prices to the tune of $2.268 billion yen in
only a month? (yen slid from 122 to 108? by tommorrow = 14 X 5.4 milln bbs per day X
30 days.) If the yen fits, you must acquit.

For educational and research purposes only: SNIP

45--Real crude price -- USD vs international currencies New York
(Platt's)--30Aug1999/517 pm EDT/2117 GMT BONNY INDEX REAL DUBAI INDEX
REAL BRENT INDEX REAL LIGHT PRICE PRICE PRICE DMK 21.22 110.9 19.14
20.44 110.9 18.44 21.46 110.9 19.36 YEN 21.22 212.3 10.00 20.44 212.3 9.63 21.46
212.3 10.11 STG 21.22 103.8 20.45 20.44 103.8 19.69 21.46 103.8 20.68

(PRICES USD) INDEX -- SHOWS THE DAILY FLUCTUATION OF EACH
FOREIGN CURRENCY AGAINST THE USD. IF INDEX > 100, CURRENCY IS
STRONG AGAINST THE USD AND REAL PRICE PAID FOR CRUDE IS LESS
THAN ACTUAL USD PRICE. IF INDEX < 100, CURRENCY IS WEAK AGAINST
THE USD AND REAL PRICE PAID IS HIGHER THAN ACTUAL USD PRICE.
--Platt's Global Alert-- [0045] [GE] [C] [GU] [GF] SNIP (PS anyone who wants to
know what's up in oil should read Platt's Crude Oil Marketwire daily)

And here's the market assuming no intervention.

PLATT'S: Financial News: Dollar lower against yen and euro - PGA046 New York
(AFP)--31Aug1999/1203 pm EDT/1603 GMT The US dollar was lower against the yen
and losing ground against the euro in New York by mid-morning Tuesday. Traders
expected the greenback to continue to fall against the Japanese currency as the Bank of
Japan stuck to its policy of non- intervention. The dollar dropped to Yen 109.56 by 1400
GMT compared to Yen 110.60 late Monday, while the euro rose to $1.0572 against
$1.0471. The yen was expected to keep gaining against the dollar as markets no longer
expect the BOJ to intervene, said Dennis Heidt, a trader for Paribas in New York. The
dollar also lost ground against other major European currencies, trading at SFr1.5127
compared to SFr1.5292 late Monday, while sterling was at $1.6062 against $1.5894.

[PGA] [NSAM] [JP] [ASIA] [EEC] [PLTN] [LEN]

And last but certainly not least, the JAPS are picking up the freight market for VLCC's
themselves. Yeeehaaaa! You now should have all the pieces. Do you see the pattern?

139--Dirty tankers: VLCCs continue to climb London--27Aug99/1151 am EDT/1551
GMT The improved demand for VLCCs reported this continued to boost the AG market,
brokers said. Rates for AG-Japan cargoes were talked up to w50-52.5 as supplies of
modern units, especially for 1H Sep loadings, was described as "tight." One broker added
that owners were taking a "tough" position on levels, and were now looking to push rates
towards w60. However, the low w50s were seen as a more realistic level for the next
fixture. Aframaxes remained firm, with both the AG and Indo markets talked around the
w100-105 level, depending on timing and approval status. But there was little such
encouraging news for the Suezmax market. Both WAf-USG rates and cross-Med levels
struggled to attract more than w52.5, as owners continued to suffer from a heavy
oversupply of tonnage. --Platt's Global Alert-- [0139] [C] [GS] [GE] [GF] [GM] [T]

This is the begining. Watch the freights, they're always 2 weeks ahead of physical
tightening. Freight rates, going up. Crude oil, going up. IT HAS OFFICIALLY BEGUN.
THE SIGNS ARE EVERYWHERE.

Now if I was really devious and suspicous like, I might expect Slick Meister and his oil
friends (if he has any) to roll out some physical bbls. about now in some way. For
example, if they had possibly encouraged some friends in OPEC to store physicals ahead
of 2kay then as our old CRB starts to overheat the US markets and inflation, I'd be telling
them to "Roll out the barrels". Or maybe fudge up the stats a little and show some
phantom build etc. We'll see.

-- Gordon (g_gecko_69@hotmail.com), August 31, 1999

http://biz.yahoo.com/rf/990901/sq.htmlFriday's Labor Department employment report is expected to show no signs of a slowdown, adding substance to fears of further Fed rate hikes.

Ya gotta love that alliteration!

This is from Yourdon's forum from one 'Gordon Gecko'. He posts there on occasion and his analysis is always fun to read. He touches on many subjects that have been mentioned here.

Post follows;

Rising Sun Rises On Y2K, Yen Goes Home, Part Deux

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread


Lets play connect the dots shall we. When last we left off, the Japanese government was
facing a liquidity crisis with two many JGB's comming to market, and bunch of buyers
who were scared off thei ass regarding JGB end of year liquidity. Everyone was afraid
that this auction would be a disaster. I posited that the Govt of Jap. would step in and NO
MATTER WHAT this auction would go smoothly. Guess what? It did. 2.93 bidders per
bond according to one report. However,traders did report that it wasn't stellar and that
the only reason that it came off at all was the strong rumor that the govt would be taking
extraordinary measures at year end to make this thing OK for all. Fast forward to the
currency markets where the dollar is experiencing a record slide. I mean this thing can't
eve SEE the floor right now. The herd generally believed that the Govt. of Jap. would
step in once it got below say 110 to 113. But guess what, those stops came and went just
like all those boys yucking it up out at Jackson Hole with big Al over the weekend. In his
market wrap segment today, Bill Fleckenstein had an excellent section on the Yen/Dollar
situation. Here it is for fair use research and educational purposes only:

SNIP August 31, 1999 Market Rap with Bill Fleckenstein www.stocksite.com (go to this
site and learn something) The big news last night was the fact that the dollar-yen broke
pretty hard through the 1.10 level. It traded down to just about 1.09 even, nearly a 2
percent move. Asian markets didn't like it, with Japan leading the decline, down about 2
3/4 percent. This is a big deal, and a story on one of Japanese news services stated that
Japan was prepared to see it go to 1.05 and lower.

Colin's dollar-yen commentary... My friend Colin Negrych had some comments
specifically about the dollar and the yen that I'd like to share with you. I think they are
pretty on the mark and worth reading.

"People keep telling me the Treasury...the G-3...somebody is just going to have to do
something to prevent the dollar and U.S. asset prices from falling...to avoid a global
recession. Complete crap. (1) The dollar was abandoned by the U.S. last summer and
global investors now see this. (2) The best way to avoid a global recession or lessen its
severity...is to deflate the U.S. asset bubble...in particular by raising U.S. rates. The
more the Fed raises rates...the more "monetary capacity" it will have to offset the
balance sheet damage which will result from the U.S. stock market "normalizing"...and
by raising rates N-O-W the Fed can "cap" the balance sheet damage at the current
embedded... inevitable...level...and obtain maximum wherewithal to counter the
"economic" consequences it will produce.

"Folks still do N-O-T understand the Japanese wanted the yen to strengthen...(it
did)...and they want it to strengthen more...(it will). I have heard private estimates from
Japanese officials W-E-L-L U-N-D-E-R 100. These folks view the U.S. asset markets
as I-D-E-N-T-I-C-A-L to their own in 1989...and, consequently, they do not want their
asset managers to invest here, particularly in stocks. Also...these same officials are
determined to impede offshore investment, in general, in favor of encouraging domestic
investment...particularly in the JGB market. Most "Americentric" analysts simply refuse
to accept the idea Japanese investors could prefer to own historically low yielding JGBs
rather than U.S. bonds...which offer the highest real yields in the G-7.

SNIP

Fleck and Colin think that the Japs(not meant as a slur)have figured out that we are in a
bubbl economy which is certain to burst soon. They have part of the puzzle in place, let
me give you some other pieces to complete the mosaic. There's a thing called the real
price of crude. Although most all crude oil transactions are transacted in dollars, currency
rates do play a rather large role in the global oil markets. Platt's publishes a nifty little
document which lays it out quite nicely I think. Check it out, the Japs are buying bonny
light at TEN BUCKS A BARREL currency adjusted. Yeehaaaa! Did I mention that they
are a net importer of approximately 5.4 million bbls per day? Did I mention that they will
probably try to add to their already hefty reserve balance (currently 3 months of supply in
tank at this time)ahead of Y2K? Did I mention that if they hadn't allowed the currency
slide to occur, they would have faced higher oil prices to the tune of $2.268 billion yen in
only a month? (yen slid from 122 to 108? by tommorrow = 14 X 5.4 milln bbs per day X
30 days.) If the yen fits, you must acquit.

For educational and research purposes only: SNIP

45--Real crude price -- USD vs international currencies New York
(Platt's)--30Aug1999/517 pm EDT/2117 GMT BONNY INDEX REAL DUBAI INDEX
REAL BRENT INDEX REAL LIGHT PRICE PRICE PRICE DMK 21.22 110.9 19.14
20.44 110.9 18.44 21.46 110.9 19.36 YEN 21.22 212.3 10.00 20.44 212.3 9.63 21.46
212.3 10.11 STG 21.22 103.8 20.45 20.44 103.8 19.69 21.46 103.8 20.68

(PRICES USD) INDEX -- SHOWS THE DAILY FLUCTUATION OF EACH
FOREIGN CURRENCY AGAINST THE USD. IF INDEX > 100, CURRENCY IS
STRONG AGAINST THE USD AND REAL PRICE PAID FOR CRUDE IS LESS
THAN ACTUAL USD PRICE. IF INDEX < 100, CURRENCY IS WEAK AGAINST
THE USD AND REAL PRICE PAID IS HIGHER THAN ACTUAL USD PRICE.
--Platt's Global Alert-- [0045] [GE] [C] [GU] [GF] SNIP (PS anyone who wants to
know what's up in oil should read Platt's Crude Oil Marketwire daily)

And here's the market assuming no intervention.

PLATT'S: Financial News: Dollar lower against yen and euro - PGA046 New York
(AFP)--31Aug1999/1203 pm EDT/1603 GMT The US dollar was lower against the yen
and losing ground against the euro in New York by mid-morning Tuesday. Traders
expected the greenback to continue to fall against the Japanese currency as the Bank of
Japan stuck to its policy of non- intervention. The dollar dropped to Yen 109.56 by 1400
GMT compared to Yen 110.60 late Monday, while the euro rose to $1.0572 against
$1.0471. The yen was expected to keep gaining against the dollar as markets no longer
expect the BOJ to intervene, said Dennis Heidt, a trader for Paribas in New York. The
dollar also lost ground against other major European currencies, trading at SFr1.5127
compared to SFr1.5292 late Monday, while sterling was at $1.6062 against $1.5894.

[PGA] [NSAM] [JP] [ASIA] [EEC] [PLTN] [LEN]

And last but certainly not least, the JAPS are picking up the freight market for VLCC's
themselves. Yeeehaaaa! You now should have all the pieces. Do you see the pattern?

139--Dirty tankers: VLCCs continue to climb London--27Aug99/1151 am EDT/1551
GMT The improved demand for VLCCs reported this continued to boost the AG market,
brokers said. Rates for AG-Japan cargoes were talked up to w50-52.5 as supplies of
modern units, especially for 1H Sep loadings, was described as "tight." One broker added
that owners were taking a "tough" position on levels, and were now looking to push rates
towards w60. However, the low w50s were seen as a more realistic level for the next
fixture. Aframaxes remained firm, with both the AG and Indo markets talked around the
w100-105 level, depending on timing and approval status. But there was little such
encouraging news for the Suezmax market. Both WAf-USG rates and cross-Med levels
struggled to attract more than w52.5, as owners continued to suffer from a heavy
oversupply of tonnage. --Platt's Global Alert-- [0139] [C] [GS] [GE] [GF] [GM] [T]

This is the begining. Watch the freights, they're always 2 weeks ahead of physical
tightening. Freight rates, going up. Crude oil, going up. IT HAS OFFICIALLY BEGUN.
THE SIGNS ARE EVERYWHERE.

Now if I was really devious and suspicous like, I might expect Slick Meister and his oil
friends (if he has any) to roll out some physical bbls. about now in some way. For
example, if they had possibly encouraged some friends in OPEC to store physicals ahead
of 2kay then as our old CRB starts to overheat the US markets and inflation, I'd be telling
them to "Roll out the barrels". Or maybe fudge up the stats a little and show some
phantom build etc. We'll see.

-- Gordon (g_gecko_69@hotmail.com), August 31, 1999

http://www.usagold.com/Because this is surely an Inferno.

I thought the system was down again. After posting I got this message followed by a empty forum page:
We're So Sorry!
Please tell the webmaster that Frontier couldn't process the request because:
The file "day1.dataf" is not open.

Oddly enough, the "August jobs" post that gave me the above message went through. Maybe this means something to Jeff. I'm stumped.

This is from Yourdon's forum from one 'Gordon Gecko'. He posts there on occasion and his analysis is always fun to read. He touches on many subjects that have been mentioned here.

Post follows;

Rising Sun Rises On Y2K, Yen Goes Home, Part Deux

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread


Lets play connect the dots shall we. When last we left off, the Japanese government was
facing a liquidity crisis with two many JGB's comming to market, and bunch of buyers
who were scared off thei ass regarding JGB end of year liquidity. Everyone was afraid
that this auction would be a disaster. I posited that the Govt of Jap. would step in and NO
MATTER WHAT this auction would go smoothly. Guess what? It did. 2.93 bidders per
bond according to one report. However,traders did report that it wasn't stellar and that
the only reason that it came off at all was the strong rumor that the govt would be taking
extraordinary measures at year end to make this thing OK for all. Fast forward to the
currency markets where the dollar is experiencing a record slide. I mean this thing can't
eve SEE the floor right now. The herd generally believed that the Govt. of Jap. would
step in once it got below say 110 to 113. But guess what, those stops came and went just
like all those boys yucking it up out at Jackson Hole with big Al over the weekend. In his
market wrap segment today, Bill Fleckenstein had an excellent section on the Yen/Dollar
situation. Here it is for fair use research and educational purposes only:

SNIP August 31, 1999 Market Rap with Bill Fleckenstein www.stocksite.com (go to this
site and learn something) The big news last night was the fact that the dollar-yen broke
pretty hard through the 1.10 level. It traded down to just about 1.09 even, nearly a 2
percent move. Asian markets didn't like it, with Japan leading the decline, down about 2
3/4 percent. This is a big deal, and a story on one of Japanese news services stated that
Japan was prepared to see it go to 1.05 and lower.

Colin's dollar-yen commentary... My friend Colin Negrych had some comments
specifically about the dollar and the yen that I'd like to share with you. I think they are
pretty on the mark and worth reading.

"People keep telling me the Treasury...the G-3...somebody is just going to have to do
something to prevent the dollar and U.S. asset prices from falling...to avoid a global
recession. Complete crap. (1) The dollar was abandoned by the U.S. last summer and
global investors now see this. (2) The best way to avoid a global recession or lessen its
severity...is to deflate the U.S. asset bubble...in particular by raising U.S. rates. The
more the Fed raises rates...the more "monetary capacity" it will have to offset the
balance sheet damage which will result from the U.S. stock market "normalizing"...and
by raising rates N-O-W the Fed can "cap" the balance sheet damage at the current
embedded... inevitable...level...and obtain maximum wherewithal to counter the
"economic" consequences it will produce.

"Folks still do N-O-T understand the Japanese wanted the yen to strengthen...(it
did)...and they want it to strengthen more...(it will). I have heard private estimates from
Japanese officials W-E-L-L U-N-D-E-R 100. These folks view the U.S. asset markets
as I-D-E-N-T-I-C-A-L to their own in 1989...and, consequently, they do not want their
asset managers to invest here, particularly in stocks. Also...these same officials are
determined to impede offshore investment, in general, in favor of encouraging domestic
investment...particularly in the JGB market. Most "Americentric" analysts simply refuse
to accept the idea Japanese investors could prefer to own historically low yielding JGBs
rather than U.S. bonds...which offer the highest real yields in the G-7.

SNIP

Fleck and Colin think that the Japs(not meant as a slur)have figured out that we are in a
bubbl economy which is certain to burst soon. They have part of the puzzle in place, let
me give you some other pieces to complete the mosaic. There's a thing called the real
price of crude. Although most all crude oil transactions are transacted in dollars, currency
rates do play a rather large role in the global oil markets. Platt's publishes a nifty little
document which lays it out quite nicely I think. Check it out, the Japs are buying bonny
light at TEN BUCKS A BARREL currency adjusted. Yeehaaaa! Did I mention that they
are a net importer of approximately 5.4 million bbls per day? Did I mention that they will
probably try to add to their already hefty reserve balance (currently 3 months of supply in
tank at this time)ahead of Y2K? Did I mention that if they hadn't allowed the currency
slide to occur, they would have faced higher oil prices to the tune of $2.268 billion yen in
only a month? (yen slid from 122 to 108? by tommorrow = 14 X 5.4 milln bbs per day X
30 days.) If the yen fits, you must acquit.

For educational and research purposes only: SNIP

45--Real crude price -- USD vs international currencies New York
(Platt's)--30Aug1999/517 pm EDT/2117 GMT BONNY INDEX REAL DUBAI INDEX
REAL BRENT INDEX REAL LIGHT PRICE PRICE PRICE DMK 21.22 110.9 19.14
20.44 110.9 18.44 21.46 110.9 19.36 YEN 21.22 212.3 10.00 20.44 212.3 9.63 21.46
212.3 10.11 STG 21.22 103.8 20.45 20.44 103.8 19.69 21.46 103.8 20.68

(PRICES USD) INDEX -- SHOWS THE DAILY FLUCTUATION OF EACH
FOREIGN CURRENCY AGAINST THE USD. IF INDEX > 100, CURRENCY IS
STRONG AGAINST THE USD AND REAL PRICE PAID FOR CRUDE IS LESS
THAN ACTUAL USD PRICE. IF INDEX < 100, CURRENCY IS WEAK AGAINST
THE USD AND REAL PRICE PAID IS HIGHER THAN ACTUAL USD PRICE.
--Platt's Global Alert-- [0045] [GE] [C] [GU] [GF] SNIP (PS anyone who wants to
know what's up in oil should read Platt's Crude Oil Marketwire daily)

And here's the market assuming no intervention.

PLATT'S: Financial News: Dollar lower against yen and euro - PGA046 New York
(AFP)--31Aug1999/1203 pm EDT/1603 GMT The US dollar was lower against the yen
and losing ground against the euro in New York by mid-morning Tuesday. Traders
expected the greenback to continue to fall against the Japanese currency as the Bank of
Japan stuck to its policy of non- intervention. The dollar dropped to Yen 109.56 by 1400
GMT compared to Yen 110.60 late Monday, while the euro rose to $1.0572 against
$1.0471. The yen was expected to keep gaining against the dollar as markets no longer
expect the BOJ to intervene, said Dennis Heidt, a trader for Paribas in New York. The
dollar also lost ground against other major European currencies, trading at SFr1.5127
compared to SFr1.5292 late Monday, while sterling was at $1.6062 against $1.5894.

[PGA] [NSAM] [JP] [ASIA] [EEC] [PLTN] [LEN]

And last but certainly not least, the JAPS are picking up the freight market for VLCC's
themselves. Yeeehaaaa! You now should have all the pieces. Do you see the pattern?

139--Dirty tankers: VLCCs continue to climb London--27Aug99/1151 am EDT/1551
GMT The improved demand for VLCCs reported this continued to boost the AG market,
brokers said. Rates for AG-Japan cargoes were talked up to w50-52.5 as supplies of
modern units, especially for 1H Sep loadings, was described as "tight." One broker added
that owners were taking a "tough" position on levels, and were now looking to push rates
towards w60. However, the low w50s were seen as a more realistic level for the next
fixture. Aframaxes remained firm, with both the AG and Indo markets talked around the
w100-105 level, depending on timing and approval status. But there was little such
encouraging news for the Suezmax market. Both WAf-USG rates and cross-Med levels
struggled to attract more than w52.5, as owners continued to suffer from a heavy
oversupply of tonnage. --Platt's Global Alert-- [0139] [C] [GS] [GE] [GF] [GM] [T]

This is the begining. Watch the freights, they're always 2 weeks ahead of physical
tightening. Freight rates, going up. Crude oil, going up. IT HAS OFFICIALLY BEGUN.
THE SIGNS ARE EVERYWHERE.

Now if I was really devious and suspicous like, I might expect Slick Meister and his oil
friends (if he has any) to roll out some physical bbls. about now in some way. For
example, if they had possibly encouraged some friends in OPEC to store physicals ahead
of 2kay then as our old CRB starts to overheat the US markets and inflation, I'd be telling
them to "Roll out the barrels". Or maybe fudge up the stats a little and show some
phantom build etc. We'll see.

-- Gordon (g_gecko_69@hotmail.com), August 31, 1999

Heh - heh. Well, posting to this forum has me stumped. I'm getting screwy messages telling me I can't post for some reason and then the posts show up after all. Please delete if you can my multiple posts.

ET

http://www.worldnetdaily.com/bluesky_btl/19990901_xcbtl_is_russia_.shtmlPlease read and heed... Make preperations quickly, This confirms what i have been saying lately in (lost post land). The West Bank deal will be settled this month as i have said. Look for the antichrist to have a part in approval. (Biblical ya know). The number of the antichrist is 666, an upsidedown cross is a sign of Satan.... the date 9/99 is the month we will find out who he/she is....by this approval.....(un approval??) (date upside down is 6/66...)
Russia will help Saddam attack Isreal, while China attacks Tiwan and North Korea has said yesterday they are prepared to contest coastal waters... This WAR of many fronts is too much for our forces to handle and protect the home front. Our missels are depleted from Kosovo. The plot was sealed up in the Summit that Russia, China had.
i live in the Bible Belt..so i've been keepin up with this..The tribulation is about to start.. the Bible talks about this currency collapse we are about to witness... it says that in the tribulation their Gold and Silver will be cankered (Our Fiat Money) and will become worthless, the rich will howell and throw it into the streets... Got Physical Gold??? The 3/12 years of the Tribulation begins this month..... The WAR will take out 2 billion+... Chernoble is (WORMWOOD) in Russian... The Bibles star that falls to earth and posins 1/3 of the earths water is nuecular fallout when the war of many fronts spins out of control.

Alot of you don't live in the Bible belt (blessing/curse) i thought i'd share what the whispers in the wind that are from my lookout posts advantage....

i'm not Bible thumppin hear,,, i'm just reportin what's up from hear.....
If some of yall show some interest in me keepin ya posted as this develops please let me know... otherwise silence is Golden...

Get some real money, food, water, etc... just incase...

Please read the intelegence posts on China/Tiwan at Strafor.com They are an independant spy agency of great note.

Things are not Good......Oh what a world...what a world...

http://www.worldnetdaily.com/bluesky_btl/19990901_xcbtl_is_russia_.shtmlPlease read and heed... Make preperations quickly, This confirms what i have been saying lately in (lost post land). The West Bank deal will be settled this month as i have said. Look for the antichrist to have a part in approval. (Biblical ya know). The number of the antichrist is 666, an upsidedown cross is a sign of Satan.... the date 9/99 is the month we will find out who he/she is....by this approval.....(un approval??) (date upside down is 6/66...)
Russia will help Saddam attack Isreal, while China attacks Tiwan and North Korea has said yesterday they are prepared to contest coastal waters... This WAR of many fronts is too much for our forces to handle and protect the home front. Our missels are depleted from Kosovo. The plot was sealed up in the Summit that Russia, China had.
i live in the Bible Belt..so i've been keepin up with this..The tribulation is about to start.. the Bible talks about this currency collapse we are about to witness... it says that in the tribulation their Gold and Silver will be cankered (Our Fiat Money) and will become worthless, the rich will howell and throw it into the streets... Got Physical Gold??? The 3/12 years of the Tribulation begins this month..... The WAR will take out 2 billion+... Chernoble is (WORMWOOD) in Russian... The Bibles star that falls to earth and posins 1/3 of the earths water is nuecular fallout when the war of many fronts spins out of control.

Alot of you don't live in the Bible belt (blessing/curse) i thought i'd share what the whispers in the wind that are from my lookout posts advantage....

i'm not Bible thumppin hear,,, i'm just reportin what's up from hear.....
If some of yall show some interest in me keepin ya posted as this develops please let me know... otherwise silence is Golden...

Get some real money, food, water, etc... just incase...

Please read the intelegence posts on China/Tiwan at Strafor.com They are an independant spy agency of great note.

Things are not Good......Oh what a world...what a world...

http://www.worldnetdaily.com/bluesky_btl/19990901_xcbtl_is_russia_.shtmlPlease read and heed... Make preperations quickly, This confirms what i have been saying lately in (lost post land). The West Bank deal will be settled this month as i have said. Look for the antichrist to have a part in approval. (Biblical ya know). The number of the antichrist is 666, an upsidedown cross is a sign of Satan.... the date 9/99 is the month we will find out who he/she is....by this approval.....(un approval??) (date upside down is 6/66...)
Russia will help Saddam attack Isreal, while China attacks Tiwan and North Korea has said yesterday they are prepared to contest coastal waters... This WAR of many fronts is too much for our forces to handle and protect the home front. Our missels are depleted from Kosovo. The plot was sealed up in the Summit that Russia, China had.
i live in the Bible Belt..so i've been keepin up with this..The tribulation is about to start.. the Bible talks about this currency collapse we are about to witness... it says that in the tribulation their Gold and Silver will be cankered (Our Fiat Money) and will become worthless, the rich will howell and throw it into the streets... Got Physical Gold??? The 3/12 years of the Tribulation begins this month..... The WAR will take out 2 billion+... Chernoble is (WORMWOOD) in Russian... The Bibles star that falls to earth and posins 1/3 of the earths water is nuecular fallout when the war of many fronts spins out of control.

Alot of you don't live in the Bible belt (blessing/curse) i thought i'd share what the whispers in the wind that are from my lookout posts advantage....

i'm not Bible thumppin hear,,, i'm just reportin what's up from hear.....
If some of yall show some interest in me keepin ya posted as this develops please let me know... otherwise silence is Golden...

Get some real money, food, water, etc... just incase...

Please read the intelegence posts on China/Tiwan at Strafor.com They are an independant spy agency of great note.

Things are not Good......Oh what a world...what a world...

http://www.worldnetdaily.com/bluesky_btl/19990901_xcbtl_is_russia_.shtmlPlease read and heed... Make preperations quickly, This confirms what i have been saying lately in (lost post land). The West Bank deal will be settled this month as i have said. Look for the antichrist to have a part in approval. (Biblical ya know). The number of the antichrist is 666, an upsidedown cross is a sign of Satan.... the date 9/99 is the month we will find out who he/she is....by this approval.....(un approval??) (date upside down is 6/66...)
Russia will help Saddam attack Isreal, while China attacks Tiwan and North Korea has said yesterday they are prepared to contest coastal waters... This WAR of many fronts is too much for our forces to handle and protect the home front. Our missels are depleted from Kosovo. The plot was sealed up in the Summit that Russia, China had.
i live in the Bible Belt..so i've been keepin up with this..The tribulation is about to start.. the Bible talks about this currency collapse we are about to witness... it says that in the tribulation their Gold and Silver will be cankered (Our Fiat Money) and will become worthless, the rich will howell and throw it into the streets... Got Physical Gold??? The 3/12 years of the Tribulation begins this month..... The WAR will take out 2 billion+... Chernoble is (WORMWOOD) in Russian... The Bibles star that falls to earth and posins 1/3 of the earths water is nuecular fallout when the war of many fronts spins out of control.

Alot of you don't live in the Bible belt (blessing/curse) i thought i'd share what the whispers in the wind that are from my lookout posts advantage....

i'm not Bible thumppin hear,,, i'm just reportin what's up from hear.....
If some of yall show some interest in me keepin ya posted as this develops please let me know... otherwise silence is Golden...

Get some real money, food, water, etc... just incase...

Please read the intelegence posts on China/Tiwan at Strafor.com They are an independant spy agency of great note.

Things are not Good......Oh what a world...what a world...

http://www.worldnetdaily.com/bluesky_btl/19990901_xcbtl_is_russia_.shtmlPlease read and heed... Make preperations quickly, This confirms what i have been saying lately in (lost post land). The West Bank deal will be settled this month as i have said. Look for the antichrist to have a part in approval. (Biblical ya know). The number of the antichrist is 666, an upsidedown cross is a sign of Satan.... the date 9/99 is the month we will find out who he/she is....by this approval.....(un approval??) (date upside down is 6/66...)
Russia will help Saddam attack Isreal, while China attacks Tiwan and North Korea has said yesterday they are prepared to contest coastal waters... This WAR of many fronts is too much for our forces to handle and protect the home front. Our missels are depleted from Kosovo. The plot was sealed up in the Summit that Russia, China had.
i live in the Bible Belt..so i've been keepin up with this..The tribulation is about to start.. the Bible talks about this currency collapse we are about to witness... it says that in the tribulation their Gold and Silver will be cankered (Our Fiat Money) and will become worthless, the rich will howell and throw it into the streets... Got Physical Gold??? The 3/12 years of the Tribulation begins this month..... The WAR will take out 2 billion+... Chernoble is (WORMWOOD) in Russian... The Bibles star that falls to earth and posins 1/3 of the earths water is nuecular fallout when the war of many fronts spins out of control.

Alot of you don't live in the Bible belt (blessing/curse) i thought i'd share what the whispers in the wind that are from my lookout posts advantage....

i'm not Bible thumppin hear,,, i'm just reportin what's up from hear.....
If some of yall show some interest in me keepin ya posted as this develops please let me know... otherwise silence is Golden...

Get some real money, food, water, etc... just incase...

Please read the intelegence posts on China/Tiwan at Strafor.com They are an independant spy agency of great note.

Things are not Good......Oh what a world...what a world...

TEst

http://www.worldnetdaily.com/bluesky_btl/19990901_xcbtl_is_russia_.shtmlPlease read and heed... Make preperations quickly, This confirms what i have been saying lately in (lost post land). The West Bank deal will be settled this month as i have said. Look for the antichrist to have a part in approval. (Biblical ya know). The number of the antichrist is 666, an upsidedown cross is a sign of Satan.... the date 9/99 is the month we will find out who he/she is....by this approval.....(un approval??) (date upside down is 6/66...)
Russia will help Saddam attack Isreal, while China attacks Tiwan and North Korea has said yesterday they are prepared to contest coastal waters... This WAR of many fronts is too much for our forces to handle and protect the home front. Our missels are depleted from Kosovo. The plot was sealed up in the Summit that Russia, China had.
i live in the Bible Belt..so i've been keepin up with this..The tribulation is about to start.. the Bible talks about this currency collapse we are about to witness... it says that in the tribulation their Gold and Silver will be cankered (Our Fiat Money) and will become worthless, the rich will howell and throw it into the streets... Got Physical Gold??? The 3/12 years of the Tribulation begins this month..... The WAR will take out 2 billion+... Chernoble is (WORMWOOD) in Russian... The Bibles star that falls to earth and posins 1/3 of the earths water is nuecular fallout when the war of many fronts spins out of control.

Alot of you don't live in the Bible belt (blessing/curse) i thought i'd share what the whispers in the wind that are from my lookout posts advantage....

i'm not Bible thumppin hear,,, i'm just reportin what's up from hear.....
If some of yall show some interest in me keepin ya posted as this develops please let me know... otherwise silence is Golden...

Get some real money, food, water, etc... just incase...

Please read the intelegence posts on China/Tiwan at Strafor.com They are an independant spy agency of great note.

Things are not Good......Oh what a world...what a world...

Was able to find the bug causing the problems. Don't know what caused it..... but I found a way to hack around it.

-Jeff

http://www.worldnetdaily.com/bluesky_btl/19990901_xcbtl_is_russia_.shtmlPlease read and heed... Make preperations quickly, This confirms what i have been saying lately in (lost post land). The West Bank deal will be settled this month as i have said. Look for the antichrist to have a part in approval. (Biblical ya know). The number of the antichrist is 666, an upsidedown cross is a sign of Satan.... the date 9/99 is the month we will find out who he/she is....by this approval.....(un approval??) (date upside down is 6/66...)
Russia will help Saddam attack Isreal, while China attacks Tiwan and North Korea has said yesterday they are prepared to contest coastal waters... This WAR of many fronts is too much for our forces to handle and protect the home front. Our missels are depleted from Kosovo. The plot was sealed up in the Summit that Russia, China had.
i live in the Bible Belt..so i've been keepin up with this..The tribulation is about to start.. the Bible talks about this currency collapse we are about to witness... it says that in the tribulation their Gold and Silver will be cankered (Our Fiat Money) and will become worthless, the rich will howell and throw it into the streets... Got Physical Gold??? The 3/12 years of the Tribulation begins this month..... The WAR will take out 2 billion+... Chernoble is (WORMWOOD) in Russian... The Bibles star that falls to earth and posins 1/3 of the earths water is nuecular fallout when the war of many fronts spins out of control.

Alot of you don't live in the Bible belt (blessing/curse) i thought i'd share what the whispers in the wind that are from my lookout posts advantage....

i'm not Bible thumppin hear,,, i'm just reportin what's up from hear.....
If some of yall show some interest in me keepin ya posted as this develops please let me know... otherwise silence is Golden...

Get some real money, food, water, etc... just incase...

Please read the intelegence posts on China/Tiwan at Strafor.com They are an independant spy agency of great note.

Things are not Good......Oh what a world...what a world...

"I think the markets are starting the long awaited "final convulsion"!" FOA (9/1/99; 6:11:11MDT - Msg ID:12547)

Thanks, FOA, for continueing to give us "what (your) side of the river sees as significant to watch".

These last months have been difficult for those who watch from this side of the river the slow-motion playing out of macro forces that seem so much clearer from over there on your side. It all appears so much more dramatic and dynamic from over there. From here, in a desperate attempt at perspective, I sometimes wonder how dramatic it all really is.

Remember 1971?

The US unilaterally renounces its Breton-Woods obligation to exchange (foreign-held) dollars for gold. Sounds pretty dramatic. I remember when it happened. What happened over here on this side?

Well, it did make the nightly news!

Oh yeah, we had some inflation, too. That is, prices started climbing at the supermarket. They kept climbing for years. During that time, we all had to think a little differently. Whenever we decided that a new stereo, or a new toaster, or new car was in order, we hurried out to buy it because waiting even another month or two meant that it would just cost more. At the same time, after we bought it, we still thought of it as having value. Sure! If we wanted to, we could always sell it for a good price (maybe almost as much as we had paid for it) because the price of the same item now cost more than when we bought it. Anyone would be glad to buy it from us for the same price (or maybe more) because their only alternative was to pay even more for it at the store.

As time passed, and gold and silver soared, violin strings (which are wrapped in silver) became expensive. In fact, they added a "silver surcharge" onto the price of strings, based on the spot price of silver. Was it an annoyance? Yes! Did life go on? Yes! Did we stop buying violin strings? Hardly. It all seemed quite normal at the time.

Yes, things change. For example, what do we do nowdays when it's time to upgrade a computer? We start the process by throwing the old one in the trash. Would that ever have seemed strange back then! But the new ones now cost less than when we bought ours, and they are far better, faster, etc. Who would pay us even a fraction of what we paid for the old one?

So, was 1971 a cataclismic event? Maybe for some it was. But over here, on this side of the river, it was hardly noticable. It seemed pretty normal. Although come to think of it, it did make the nightly news.


Remember when Peter Jennings was reporting night after night about the Asian crisis? Now they say it's over. The tidal wave never reached our shores...we dodged the bullet. Things are normal, now. Sure, they ARE a bit different. But they're still normal, aren't they?

They say that bankrupted stock speculators were jumping out of windows in 1929. Yet life did go on. Our parents did live through the great depression. Things were bad, they say. Yet they didn't jump out any windows. Life did go on. And it still goes on today. It's even more "normal" than ever. In fact!

What about the cataclismic event of the Russian default? Did that bring the world financial system crashing down around our ears? Yeah, we heard about LTCM. They had to lower interest rates .75% for a whole year. Now they're raising them again! Well, that seems pretty normal.

What about the recent bond default in Equador? Not yet, you say?

Then when? And in what sense?

Now it seems normal to expect the price of gold and sliver to sink under the weight of selling on the established markets such as LBMA and Comex before the physicals will be allowed to find a realistic value, "within hours or days" of the collapse of the Comex. This sounds dramatic. Will it really happen that way? Or will such a cataclism be just another facet of "normality"?

Will they stretch it out? Keep up the illusion that things are "normal"? Will the "crash" of the dollar, in the weightlessness they call "normality", seem no more than material for Fleckenstein's daily column? Something we will hardly notice, unless we look it up on the internet, or in the financial pages of the newspaper.

Maybe we will all just "adjust" our thinking again. Let "normality" redefine itself. Maybe most of us won't even notice the change. Maybe life will just keep going on being normal, just as it has done since the beginning of time.

Normal. That's what it is! Just normal. Nothing dramatic about. It's just what is!

Maybe that's what the "final convulsion" will be. Just another "normal" convulsion.

Over here! From this side of the river!

BUG WAS CAUSING PROBLEMS WHEN i TRIED TO POST!!!!!

hello hello? More technical problems or what?

http://news.bbc.co.uk/hi/english/uk/newsid_435000/435444.stmNot only has the Bank of England raised its production levels of �10 and �20 notes, it also stopped taking old �20 out of circulation at the beginning of this year in an effort to meet the millennium demand. There's more at hand than people simply stocking up for the long holiday weekend as implied by the banks. You don't have to alter your old-bill shredding program for that.

The big question is: Will all banks have enough cash, or will customer confidence crash and burn when they do run out?

WoW!! Great post on OiL ET!! Good Work!! I've got my own reserves, been building them for a while... time to by more.... 2kay is not Ok.....

Great Post...i agree with your observations, many of us are like the animals in that when rain comes they know not about fronts or cloud formations... only that it is raining with nary a thought about from whence it came or when it shall go..... To them change is normal, they have no understanding of the mechanisims that support their suroundings.... therefore they have no clue if something is abnormal...Higher brains with reason and memory know the difference if it is on their radar scope and are willing to dig deep enough to learn.... i guess CARE is the key word here.... if one cares deeply enough to dig out the hidden mechanisims...these are the ones who know the normal difference....

A lot of the generation now do not know hard times i.e. a time without jobs, money, food, tv, heat, water, transportation. When the T.V. goes off.... everyone will scratch their colective heads and say "ya know this just ain't normal..."

Good job on finding the BUG... i once programed the computers that control the actual process of a major chemical company. It was a thankless job... no one knew you were there and all of the great things and inovations that you accomplished every day.. unless you made any small error that shut the process down and WOW!! suddenly everyone knew your name (MUD)...

Imagine how the programers will feel and how long it will take when they try to sort out if its a 2kay bug or is it a virus when the millinium comes.....Power UP...Power down..Power UP.... Power down....Water On... Water off...

We, goldbugs, as yet have not found what's really bugging the POG, though we do have a pretty fair idea, as to who, what and why our favourite metal(real money)is being suppressed for so long, against all fundamental evidence, which would indicate .
Otherwise, while watching the PPT, also known as "Plunge Protection Team", which was allegedly started as a governmental answer to the Oct. 1987 debacle in order to uphild a semblance of orderly markets, this entity now seems to have been amalgamated into the "Counterparty Risk Control" unit of the NY FRB.
As avid market watchers may agree the PPT are rapidly transforming into "Pragmatic Practioners of Travesty" as they patheticly seem to lose control of the credit, currency and paper asset bubble.
All rallies on the bond and equity markets have self-aborted lately, the US$ is tanking rapidly and the only thing left to bash is the POG, again only in form of the paper promise to deliver physical, which seems to be short some 4-5 y's of production.
In the alledged non-inflationary environment - notwith- standing the aforementioned bubbles of money and credit creation-, the CRB Index is making new highs by the day, the oil price more than doubled, and even AG (being in a hole named Jackson) warning of (paper)asset inflation, vs goods and services AGreed to put 'em on the watch list.

In conclusion the PPT is rapidly deteriorating into a gang of "Permanently ('hopefully') Prohibited (FTC?) Terrorists" of the free market system, IMHO for all to see?.

CB2 - don't ya bug me Jeff, no more, eh!

... lot's of un-concluded conclusions collusively included.

New day - new try - CB2 - "AU" (short for 'it hurts' in my lingo) - NOW, let's hurt the shorts in au's lingo!

http://news.bbc.co.uk/hi/english/business/the_economy/newsid_435000/435667.stmEcuador's debt default is set to change the way investors view emerging markets -- forcing them to take some of the costs of bailing out weak economies. Ecuador gained the dubious distinction of being the first country in the history of the world to default on its Brady debt.

This is a departure from the past mentality of restructure, refinance, and roll over. A change in the wind of world finance?

great essay with a superb punch line!

http://www.y2ktoday.com/modules/home/default.asp?id=2018Question: do any of you think this group would fit into their profile of groups that the government is worried about? i know from this end that i'm no threat to them, they are their own worst enemy through fiat currency policys.... BUT from THEIR VIEW... what do they see....
Responces to this would be appreciated...inquiring mind wants to know your view....

http://www.gmt-2000.com/news/press/pr23081999.htmMust read article on Japans PC's.... Why is all of the forign money buying Japaneese YEN??? They risk ever seeing their money again as it may be lost to the 2kay bottomless money pit...... Looks like Japans banks are too late....

Oh wise members of the forum. Has anyone heard when the BOE will have is next gold sale? Will it follow the same date convention as the July sale and be on the sixth of Sept or has the public out cry caused its cancelation.

Hello golfer _ BoE auction for another measly 25 ton(ne)s should be on Sept. 21-, but don't worry it's sold (maybe forwarded already)and shouldn't hit any (physical) market.
Put(t) yourself at ease-please - welcome to the forum CB2

Hello golfer _ BoE auction for another measly 25 ton(ne)s should be on Sept. 21-, but don't worry it's sold (maybe forwarded already)and shouldn't hit any (physical) market.
Put(t) yourself at ease-please - welcome to the forum CB2

Hello golfer _ BoE auction for another measly 25 ton(ne)s should be on Sept. 21-, but don't worry it's sold (maybe forwarded already)and shouldn't hit any (physical) market.
Put(t) yourself at ease-please - some of the more knowledgeable goldbugs still feel, that a change in the BOE gold sale "ploy" is imminent.
welcome to the forum CB2

Hello golfer _ BoE auction for another measly 25 ton(ne)s should be on Sept. 21-, but don't worry it's sold (maybe forwarded already)and shouldn't hit any (physical) market.
Put(t) yourself at ease-please - some of the more knowledgeable goldbugs still feel, that a change in the BOE gold sale "ploy" is imminent.
welcome to the forum CB2

test

Hello golfer _ BoE auction for another measly 25 ton(ne)s should be on Sept. 21-, but don't worry it's sold (maybe forwarded already)and shouldn't hit any (physical) market.
Put(t) yourself at ease-please - some of the more knowledgeable goldbugs still feel, that a change in the BOE gold sale "ploy" is imminent.
welcome to the forum CB2

Hello golfer _ BoE auction for another measly 25 ton(ne)s should be on Sept. 21-, but don't worry it's sold (maybe forwarded already)and shouldn't hit any (physical) market.
Put(t) yourself at ease-please - some of the more knowledgeable goldbugs still feel, that a change in the BOE gold sale "ploy" is imminent.
welcome to the forum CB2

Today's action among the futures traders erased yesterday's price gains on the December gold contract (GCZ9), with that paper's negotiated price ending the day at $255.60 per ounce of the 100-ounce contract. NY spot price took its cue and was quoted at $253.70 to end the day.

Bearish sentiment was fostered by rumblings comming out of the International Monetary Fund board meeting which was recently held. IMF Managing Director Michel Camdessus stressed in the board meeting Monday the need for bilateral contributions from IMF members now, so that plans for debt relief can move forward. In that same vein, IMF spokesman William Murray said Tuesday the IMF is continuing to look at ways to sell some gold reserves in an effort to fund this debt relief. Many traders and dealers, such as Leonard Kaplan who is chief bullion dealer at LFG Bullion Services, have already dismissed this likelihood on the basis of US Congressional opposition. "There's no way they're going to sell any gold -- Congress will not let them sell one ounce," said Kaplan as quoted by Bridge News.

Traders indicated that some Asian demand is on hold, hoping that the yen strengthening against the dollar will give them better buy opportunities in terms of yen. The latest Gold Demand Trend report of the World Gold Council shows, however, that Asian demand for the yellow metal is way up. When you get burnt by your paper currency, you tend to learn a quick lesson. And rather than being "burned" by the currency crisis, those who held their savings in gold actually prospered during this time by spending their gold on such things as ag land and equipment. Now that recovery is underway, these same people are rolling their earnings right back into gold.

All was quiet today in the COMEX gold warehouse as we start a new month in the wake of August's flurry. To help you better appreciate the magnitude of what went down in August, here's a quick review and comparison. First and foremost, futures traders typically settle for cash...take note of July. In July, only 250 contracts (3/4 of a tonne) were held by traders that announced intentions for delivery. In August, an eye-popping 8,500 contracts (over 26 tonnes) were held for delivery intentions...much of that by Goldman Sachs, as we've reported. All gold currently held within COMEX's official depostories total 37 tonnes following the additional gold received to settle the August contracts. What excitement will September bring? We shall watch and see what the future holds...

The 30-year bond continued downward today, losing 1/4 in price to raise the yield to 6.08%. Traders seem to be hanging back with trepidation in advance of the Friday employment report for August. On the NYMEX, October crude settled marginally down today at $21.99 after setting a new contract high in intraday trade.

Economic troubles in Ecuador, notably the first ever default on a nation's Brady debt, looks like it could usher in a new era in international response to debt default. You'll want to read about the faceoff between public and private lenders in the BBC article that was posted earlier today. This could spark a domino reaction with many so stuggling nation states deciding to shrug off their debt burdens.

And finally we have this comforting thought from John Koskinen, chairman of the President's Council on Year 2000 Conversion. After the pat reassurances (which it is his job to deliver time and time again), he said the biggest Y2K vulnerability lies with an estimated 800,000 small businesses, health care systems and units of government that have taken no action. But "we don't see a cascading effect," he said. "Small organizations will fail on their own. They won't bring everyone down."

Thanks for that ray of sunshine, John.

And that's the view from here...after the close.

The USA will fail. Right now in 1999 Sept. the economy is in such an uproar, that it is setting
records almost daily.. record low gold price in the last 20 uyears, all time record high on the
Dow J, record low prices in most commodities, monsterous national debts. In the end this country
will tank.

The world does not live in records, not highs nor lows..we live in average numbers some where in
between the highs and the lows.. all the markets that are presently at one extreme or the other
will corect themselves sooner or later.

So where does this leave us?? We know what the past shows us ..(dismall failure of every govt.
known to mankind...remember how the communists were going to take over the world? How we needed to
fight the good fight in Veitnam so we would'nt have the domino effect??) we know where we are at
presently, ((on the verge of monumental collaspe, but at an all time high in stocks, national debt,
people employed, US$ in circulation) sounds like the 1930's ..yes??)
Lets look at where we will be in the future. Many prophets speak of gold and silver. In the Bible
they tell of the countries of this world coming to Isreal after the great last war, and bringing
Her ...what else, gold and silver, both of which still HOLD MUCH valuve.. in fact they are the
chief gifts from nation to nation, THE BEST THEY GOT. Nastradomus perhaps speaks of a golden
future when he said



The great credit of gold and abundance of silver
will cause honor to be blinded by lust;
the offense of the adulterer will become known,
which will occur to his great dishonor.



The copies of gold and silver inflated,
which after the theft were thrown into the lake,
at the discovery that all is exhausted and dissipated by the debt.
All scrips and bonds will be wiped out.

So, who steals what??? Gold perhaps? Who seals it? who is in the position to steal??
Many unanswered questions. I find it comforting at least that we will find out the offense of the
adulterer, and who he is should Nastro prove to be correct.

AG spoke of some interesting things the other day. The over-all tone, I took to mean that our
bubble economy was based on imagined wealth, not ture wealth. That maybe we should look
to sound investments such as "riskless bonds" and companies that had staying power to survive d
own the road. Of course he never uses the G word, but down deep, and maybe not so deep I think
there lurks a gold bug. I think now AG is in denial, or at the very least AG is a gold bug in
drag.

It sounds like ole' Nastro may have had it right about the gold and silver inflation so possibily
he might be right about the worthless scripts and bonds (fiat money, and bonds). Now if Nastro is
right about scripts and bonds, but AG on the other hand is saying bonds are riskless, what is a
person to do??? Better question would be, " Where do I put my assets so as to preserve my wealth
in times of transition??"

While an inteligent person might contenplate these things, along comes y2k. AG spoke of attention
that must be given to markets. Sooooo, if we gather from this that the Fed is now involved in
market manipulation, which I believe they are, then they can control any market as long as they
want to, because the have the keys to the printing press in the back room, and they can print
money whenever they want to. Since money controls the price of ALL commodities and stock markets,
they can control this economy as long as they wish. The only thing that could stop them is if
people lose confidence in America's primary export...US$'s.

Now all of a sudden (or at least since they saw the euro coming) they see something on the
horizan that tells them that the people are going to lose confidence in the dollar. Now there is
a choice to be made. This y2k thing can be anything that the holder of the backroom keys want it
to be. They knew long ago about the Euro. I belive that they knew a long time ago about how they
were going to drive the pog down. Drive it down so low as to force most mines (or at least their
output for the next ten years) to become their's, by again visiting the back room (via the
revolving door recently installed) they either force them to sell, or force them to forward sell
their gold. Either way, they end up with all the gold. ...well thought and executed in deed.

AG also said that "claims on far distant future values are discounted to insignificance." Now I
don't know exactly what distant means, but I don't think that Dec. is far distance, but Jan. might
be. So with all of these clues to digest,.. what should we think?? Maybe this era is at an end.
Maybe all of their preparation has been done and its time to get while the gettin is good. Maybe 8
years ago they all got together and decided that y2k would be a great time to hide many errors of
the past, and then put a spin on the whole thing as only the can do, to blame the computers for
all of their games of folly. If you were them would you pass up such an opportunity of a lifetime.
I can here them now, "it wasn't me, its that darn y2k thing".

What can we do??? What do the big boy's in the know do?? What is GS doing? I say take gold, hide
it away. Be thoughful not to fight the last fight.

FOA, Another, I subscribe to your way of thinking, and value your thoughts. comments????

please forgive the typo's

they are a big threat to the price of gold...yea!!!!latin america is tanking ...thats the problem.... IMF is broke...think about it...

I have been seeing rumours posted at Kitco & Gold-Eagle that the COMEX warehouse is out of gold. Is there any truth to this? Can someone supply a link to where it shows how much gold is in the warehouse?

Thanks,
THX-1138

??????????

Test-Jeff

See Towncriers superlative after the close summery's for the last 2 weeks. He has given an on going daily Gold count at COMEX...Many Thank You's, Townie!!.....beesting

test

test

test post

Hang in there kid---when the goin gets tough---well, the tough just ignore it!!!

No49

This from yesterday's GOLDEN VIEW, when coupled with the COMEX depository commentary from today's report, pretty much gives the whole story. This might save THX-1138 a little time and effort searching.

"A relatively quite day in the COMEX gold vaults, 289 ounces left the Scotia
Mocatta depository today. Assuming that all August contracts had to be
settled with cash or physical delivery within the month of August, we can
try to evaluate where Goldman Sach's request for delivery of approximately
20 tonnes of gold came from. COMEX depositories started the month with about
27 tonnes of Registered gold and 3 tonnes in the Eligible category for a
total of approximately 30 tonnes. Through the month we tracked the departure
of 4-1/2 tonnes and the arrival of 12-1/2 tonnes for a net increase of 8 tonnes.

For whatever its worth, we can assume that this visible gold movement was
for other accounts, and Goldman simply received Registered title to 20 of
the original 27 tonnes of Registered gold. Or we can assume that of the 12.5
that arrived, the 4.5 tonnes that left were for another account, and Goldman
received these newly arrived 8 tonnes in addition to 12 tonnes of original
Registered inventory. Obviously, a number of other combinations and
assumptions is possible, but our primary interest was to see if 20 new
tonnes would arrive on the scene, and what we witnessed was only half of that.

Here's the situation. While delivery on contracts is often not sought, if a
panicked herd would be calmed by gold, we put the odds well below a
snowball's chance in hell. There are currently 129,224 open interest gold
contracts total for October and December of 1999. Any percentage of these
could result in positive delivery intentions (each contract being 100
ounces.) This represents up to 402 tonnes of gold. We'll leave it to you to
ponder the rest in light of the source of half of Goldman's puny request."

Whoops, I missed that.
With the system going down so much, I forgot what I had read.
Thank you for the reminder.

Peter Asher (8/31/99; 22:35:25MDT - Msg ID:12542)
Peter,
Thanks for not only reading my post, but for understanding some of it. It's interesting how well we comprehend our own thinking, yet never really know if anyone else is following the same trend. That's why I'm happy to see others offering their viewpoints. It broadens the conversations and allows everyone, in their own way get something from of it. Right or wrong, at least we pick up the drift of all the many discussions that occur here.

Your comments about my #12506: I'll rearrange your words a little.

Does your (statement) describe the same phenomena and event as my #8841 of 7/13.

FOA said: ----Just as most men will not hang themselves with a rope, the shorts that actually create the quoted price of gold today, will not trade it higher. In fact, I believe they are trying to gather physical gold (taking delivery everywhere) while it still trades in relation to the low derivatives price.-----

Peter said: ------I believe they will continue this control of the POG with impunity, until their cohorts have completed the trading activities necessary to protect their positions. They do not have to buy physical gold to do this. As negative sentiment holds the price of gold down and leaves all rallies suspect, larger quantities of long future contracts can be purchased without pulling up the price of physical. The same leverage that created massive short positions will also serve to acquire the longs. It is the writer of those long contracts that is caught short by the breakout. The purchaser has locked in his cover price for a small fraction of the funds that would be necessary to buy the physical. Squaring off the short sales then becomes merely a technical financial matter. Provided, of course, that the 'System' is still in place.-------

Peter, I went back and read your post to better understand it's direction. First, let me further expand on the thought I presented.

The understanding I'm presenting here, is offered to explain why so many are off base and confused about the current gold price. Because I too am "Western" my thinking was also skewed towards a big short covering blow-out, where all "paper would burn". It seemed the only outcome, the markets would lock up and close down as the price of bullion went sky high. That was how Another offered the original thoughts, as he tried to get everyone to see how out of whack the real market was. What would have been required to set off such a run back then? Anyone large enough to buy spot physical gold as an "open order" on the world dealer market. Perhaps, several oil states working with several CBs could have offered, say, a 10 billion book priced above the
London fix. It would have been all over with, as anyone with short exposure would be shut down from margin calls as gold zoomed in price. That didn't happen, probably because the market was in the process of entraping itself with false perceptions. Most of the real gold was corrnered anyway,
so let the world have it's way!

As time has passed, our gold pricing has seemed to become more irrational. Other important analyst are starting to look for different explanations also. Today, Another is no longer "on the fringe of reality". However, there was always more to it than just politically manipulated markets.
The lower we go the more questions crop up. Why does gold still continue to drop in the face of statistics that show massive demand and ongoing supply deficits? Why does it hold here at $250 when this range will obviously destroy most supply from the mines? How in the world can it go even lower when everyone is buying it?

The answer lies in our perception of the modern gold markets. Back in the late 70s and early 80s, anyone "big" that wanted gold simply brought it "spot physical" in "allocated" form in London. The gold was there for delivery if wanted. Others brought through large world class dealers.
Further out on the limb, one could buy Comex "spot month" or "near by" and take delivery of a warehouse receipt later. When large orders went into the paper market, it had a major impact on the price because the price was tied to a "good probability" that real gold may be called for. Paper
buying, back then scared shorts because the longs that brought for hedging and investment purposes, really did take delivery quite often.

Time has gone by and things have changed. I won't get into the political why and what for because that's Another story. The gold market evolved as needs and perceptions changed. Through out the late 80s and early 90s the "need" to use gold as a "security" hedge expanded tremendously. Far more players entered the market to secure a "gold hedge" than physical off take statistics indicated. The physical side of the market was becoming less and less important as
players became satisfied to hold the promise to supply gold from someone else, instead of the actual bullion. Mine supply and scrap was becoming more a product for the jewellery trade and bullion coins. The market then evolved further as large gains from booming world security markets
pressed portfolio hedgers to commit less money for gold hedges. Even though the demand for paper gold was exploding, derivatives were allowing investors to tie up the same exposure with less cash. If they could go a little further out on the limb, away from "deliver ability probability", they could still hold gold using less working money. After all, the world was doing fine as even the worst of problems seemed to be handled by the IMF team. The real need for physical gold was always in the "total currency default / inflation" arena and that seemed light years away. So, over time, the gold market matured into it's present state. Today, by far, most of the holdings of gold are
represented in derivative form. Little more than a bet with someone else about where the price of gold is going. You put up cash, someone else puts up cash and both of you watch the exchange price indicate how you will settle up later. Settle up in cash, that is! The "good probability" of someone wanting delivery was fading away.

What is the problem with all of this, you ask? It's the trading of real bullion that still must set the price of all of these outstanding derivative bets, yes? Well, not really.

The end work of this process has found the 3,000 or 5,000 ton per year real bullion market, is little more that a sea shell on a fifty mile beach. Everyone on the "gold net" already knows how much LBMA trades and that is small stuff compared to the other unseen world markets. The debth
and liquidity of the paper market moved the bullion trade into the "pink sheets". Needless to say, today, the famed "closing bullion price" is set by the cash commitments that bid for derivatives, not the cash that bids for bullion. In the old days, really big traders would arbitrage any such paper overhang against bullion by calling for delivery. Today, with the paper market so large, any such power play would find most traders taking delivery of gold as the market is sold out from under him. Besides, this new market perspective works against any long traders because none of the present "derivative gold demand" wants delivery! They only want to settle in cash, because taking delivery would require selling their other "better performing" investments. The mindset today is that gold is only an insurance hedge, as such "an increase in it's price will settle up in a cash delivery to me, to offset my other risk of cash impairment to my portfolio"! To further develop: "I don't need
physical gold, I only need to participate in it's price movements"!

In complete satisfaction of the current trend, derivatives fill the bill for this current gold market. Clearly, we can see that this new market is not "fraudulent". There is nothing wrong with players pouring margin money into the short side to create a demanded product! It's has evolved into a cash game. This is where GATA is fighting a war they cannot win. Gold bugs (of the last few years) were viewing the present market using 70s eyes. Indeed, they were investing in an industry that was losing primary demand for it's product, even as "the need" for that product was exploding. This new gold market found a way to channel the "modern need" for gold's attributes away from physical demand and into paper supply. You simply can't create a short covering run if none of the current (insurance) longs want to take delivery. Even worse, as this trend was further developed, more and more old private physical holders were selling their gold and holding paper instead. Add to that Western dollar supporters wanting their currency to look good, and we have paper gold supply that's also used as a form of positive currency intervention. Anyone investing in the gold industry, expecting bullion to explode from all the new demand was truly disappointed. For every new Western gold bug that wanted gold for insurance, there were five paper sellers to supply him with all the gold insurance he needed, at a fraction of the cash commitment.

Peter, (if you are still with me) this is only the end of this act, not the end of the play. We have been standing on the trail and looking at where we have just travelled. Now, let's turn around and look forward.

Everything we just discussed was what "Western Gold Bug Eyes" didn't see! Most have read my other posts and have seen how Another has cleared the path without pointing the way. My above is a broad overview without describing the full political involvement. Just as everything is in
constant movement and change, so too is the gold market. The recent evolution in the world currency scene has set in motion a new sea change of events. The same dollar/IMF world that created the seemingly endless wealth for American investors is now entering the end of it's historical
timeline. The tremendous debt that purchased our lifestyle, is slowly being revalued world-wide. Every tick against the dollar currency is translated into more sales by foreign holders of that debt. Soon, the par value of that debt will begin to fade as the negative trade deficit of the US works it's evil ways. At the same time, for the first time sense the dollar overruled the Pound, another currency has been created that is equal to the task. The dynamic of changing world reserve currencies is also going to change the dynamic of the gold market. Once again, the needs of investors will redirect the method of using gold. As the wealth effect of the Dollar/IMF system goes into reverse, the process of receiving your gold hedge insurance in dollars will be perceived as a risk. At this stage, all of the past demand for gold that was channelled into cash settled paper
derivatives will suddenly reverse it's trend. Slowly, more and more of a percentage of settlement will be asked for in real gold. As delivery fails from increased demand, existing derivatives will be dumped upon the market place in an attempt to cash out. This very process will: First dry up all gold supply and lock down any existing private stocks. Second, cash biding on the dealer market will become convoluted and reflect only gold's currency value. It's economic / industrial use will be priced totally out of the market. Third, what was once the world price making market for gold, will become useless for delivery as it's contracts are defaulted on and discounted in price. What price could the world gold price be set at, using these defaulted, bond like securities? How low does russian debt trade?

Peter, using your analogy about how the traders may be buying gold paper long, could be correct for this moment in time. But, as you can see, if the above plays out, they will be in the same boat holding nothing but a ticket for court. I bet, most of the smart ones are slowly looking for available gold, not more derivatives. I believe that in fits and starts, all paper gold (any comex paper outside of spot month) will be sold down. Driving the perceived physical price lower until no more can be delivered. Then, a general default will begin, destroying the entire gold industry as we know it.

As in conclusion to my earlier post, I hope to later describe the trouble this will visit upon the mining industry.
Thank you for considering this, FOA

PH in LA, some post! We will talk here later, across this USAGOLD forum river, that is.

http://www.oism.org/nwss/

I share some of your ideas about the coming crisis being a combination of religious, political, economical and military events. Suggest you read: http://www.oism.org/nwss/ Chapter 13

You should consider adding Potassium Iodide (KI) to your precious metal portfolio.

For those who survive the initial event of a nuclear incident (bomb explosion, reactor melt-down, contaminated environment), the next biggest threat to avoid is poisoning from radioactive Iodine.

Consider the following:

Several hundred reactors in the US, and probably 10 times that world wide.
Terrorist attacks on nuclear plants
Missing Soviet munitions.
China with their recent White House MERV technology gift.
Global jet stream.
Three-mile Island, Chernobyl, Bhopal, India
Embedded chips in complex plant systems.

In other words: "Murphy's Law: Any system that fails will do so in the worst possible way and at the most inopportune time."

Potassium Iodide is cheep, easy to get, follow Chapter 13 instructions. About $20 for 125 gm, 1,000 doses, non-prescription from any chemical supply company in the Yellow Pages.

Got KI?

Thank you for devoting so much writing time to your response. I understood all of it quite clearly. I realize that the operational words are "Cash settlement."

One question, regarding your <<< I believe that in fits and starts, all paper gold (any comex paper outside of spot month) will be sold down. Driving the perceived physical price lower until no more can be delivered. >>> That event would show up as "backwardation" which is regarded as an extremely bullish factor. Would that not trigger a definitive reversal, giving birth to a runaway upward movement in the spot market?

One thought I am still wondering about, was my conjecture that the apparent motives of Gold carry profits, politically driven debt bubble controls, Central Bank cash needs and collusion driven short sale profits, while all true, could be lesser activities behind a plan to corner most above ground gold and to acquire the ownership of many of the mines.

If it is known to the real 'Masters' that the currencies of the world will implode, then it would be axiomatic that they would want their wealth stored in Gold. So, the big question, that others here have also raised is: Just what physical gold is being bought and claimed, and by whom? I am not suggesting that you know the answer to this, but I would be interested to hear your speculations.

At your leisure, please, good friend! ---- Peter A.

BTW there is a lesser known "O'Malley's Law" Which states, "Murphy is an optimist"!

GoldGold

GoldGold

http://www.usagold.com/cpmforum/archives/119999/default.htmlSimply outstanding piece of work!
I wish I could offer you some additional thoughts on that whole business because I know you take great interest in other's perspectives, but I can't say anything at the moment. On my first read-through, I find myself to be in total comprehension and agreement with the view you've presented. I'll go to sleep with a smile, and maybe the new day will bring up an extra thought or two.

Nice show!

On a technical note, is anyone else having problems bringing up the screen with all the posts? Only by making my previous "Gold" post was I able to see the day's messages.

Hey seeker, I really enjoyed your post, too. Keep 'em coming, and I'll keep reading!

Gold. GET YOU SOME! ---Aristotle

Thanks Dave, Great info i added it to my favorites list..
(ki) could become more valuable than gold when the nukes of Bin Laden are used. (i think this is first) Look for the FBI to make a pre-emptive raid on fringe group malitas and all hell will break loose in the midwest.

Seeker Great post!! it's errie how Nostro, the Bible, and the current situation are lining up.. its like watching a movie after having read the book....

FOA,PETER...enlightning..... thanks for the conversation, i could see the end result. You guys gave an explaination of the mechanism thanks.... Question: How will this play in fast foward if a REAL war breaks out??? will sheepols first reaction be to buy Dollars..take it from there please,,,Thanks....

Could someone enlighten me?
I am trying to figure out what this gold leasing thing is all about.
When someone leases gold from a central bank, do they take possession of it or is it all just on paper?
What are their rights that come with the lease?
Can they lease gold and then sell it?
When you lease gold, you don't own it do you? What do you do with leased gold? What happens when the lease is up?
I would appreciate any help on this subject
Thank you
Michael Hipple

Hi, everyone! Just been looking over the Kitco offerings from last night and this morning.

Has everyone seen this:

Le Metropole members and internet,

A highly sophisticated source has informed me that he understands that a blind trust set up for Hillary Clinton, shorted gold financial instruments just before the Bank of England gold sale announcement on May 7, 1999.

If true, it is an outrage and is further anecdotal evidence of the conspiratorial nature of the Bank of England gold sales and of the high level nature of the manipulation of the gold market. Nobody could be so lucky as to have made $100,000 on a $1,000 investment in cattle futures and then have someone else just happen to SHORT gold for them immediately prior to that extraordinary gold sale announcement.

The trading activity in a blind trust of a major public figure such as Hillary Clinton must be a matter of public record. It would be of help to the Gold Anti-Trust Action Committee if someone on the internet could help me access these records.

A matter of such sensitivity ought to warrant a statement by the Trustees and its auditors.

All the best,

Bill Murphy
Chairman, Gold Anti-Trust Action Committee


FOA, this was written about you:
Date: Thu Sep 02 1999 01:18
surfer (FOA) ID#289292
Usually there is a secret message that will make you rich if you can decipher it though.

There are others here far more competent than I to answer your question but I will throw in my 2 cents worth. Gold is leased by CBs and private hands. I think that leased gold may come from the CBs vaults or vaults in the UK or US where some CBs and others store their gold. I also think that not all the gold is physically delivered but, certainly, a lot of it is. Those leasing the gold sell it, otherwise they would realize no benefit from the lease. They use the proceeds to invest in other instruments such as bonds, etc. In all cases, the gold has gone, i.e. been sold, even though the CB, in theory, still owns it. Those leasing expect to be able to buy some back later should the owner demand repayment of the gold. I would love to know how much has been leased this way. I have seen figures of from 10,000 to 14,000 tonnes or more. I suspect a fair bit of it has physically gone into jewellery, etc. and left the vaults forever.

I would be interested in knowing more about this subject too but I think it is mostly hidden and we are unlikely to here much.

http://biz.yahoo.com/rf/990902/lw.htmlCalling the tune and paying the piper: Life with bad money.

http://biz.yahoo.com/rf/990902/5.htmlLearn a little more about euro mechanics here.
Volume of bank bids on ECB's weekly allotment of funds is so high only five percent are filled each week.

http://biz.yahoo.com/rf/990902/b4.htmlIf truly a bubble, Mr. Friedman says there will be a "deep collapse of the stock market" and that it poses a grave danger to the U.S. economy.

The horses are on the track...

http://biz.yahoo.com/rf/990902/0.htmlEuropean Central Bank Directorate Member Tommaso Padoa-Schioppa comments on ECB interest rates and credit supply.

As of this writing, S&P futures less than five points away from being locked limit down. Apparently a recent comment by a Fed Governor was not well received.

Stock bulls on the ropes, baby...

http://biz.yahoo.com/rf/990902/n4.html"Liquidity might be a problem tomorrow," was the comment of one interviewed economist.
-------------------
Subsequent article: Fed says overnight system RPs totaled $4.985 bln

http://biz.yahoo.com/rf/990902/rh.html

MARKET REPORT (9/2/99): Gold was sideways this morning amidst a maelstrom of
bad news for the equities markets and the dollar. One would have thought that the yellow
would be trading higher with the Dow down 150 in the early going; the long bond market
down almost a half the dollar taking sound thrashing on international currency markets. But
this is the era of the paper tail wagging the physical dog and gold investors are offered as a
result the opportunity of picking up history's best known hedge against financial disaster at
bargain basement prices.

In Asia -- where the effects of the various failures that have come to be known as the Asian
contagion wiped out millions -- a whole new generation of gold investors, burned
previously by their lack of diversification, won't be caught a second time around. In the
United States -- where investors with bloated equities portfolios -- investors are finding that
hedging with gold provides a certain amount of comfort when "bubble" seems to be the
word of the day and the Fed chairman warns that he's searching around the kitchen drawer
for that big pin he's warned about using so many times in the past.

If the general atmosphere for equities was not bad enough, the markets braced for a plethora
of reports today (including jobless claims, factory orders and money supply) most of which
are sure to reveal an economy trending towards boiling point. This could be a day when we
see statistical fuel thrown on the interest rate hike fire. Beyond these domestic concerns the
market also needs to worry about trouble brewing in Latin America where Ecuador has
already defaulted on its Brady bond interest obligation and in Europe where the growing
sentiment is that Europe won't respond to Fed interest rate increases with increases of their
-- a prospect likely to be seen as the key reason for the dollar's fall this morning.

That's it for today, fellow goldmeisters. We will update if something major happens.

The October edition of News & Views is a major you-don't-want-to-miss-it, highly
informative, and slightly irreverent blockbuster. We revisit our Five Horsemen of the
New Apocalypse -- the euro challenge, Y2K, the Asian contagion, the bubble stock
market and rising oil -- none of which have taken the summer off. We also preview the
Ten Reasons Why Main Street Worldwide Is Returning to Gold and Short &
Sweet (as is our custom) rambles with a hint of cynicism through a litany of world
political and economic events. You won't want to miss our look at the world of gold to kick
off the Fall investment season. The Season of the Yellow Metal? Just might be so...........

Please call 800-869-5115 (Ask for Mary Conway) if you have an interest in receiving
a trial subscription to our widely read newsletter, News & Views: Forecasts,
Commentary and Analysis on the Economy and Precious Metals. Or you can
go to our ORDER FORM and submit your request by E-Mail. You will also receive our
introductory packet on investing in gold.

I thought some might like to reread what was said over one year ago. Is it close? I copied these to my personal files and did not save the post #. I could not look it up because the archives only go back to Sept22, 98. Sorry. Enjoy.

8/10/98 Friend of ANOTHER

(Editor's Note: Please read what's below carefully. This is an extraordinary analysis from the Friend of ANOTHER at a time of much confusion and uncertaintly in investment/currency markets. We are told at the outset that the largest pro-gold groups -- the Europeans and the
Gulf states -- want a world currency "not subject to the performance of the American economy." In other words, a currency not tied to American treasury obligations, or the percpicacity of any other nation for that matter. That currency for those of us who have reached for the deeper
truths of economy is called gold. As an American, I must say that I have never seen the concept of American hegemony explained in quite the same way before. Perhaps, my eyes were closed. I keep getting this feeling that Americans must necessarily begin to understand a new role for this
country in a rapidly changing international political and economic environment -- a role for which our political and economic institutions appear ill-prepared. I will not be so presumptuous as to explain what the Friend of ANOTHER is saying, I will let you read for yourself. I do not think it could be said any better than Friend of ANOTHER says it.
The fact that his analysis implies how one should design one's portfolio is a happy side benefit.)

Michael Kosares,

It has taken some time to send this, but now I can also offer my thoughts to your questions.

Your statement: "As a matter of long term policy, do you believe that ECB will "sell" gold to defend the Euro or "buy" gold to defend the Euro? Each of course would entail a different course of action with respect to reserves of the new national bank. Along these lines,will ECB buy gold from its member treasuries, or will it simply force them to
transfer it to ECB coffers if needed to defend the Euro? I am prompted to ask this question in view of your assertion that there will be much selling of Euros to defend the dollar. If the Euro, as you suggested, is being printed to buy dollars isn't this just another manifestation of the U.S. exporting its inflation? It appears to me that the Euro will need to be defended -- and not with dollars -- but with gold! "

Michael, I believe the most difficult part in understanding the modern gold market is overcome by seeing all the various political factions involved. Essentially and basically, the largest pro gold groups are those who want a world currency that is not subject to the performance of the American economy. At this moment and in this period of economic
history, all currency reserves held by foreigners (non-Americans) is a debt of the US Government and by extenuation through tax collection, a debt based on the ability of the American economy to function profitability!

In essence, America has told the world that as long as the business of this country is functioning, your wealth, as represented in Marks, Yen, Pesos, etc. is backed with performing US debt. It's like saying, "as long as your neighbor, next door, does not loses his job, you will not
lose all your money! Most people would be surprised at how clear this is, outside the USA sphere of influence. This, the largest of the pro gold group, is largely made up of countries with economies that have no need to sell most of their production to the US. The business of these
communities would not totally fail without the American engine. Yes, they would slow down, but not collapse, as trade with other countries would continue. To add what was said before: If your neighbor loses his job, you can still trade with the other people in the town, as long as
the currency system is not based on your neighbors debts!

This group, made up of much of Europe and the Middle East, is not looking for a return to the old Gold Standard, but perhaps something far better. They do not see any advantage in holding the currency bonds of one country, as a reserve asset of future payment, over holding physical gold as a reserve asset in full payment. The fact that the debt reserve asset pays interest is little more than a joke in these banking circles.
Any paper currency, the dollar included, can fall in exchange value against your local currency far more than the interest received! In today's paper markets, the only true value in exchange reserves, held by a government as currency backing, is found in it's effectiveness for defending the local currency from falling against other currencies. In
other words, use the reserves to buy your countries money. But, this is a self defeating action as sooner or later the reserves are used up!
This fact is not lost on many, many countries around the world, as they watch their currencies plunge, lacking reserves as defense. Ask them how important the factor of earning interest on reserves is under these conditions.

On the other hand, buying gold on the open market, using your local currency, works as a far different dynamic from selling foreign bond\reserves. This action takes physical gold off the market, and in doing so increases it's value in dollar terms. Gold is and always has been the chief competitor with the dollar for exchange reserve status.
The advantage here comes from the fact that governments do not run out of local currencies to use in buying gold, as opposed to selling foreign currency reserves to buy the local currency on the open market. Of course, the local price of gold goes sky high, however, in this action
you are seen as taking in reserves, not selling them off.

Also, as gold begins to rise against the dollar, the local gold reserves are seen as assets of increasing value, backing the local currency. Under these conditions, with a stable currency, citizens will purchase more gold as it is seen as a positive asset. Not unlike a rising stock,
everyone wants an increasing investment. Contrast this action against that in Korea, where everyone sold gold as it increased in an unstable currency!

Basically, this is the direction the Euro group is taking us. This concept was born with little regard for the economic health of Europe.
In the future, any countries money or economy can totally fail and the world currency operation will continue. What is being built is a new currency system, built on a world market price for gold. Michael, you are absolutely correct in that the USA will see a hyper inflation of it's currency and a gold price in dollars that reflects it.
Unfortunately, for most investors, the gold price rise will be sudden and also hyper fast. as it will occur just after a rapid plunge in dollar based assets including, stocks, debt and the entire banking system. This action will destroy virtually all gold based paper assets as they are also dependent on a functioning economic system. A local
gold mine, in any country, must sell production to realize a profit. The contract system they deal with will not be functioning during this time.
Contrary to many hopeful investor, local treasury officials will not allow miners to pay employees or buy equipment with physical gold. When the dust does clear for mining to continue, gold will be recognized worldwide as real money, and the mining of money will, no doubt, carry Extreme taxation. Stock prices of these operations, after being priced to zero, will then double or triple in price. Zero times three equals?

Back to your original question. The Euro will not replace gold, it will evolve into a gold transactional currency. It will also price Euro gold very high, perhaps $6,000 in current dollar terms buying power. However, in actual dollar terms of the future, $30,000 US will reflect the American debt as the negative reserve asset it truly is. The ECB will
have an easy time issuing Euros to buy gold from the member banks. The real political warfare will be in trying to force them to sell the gold at all, once this ball starts rolling. The Euro has, in effect already been dispersed in the form of Gold Leases not gold sales. One has only to look at the official gold holdings of most central banks to see that
physical gold sales are little more than the average, with a good amount of that coming from nonEuro countries. Gold is a funny thing, it can be sold many times and pass through many countries and still remain in a CB vault. Truth Be told, some 14,000 metric/ton have been sold this way.
Far more than the street thinks. Using this amount it's easy to see how certain entities have moved off the dollar standard in the last few years. If we use a future price of $6,000+US, the move is about complete.

The process: An oil country (or others) goes to London and purchases one tonn of gold from a Bullion Bank. The BB borrowed this gold from the CB (leased). The one tonn gold certificate is transferred to the new owner.
The gold stays in the CB vault and the owner goes home. The CB leased this gold to the BB and expects it to be returned plus interest. The BB financed the Actual Purchase of this gold mortgaging assets of the buyer. The BB, who created the loan, then uses the cash arranged in this venture to contract with a mining company (or anyone wanting a
gold/cross financing deal) to purchase production gold, using this cash to pay for it. In the eyes of the mining company, the BB just sold gold on the open market, for cash, and will purchase future production at the contracted price. The mine does not know where the gold came from, only
that it was sold and a fixed cash price is waiting. Of course, most of this made more sense when gold was higher. There were thousands of these deals, structured in every possible fashion. Look to the volume on LBMA and you see where the future reserve currency is traded today!

Now when we look at this picture, who is at risk here? The Euro CB Group still holds the physical gold and will buy it back from the new owners, if asked, using printed Euros. The new gold owner has just replaced his dollar reserves with either bargain priced gold, or Euros at an exchange rate never to be seen again! Some of this was done to buy the pricing of oil in Euros. The BB owe the CBs 14,000 tons of gold that they must collect inthe future from producers or currency speculators. And they must collect it by paying what will be a, then, ridiculous price of $300/$400US, while the world market price will be, well, a little higher.

With Canada, Australia, and perhaps England having sold much gold to hold US$, much of the English speaking, IMF/dollar world is about to change. Any country, Japan, Mexico, etc., that has locked their future by selling most of their production to the American economy , is headed for a depression. Another is answering some of your mail questions and is also sending a letter. Will send it on arrival.

Thanks Michael,

FOA


8/19/98 ANOTHER (THOUGHTS!)

Supply And Demand for Gold; Does this change the value of this "Metal Currency"?

I ask, why do many look to the "commodity" supply and demand of this element for direction of price? The use of gold for jewelry and other fabricated forms is but a small amount of the buying and the selling. The mines do produce perhaps 2,500 tonnes a year, and "fabrication demand" does use perhaps 3,000 tonnes. Yet, all look closely to see if the usage does change and move the price up or down. However, the "fabrication demand" has been much greater of the mine supply for many years and the dollar price still falls!

Truly, the selling of 3,000+ tonnes of gold, for the making of things, does not influence the dollar price of an item of that trades 13,000 tonnes a year at LBMA alone! And the gold does trade much greater amounts in the small places of which you have little knowledge. Perhaps this "metal currency" is used for "the money transactions" as 20,000+ tonnes per year? The Central Banks still hold a billion ounces of gold:

Does your broker of "leverage gold" tell you these banks watch the "jewelry production" for the intent to value gold reserves in vault? Do the other holders of perhaps, two billion ounces of gold, held worldwide, also look for "fabrication demand" to raise the price? Do the billions and billions of currency/gold/swap transactions all see value only if "jewelry" is selling well?

My friends, events will change your thoughts. Often you are sold gold that is called "deliverable", yet the broker does lend you much percentage cash to buy. Perhaps this transaction is "deliverable after full payment" and as such the broker doer deliver "little real gold", yes? Much of the western world does "attach" to gold in this form. This metal is sold with the "modern concept" of "gold is the commodity for fabrication" and "is dead as money" in "this new era". This "concept" say that only "leverage" and "trading" does add to your estate. In this fashion, many have lost the long term benefits this "world class money" will soon bring. These persons wait for the event that does not come. In the future, many "salesmen of leverage" will tell stories of the fact that could not be. "The demand for gold "the element" will vanish, as the dollar price for "gold the money" does soar". What chart will be used to view this new high gold price, that will remain, for many years, "unaffordable" as a commodity, yet all bid for daily as the right to buy "money"? In this future time noone will deliver a leveraged commodity that has become, "leveraged money", no? The physical gold, it will trade by the dealer that has seen the Euro as the gold and oil settlement currency of worldwide use. Many will learn the price of gold in Euros,
as even the American Eagle will be quoted as such!

Canada does continue to sell, however they lust not for the Euro! Perhaps the American dollar will change this thinking! Poland, the BIS did deliver them more gold for the future of their children. We watch, as the BIS does continue to buy gold under $360, for it's account, as they fill Central Banks with a new world currency reserve. Countries that now begin to think in Euro terms, find the dollar gold as "the good exchange rate" for joining the Euro Group in future! From spring of this year, this demand, makes gold be above $280? The ECB says, "this gold has been sold in dollar terms but has yet to replace the dollar reserves."

I think, now it comes time to sell the dollar. As the Belgian gold was purchased to replace dollars, it did announced the end of EMCB leases. Now the BIS transactions do create a gold market that is "not as before"!

We watch this new gold market together, yes?

Thank You

Another

PH in LA (09/01/99; 12:45:07MDT - Msg ID:12583)
Normal view from "this side of the river"
"I think the markets are starting the long awaited "final convulsion"!" FOA (9/1/99; 6:11:11MDT - Msg ID:12547)
These last months have been difficult for those who watch from this side of the river the slow-motion playing out of macro forces that seem so much clearer from over there on your side. It all appears so much more dramatic and dynamic from over there. From here, in a desperate attempt at perspective, I sometimes wonder how dramatic it all really is.

Hello PH,
The drama in any play is only as real as it's impact upon your perception. In real life, and in a similar view, economic events are only an "observation" unless they manifest themselves into a forced change of your life style.

For most people, the wealth they carry is the determining factor in how much they are "free to chose" their living conditions. Further, your freedom to move about in a social standard is governed by how others that network (trade) with you and the world in general value the form of wealth you choose to hold.

Your post is so very "on point", in that it defines how the last twenty years (+/-) have not seen the American Dream altered with some "Historical Event". Even though all the items you described were predicted to cause major problems, none of them destroyed the system. Lives were impacted somewhat and plans redirected, but, all in all our social order continued with the perception is that our wealth has grown a great deal. Yet, there in lies the residue that "1971 was a cataclysmic Historical event"! It did not affect our life style, so much, but it did change our "perception of how we value wealth ". The use and acceptance of a world reserve fiat currency has altered the concept of how much wealth we really own. Many Westerners and Americans feel rich and act out that perception by living life in an "unaltered way". It has worked this long because all of us and the rest of the world "carry our note" in the form of US debt denominated in dollars. As long as we "put on a convincing act" the play continues because others think we are "good for payment"!

In a sense, America is like a stock that has been traded up to par, say $100 a share. Yet, all of the companies capitol was borrowed from creditor banks and spent on a lavish lifestyle. The perception is that: "this stock called America, it's going higher as long as everyone keeps trading it". Yet, if the bankers call the loans, this dollar concept (the above stock) will prove to truly hold nothing more than "the American Dream"!

Here is where we have walked in the misconception that "everything is normal" and "nothing has changed, that much". The truth is that none of these past problems have washed onto our shores because our debt has purchased these years of a "normal lifestyle". Prior to the event of 1971, a
nations "lifestyle" was brought on a cash basis, using a neutral or positive trade balance. Today, practically all of our wealth and economic strength is an illusion hidden in the dollars debts. Without a competitor, the dollar was accepted without recourse. 1971 was a highjack on a world
wide basis. In like form, when a person is robbed of all of their reserves, human logic dictates that they will go to work for the thief (that now has the money) in a effort to stay alive. Needless to say, this working arrangement will change as soon as the victim has saved some money again.

The arrival of the Euro will precipitate our first "historic event" that does wash onto our shores. It will arrive as a failed dollar gold market, rising US interest rates, a falling stock market, spiking oil prices and inflation on a major scale.

Holdings of US debt, world-wide, are now reversing and that trend will only escalate. One has but to review the recent thoughts of "contraryinvestor.com,,,,,,,,,,The Dollar and the "New Era": Are the Rules Changing?

-------The linkage hinges directly on the stock market. Lower dollar equals lower demand equals potentially lower asset prices. If the declining dollar ultimately causes a lower stock market, consumption declines and lower U.S. economic growth results. A lower market and economy would depress tax inflows possibly causing the government to get into the "crowding out" borrowing act again. A lower dollar also creates the unintended consequence of importing
inflation. Another interest rate no-no. Do all of these linkages work perfectly and in a linear manner? Of course not, but one can see that the virtuous circle of dollar upside can quickly turn into a dollar whirlpool to the downside with reinforcing mechanisms that cut in a negative direction. A true and sustained change in the dollar and inflows of global capital to the U.S. would seriously
challenge the "new era" thesis. We're not completely there yet. Like any market, the conclusion for the topping process of the dollar is anyone's guess. We'll gamble that the process is at least officially underway.-----------

Also read: Mr.Richebacher

-----The dismal science will never be the same if Dr. Kurt Richebacher's dire predictions for the global economy should come to pass.

The former chief economist and managing partner at Germany's Dresdner Bank says a deflationary collapse lies ahead that will ravage the world's bourses and usher in a dark period of austerity and financial discipline.

Probably not one economist in fifty shares his views, at least not publicly. Richebacher, now living in France, says many of his American colleagues have been seduced into ignorance and complicity by Wall Street's billions as well as by their love affair with mathematical models that shun fundamental laws of economics. --------------

------* Derivatives can insure individual market participants against risk, but not system as a whole. Ultimately they have spurred higher risk-taking through leverage, exposing the global financial system to the prospect of devastating failure.

Richebacher, who counts former Fed chairman Paul Volcker among his close friends, says U.S. economists of the 1960s would more readily have recognized these problems and acted stridently to counteract them.

Public discussion was still influenced back then by staid economists who represented the banks and who knew their theory. The current crop, however, is "really a part of Wall Street's sales force to sell shares."

In contrast with European economists, their theoretical thinking is "not too deep," and in recent years has been completely eclipsed by mathematical models that fail miserably in reckoning with the crucial variable of human behavior.

The current level of thinking is "unbelievable," he says. "How can you simply overlook a negative savings rate and mountainous trade deficit" in saying the economy is healthy and robust?

"There is almost no one left in America to pose critical questions about economic fundamentals," he laments. "The only miracle about the American economy is the consumer's amazing propensity to borrow" -- a fact which Richebacher says has delayed a day of reckoning. -------------

And finally see: The Magic of Credit & Financial Engineering by David W. Tice

------ This, like most derivatives that have come to so dominate our financial system, works well during bull markets. We, however, see these derivatives much a ticking time bomb. One of these days, we will have a bear market and First Security Capital and other writers of derivative
insurance protection will be forced to sell securities to hedge their exposure. And if enough buyers do not come forward willing to part with their cash in the midst of a sinking market to take the other side of these trades, markets will suffer a liquidity crisis. And we, unfortunately, see no way around such an occurrence as our over-zealous financial system has created truly unfathomable
"perceived wealth" throughout our economy that is supported mainly by overvalued securities and unprecedented credit excesses.----------------

PH, your last item: ------ Maybe that's what the "final convulsion" will be. Just another "normal" convulsion. Over here! From this side of the river!--------

Take your vitamins, sleep well and get plenty of exercise. With a little luck we will live long enough to watch this drama to it's final conclusion.
Thank You FOA

http://cnnfntech.newsreal.com/story/19990901/07/58/5640254_st.htmlSept. 9th a "dry run" for Y2K? Just one week away.

http://dailynews.yahoo.com/h/ap/19990901/tc/early_y2k_1.htmlThe approach of a minor hurdle for some digital systems...

http://www.washingtonpost.com/wp-srv/WPlate/1999-09/02/243l-090299-idx.htmlI highly recommend this article from the Washington Post. Take a cue from the big boys.

Before I heard about the gold shorts, I read somewhere that the twice daily London gold fixing was done by an exclusive clique of gentlemen meeting (around a cup of tea ... to which Another would add that they would meet on a fence).

Are they then meeting only to fix the price of (derivative) paper gold?

Gold will never cease to be money (I don't know whether paper gold will ever be money), but can it be said that bad gold (paper gold) drives out good gold (gold)?

If so, what happens to the law of supply and demand in determining gold(which in my hypothesis is not money)'s price?

This Forum seems to be arguing that the price of bad gold determines the price of all gold. I don't understand the mechanism. Can anybody explain? The IVH.

There are a number of comments that have been posted here since I posted the following repost back in May, which refer to perception. I just want you to know that your insights have been some of the most helpful to me of any posted here. I value your opinion as much as anyone here and I hope that the run-in you had a few weeks back won't cause you to continue to perceive that everyone here is hostile to your opinion, I also hope you don't feel the need to continue prefacing everything you say. One who posts with integrity should not have to qualify himself on �going. I noticed in your post yesterday that you had concern for being perceived the way you mean to be and I couldn't help but think of my take on perception way back in May, when two individuals were having this same problem. Please don't think that I'm singling you out by posting this in conjunction with your post, on the contrary it's an opportunity for us all to look at how we react. There is always interpretation and no doubt the motive behind this post will suffer its share of scrutiny as well. But I'm counting on the integrity you've consistently demonstrated all the way back to this forums earliest days.

I'm sure that we have all been in a situation where we became zealous about an idea or product, or in Mellow 88's case another individual. His enthusiasm for his mentors opinions were based on his emotional reaction to the one who first enlightened him to the topics we read here. Whether TZ has insight or not, Mellow was defensive and handled his enthusiasm without maturity. On the other hand you had your own enthusiasm for Another.

Through the years I have been a zealot for my many causes and it has made me appreciative of the nature of the ones who are highly respected here at this forum. I'm guessing that your reaction to Mellow 88 was one of frustration with his immaturity. I have to laugh, because not too long ago that could have been this ex-zealot.


Regarding FOA Msg ID:12639 Thanks for not only reading my post, but for understanding some of it. It's interesting how well we comprehend our own thinking, yet never really know if anyone else is following the same trend.



Previous post (05/25/99; 14:19:38MDT - Msg ID:6727)Perception Is Everything"
I deal with numerous people throughout the course of each day, as I'm sure many of you do also. For the most part the situations that I get in on are either technical in nature regarding a product we've sold or a disgruntled customer or even a discouraged employee. I have become a student of "excellence" in customer service. When I am faced with situations that involve a persons feelings it is imperative that I take those feelings into consideration. It seems that it has become typical for the human race to react out of emotional responses and it makes me wonder. Have we gone to an extreme or am I overreacting?

I think about the pace that information travels and how available it has become, also, how many times I have found myself in the way of those who are now called "rage drivers" and I see how fast we track getting from place to place. I watch people drive by me on the way to work and it seems they have hollow empty stares in their eyes as they move on to tailgate the next available driver. I feel like a bug as I look in the rear view mirror about to be squashed by one who is obviously in a much greater hurry than I am. I notice that people are quick to rationalize or justify what is said, and we suddenly accuse others of that which we thought he or she did to wrong or shame each of us. We seldom give a thought to the fact that each one of us is a contributor to the outcome of everything that we're involved in. We have become obsessed with our immediate surroundings and the area that we are occupying at this very moment.

I wonder, does the more information we have at our disposal, cause us to begin a process of inward focus, concentrating more on ourselves hoping to bring some order to something that seems so vast and chaotic. The bigger "it" gets the more inward we think. Almost like self-preservation if you will. Could it be that the results of this sort of action causes us to react emotional, irrational and less mature, almost to the point of barbaric? Think about it. How confusing has it all become? How can we keep it all together? The here and now, the future, now get out there and get rich, only to be blinded by the lust patterns so that we can no longer see the effect we might have on other individuals.

It seems the more we try to bring around the perfect environment, the more chaotic things get. The thought process of those that seem to believe that we can obtain higher level thinking as they have on the make believe world of Star Trek, obviously lacks understanding of the individualism that still exists in this world, as evidenced here.

We have millions of external inputs stimulating our thought processes today. Is it any wonder that we have serious misfires and mental overloads that are taking place all around? These massive amounts of inputs may be the result of technology and progress or it may be that there is an attack on the system we've all become accustomed to and grown so comfortable with, but for whatever reason, it's a phenomenon that appears to have gripped the whole world.

I have come to the conclusion that, in general, we as a people of this world, not just the US, have become the products of shock treatment and it has caused us to be emotional reactionaries as opposed to logical thinkers. Obviously some are not affected at all and some are less affected than others, but there are many out there who are affected to the extreme. I call it hyper-sensitivity. The mettle that keeps our integrity intact has eroded and given way to hysteria, as Aragorn III cautioned earlier at this site, to not become too paranoid. These are not his exact words but that was my take on the subject. However, I can see, at least from my perspective, how easy it is to lose site of anything to hope in when so much confusion abounds. Consequently that seems to be the very reason we are all here, at least when we talk about the hope in the economic world, gold does offer a stand in one area of so many great odds.

Which brings me to the whole jest of this long-winded dissertation. I tell my employees that "Perception is everything!" As you have read this story, you have formed a perception of me. Likewise I have a perception of what I've written, as do you. Then there is my perception of how you will perceive what I've said�confused yet? Precisely the point! We not only need to have a grasp of the language being used along with all of its slang, but we have to have an even greater understanding of the logic that the writer is implying. Along with every written text goes some application of logic. If the writer incorporates it but the reader doesn't process it and he reacts because it felt like a personal attack, well, I think we can all assume what will happen next.

As I do with my own family, I do here, demonstrate objectivity by separating the comments made by the individual saying them, from what may or may not be their emotional reaction and then display integrity by not reacting with hyper-sensitivity. This forum has grown from diverse personalities and social environments. Some of us know a lot about gold and economies while others absorb their thinking, however, others know about other things and we process the two worlds of information and hopefully everyone can come away wiser for the sharing of this information. As it continues to grow ever wider, I encourage everyone, including myself, to spend more time processing than we do reacting. Have a perspective that offers objective thinking as opposed to subjectivity. It seems that there is a lot of quick jot type communication that goes on here and that often times leaves gaps in what is actually meant. So a greater amount of thought is required when interpreting or more description of what is meant must be written. Especially when communicating in the arena that involves the personal side of issues.

I will preface this�neither person nor article written at this post is under scrutiny or personal attack in this document. As so many of you bring expertise to this site with the knowledge you have of the world currencies and economies, I just wanted to emphasize what it is that keeps a good discussion going�.Objectivity!

Objectivity�..we all need it.

http://biz.yahoo.com/apf/990902/economy_4.htmlYou may recall that it has been the expectation and realization of increasing worker-productivity that Fed Chairman Greenspan has said allows for economic boomtime without price inflation. Say goodbye to good times.

http://www.usagold.com/HathawayPyramid.htmlYou will be a master of your universe if you read the link above which is the latest addition to the USAGOLD GILDED OPINION. I also recommend you read Sir FOA's post yesterday evening (the one directed to Sir Peter Asher.)

If those still don't completely answer your questions, try also reading the Hall of Fame page posts of Sirs Ari and A-III. To get there, click the link atop this Forum page.

I think this small collection of posts could be packaged and marketed as "The Economic World of Gold in a Can."

Enjoy your homework. You'll be the king of your neighborhood in the end.

http://biz.yahoo.com/apf/990902/retail_sal_3.htmlThe U.S. year-long shopping spree continues as expected.

http://biz.yahoo.com/rf/990902/tg.htmlRemember what I said in the earlier US Worker's Productivity report?
Here's a direct consequence--a rising euro:
"According to this data you and I are costing more money to do less work -- (Federal Reserve Chairman Alan) Greenspan's worst nightmare." This was said by a currency strategist in regard to further fears that the Fed would be inspired to move rates higher.

http://biz.yahoo.com/rf/990902/wl.htmlRead this to see why "IMM currency futures mostly higher early" as the headline so claims.

Peter, in you post #12641 you inquired about the paper price of gold going below the spot price. This of course would cause backwardation which is defined by the forward price of gold being lower than the spot price. I think the problem with using backwardation as a signal is that the spot POG is determined from paper gold transactions (thanks for this reminder, FOA). As FOA has also pointed out, the very people who set the spot prices are closely connected to the shorters or are short paper gold themselves and that they are not inclined to "hang themselves" with a paper rope that they fabricate in their own paper factories.

So, how is this going to unfold and how will we know it is happening? What will be good signals.

Often, we have heard it said that the high lease rate is the thing to watch. I would modify that slightly by saying watch for a PROLONGED high lease rate that is going to make the short rollovers painful or impossible. If lease rates stay high for six to eight weeks then that won't be long enough. they won't catch enough of the short rollovers. But after three months, or longer, many rollovers will be affected by high lease rates.

Also, if the lease rates stay high and you see a steady rise in the POG or a rapid and large spike in the POG then I would imagine that such a combination would be very painful one-two punch shorters to the shorter under-belly.

Probably, someone more astute that I could also comment on watching the forward rates and LIBOR. Certain combinations of these two numbers with the lease rate might be more painful to the shorters. Unfortunately these combinations are out of my narrow region of familiarity.

When the stock market fell in 87, it is my understanding that gold stocks fell with the market and only later rose. Apparently funds, that held gold stocks as a hedge, sold them early to increase their liquidity as the market dropped. A flight to gold quality occurred later. If this repeats in the coming market correction then we could see the paper POG drop early on and this could help the shorters cover provided they can find the physical they need or do some fancy cash settlements.

My take on this is that if you are long on physical, like I am, you have to be prepared for the emotional battering you might take when the price of paper gold plummets. I say I can handle it and I talk big now but I don't look forward to it. I am in this for the long haul so I will grin and bear it but that does not mean it will be easy.

I am grateful to FOA, Aristotle, Aragorn, SteveH, The Stranger, and so many others who are in a perpetual quest for understanding rather then making a quit profit.

Today's report pretty much ices the cake as far as inflation is concerned. For months, the disinflationists argued that productivity growth would continue to offset wage growth. Now, they have proven to be just as wrong as I have said they would be. Second quarter productivity up .6%, wages up 4.5%.

So far, the frustration for gold investors has been that the media may have turned away from deflation stories, but they now talk about the threat of higher rates while seldom mentioning the reason for the higher rates - INFLATION. This will change VERY soon now, thank goodness. After all, telling Joe Blow we are headed for higher rates without explaining why is hardly conducive to precious metals demand.

As to the U.S. economy, don't make the oft-repeated mistake of expecting a meltdown here. Further increases in commodity prices and better relative performance by cyclical stocks is telling you that things are picking up, not slowing down. The cheaper dollar and an improving world economy are now combining to give American exports a kick in the butt. Labor shortages and higher wages lie dead ahead. So do higher import prices.

Unfortunatly (or fortunately for gold bugs) higher bond yields are dead ahead also. No sane person is going to buy a 6% 30yr. bond if inflation is running at 5%. This plus the rejuggling of markets formerly priced for deflation plus y2k nervousness is our ace in the hole.

http://www.garynorth.com/y2k/detail_.cfm/5971The worlds currencys are in sad shape with this article from the New York Times wondering if debt default is iminent in Japan? i had no idea of the magnitude of Japan's debt until i read this article..... Soon some of the worlds wealthy will see Presious Meatals as haven of last resort they may also realise that it can't be just on paper....

Have i told you today how much i like your posts......sooo profesional..lots of info from so many places...Thanks..

Sometimes I think it is hard enough trying to figure out U.S. markets
without having to understand what is going on in Japan. But here is my
attempt to address the concerns raised by the NY Times:

Barring something unforseen occurring (or some better opportunity
arising) I am inclined to hold Japan for awhile. The only thing that really
scares me at the moment is Y2K. I don't know how well they are prepared
over there, so I wonder. But, so far, I have seen no stories about Japanese
insider stock sales, which would be a warning sign, so I am having faith
that there is no shock approaching.
Yes, Japan's public debt is scary. But, it was just as scary last
Winter when I bought into their market. Their stocks are number one in
performance among the Big Seven so far in 1999. The government made the
mistake of trying to spend their way back to prosperity all through the 90s.
Robert Rubin and Alan Greenspan both warned them repeatedly that it would
not work. After all, isn't deficit spending exactly the weapon America tried and
failed with under Roosevelt when circumstances were similar here? But, no,
the Japanese wouldn't listen, largely because the alternative was corporate
restructuring (means laying people off - a no-no in Japanese society) and
rapid monetary expansion, which was deemed too inflationary (remember, Japan
had just been through an inflation bubble in the 80s).
But this year things are different. Japan's stock market is now strong
because they are finally biting the bullet. Unemployment is growing, yes,
but it is precisely because corporations are restructuring. This creates
economic dislocation in the short run, just as it did in 1980s America.
But, in the long run, it is absolutely essential and highly beneficial.
Furthermore, while public spending is still at very high levels, the Bank of
Japan is now printing the money to pay for much of it. Such action may not
sound kosher, but, remember, they have been fighting deflation over there. Flooding the banks with cash, providing it is done responsibly, is
actually a good idea. You may recall we have been doing the same thing in
the U.S. lately. If we weren't, I am sure the dollar wouldn't be so weak
against the yen.
Long rates in Japan are at about 2%. Short rates are almost zero.
That is where the N.Y. Times gets their 60 times figure. There is nothing
unsavory about this. Actually, I pine for higher long rates in Japan,
because when we see them happening, we will have our first clear indication
that the deflation threat is over. As far as the Moody's rating....I
bought Japan BECAUSE they are having tough times. As long as they continue
to take the appropriate actions, I see no reason to sell.
So, you see, Goldspoon, I still feel pretty good about the Land of the
Rising Sun.
Thanks for bringing this up. I hope my response is helpful.

Poor MA...
Republic New York Unit Probed

NEW YORK (AP) _ Republic New York Corp.'s securities
unit is being investigated by federal prosecutors and bank
regulators for allegedly inflating the value of assets of
an investment fund that catered to Japanese investors.
The banking and financial services business has
suspended James E. Sweeney, chief executive of Republic New
York Securities Corp., and replaced the management of its
futures trading division.
Worried investors sent shares of Republic New York
down $7, or 10 percent, to $62.37{ in midday trading today
on the New York Stock Exchange.
``Republic has advised the relevant U.S. regulatory
and law enforcement authorities and ... is working in full
cooperation with them,'' the bank said in a statement late
Wednesday.
State banking regulators declined to comment. A call
to the U.S. Attorney's office was not immediately returned.
Republic New York is in the process of being
acquired by HSBC Holdings PLC of London for $10.3 billion.
The investigation could, at the very least, delay the
closing of the deal, according to executives.
While Republic New York would not name the client
involved in the investigation, a person familiar with the
investigation confirmed it is Princeton Global Management
Co., a Princeton, N.J., investment fund popular with some
large institutional investors in Japan.
Japanese investors may have placed as much as $1
billion in Princeton Global Management, according to a
report today in The Wall Street Journal.
The firm's phone number is unlisted, and executives
could not immediately be reached for comment.
The alleged errors were discovered in May by Japan's
Financial Supervisory Agency, which searched the offices of
a company called Cresvale International Ltd., which is an
affiliate of Princeton Global Management, according to the
person familiar with the investigation.
The Financial Supervisory Agency then contacted
Republic New York and asked for information about the
business between Princeton Global Management and Republic
New York Securities. Republic said that led it to
investigate and to contact U.S. authorities.




What's this going to do to the markets...?

http://cnnfntech.newsreal.com/story/19990831/16/05/5629915_st.htmlFor The Stranger and others wondering about Japan..."Japan's lack of Y2K readiness poses a serious threat to the stability of the world economy."

http://www.gmt-2000.com/news/press/pr23081999.htmThanks for the insight on Japan, it's always good to hear from those who have money invested and done their homework.
i found this post yesterday on Japan and 2kay, this article is being picked up today by some of the major press.
One reason the Yen has stalled today???

http://www.pei-intl.com/SEMINARS/0899int.htm... of Martin Armstrong, here's a recent interview with the man everyone *looooves* so much.

Kinda long, but innersting, Larry.

Apologies if this link has already been posted.

With the article you published, LTCM, Russian money laundering and South American defaults it sure shakes one's confidence in financial instiutions...
i'm afraid when the digging is done on the Russian money laundering it will be like a crack in a windsheild....it starts out small and then turns into the energiser rabbit...

Thanks for the link. I hadn't seen this article, yet, so both of you get brownie points for being so well informed.

Seeing how they are going to address problems of this magnitude in so little time should be interesting.

http://www.worldnetdaily.com/bluesky_nyquist/19990902_xcjny_death_repu.shtml... by J.R. Nyquist, from over at WorldNetDaily.

Spooky parallels.

http://biz.yahoo.com/rf/990902/0t.htmlThis is odd. Despite the clearest writing on the wall of the U.S. Congress, the IMF is counting its chickens before they hatch, still wrangling over the details of how to go about selling gold in a fashion that won't disrupt the market price. We all know well enough by now how gold is priced. This concern is little more than posturing because the maarket could absorb it within three heartbeats. The element of this story that is so telling is the sheer desperation that is apparent at the IMF. Essentially they are broadcating, "This gold must move in a certain direction or else we are in for stormy weather."

Note the standard negative rhetoric by the professional Swiss bullion trader at the end... What a clueless wonderchild.

Thanks! A note worthy comment from the article...
MA: And that's the real reason why this thing is just dragging on. I am seriously afraid that we are looking at a major financial debacle, particularly next year in Japan. The postal savings fund�I've said this many times�it is insolvent. The western press still hasn't picked up on this. The Finance Minister testified before the Diet in February. I was there. This fund is insolvent. It is the largest fund in the world�some 10 trillion dollars�and it's broke. The redemptions start next year. Obviously they don't appreciate me going around saying this.

BS: There's too much advertising in the western press for them to say anything. Advertisers decide what the press is going to report�I don't care if it's the New York Times, LA Times, Washington Post�it doesn't matter. The big advertisers decide what's going to go in the paper. I found that out myself.

MA: Japan will have no choice but to monetize to get out of this depression�the same thing that Roosevelt did. Roosevelt devalued the dollar by 69% and there is no other way out of this without doing that.

BS: How are they going to do it? Only because they aren't doing it now. I mean the yen is getting even stronger. It went from 115 to 114.

MA: The yen could get stronger. I think the worst volatility since the 1931 problem. When I first started doing research I read Herbert Hoover's memoirs and he was talking about capital rushing from one currency to another so fast it was like a loose cannon on the deck of a ship in the middle of a torrent.

BS: Boy if he were only alive today

BWAHAHAHAHA!

(I know, I know... Unwarranted, premature, ungentlemanly, juvenile, fit for Kitco, completely unworthy of a follwer of Another - but man that felt good to get off my chest!)

It remains to be seen what if anything transpires from this news item. However I _suspect_ it _might_ become the prototype for many more similar news items in due time. The structure _could_ be something like this...

1.) Discovery by some far away regulatory agency of "irregularities". Yes it is true that said regulatory agency is widely known for hiring only the blind and deaf. However, after loosing too many personell down some bottomless pit decides to act.

2.)Local regulatory agencies dragged in screaming and kicking by financial institutions mortified by possibilities of financial collapse and resulting lawsuits against directors.

3.)Discovery of massively failed investments in various commodities.

4.)Revelation that investments were based on irrefutable evidence that said commodities were fundamentally over valued, being "anachronisms" that were in their final death spiral.

5.)Further revelations that supplies of said "anachronistic" commodities had dissappeared and that consumers of the "anachronisms" now discover that they are in a massive supply crunch, resulting in default, bankruptcy and other assorted unpleasantness.

6.)The US Fed intervenes frantically to prevent contagion and to stablise the system.

7.)The Dow has another record day moving up 500 points at the close.

Awhile back, someone published a commentary decrying the state of the youth of today. It was a spot on accurate description. The punch line also was that it was a quotation from old Rome.

Regarding the article you posted, do you suppose that, to 9/9/99 and 1/1/00 (oops, 1/1/2000), we should add 3/15/2000

Sounds plausible, Sell on good news, buy on bad,right?

With Howlloween treats already in the store i couldn't resist....Boo!!!

It's the new paradigm, Peter. ;)

Dear FOA: This morning I printed out your Comment on PH's post of yesterday. It took 2-1/2 pages single spaced. Yesterday you wrote how many, two? long posts to us. You must spend many hours each day writing these notes for us, with no compensation and no real recognition. I want to thank you for your hard work and let you know that everything you write is read and studied by many, many people (probably thousands). Some of us may be slow studies, but the frequency of your letters to us and the way you cover topics over and over in the light of current events and new ideas is definitely having an impact. Thank you, FOA!

P.S. I imagine the "secret message that will make us rich" is: BUY PHYSICAL and STAY AWAY FROM PAPER, right?

When you post an article as GOOD as that one was, it is recommended that you accompany the info with the simple phrase "Must Read."

Now you know, and so do the others. Check it out.

http://www.sunday-times.co.uk/news/pages/tim/99/09/02/timfgnfar01003.html?1996766Ready to threaten us to stay out of comming war.....

I posted this question earlier. Is this subject so shrouded in mystery? Could someone enlighten me?
I am trying to figure out what this gold leasing thing is all about.
When someone leases gold from a central bank, do they take possession of it or is it all just on paper?
What are their rights that come with the lease?
Can they lease gold and then sell it?
When you lease gold, you don't own it do you? What do you do with leased gold? What happens when the lease is up?
I would appreciate any help on this subject
Thank you
Michael Hipple

Don't know very much about this. My understanding from what I've read onthis site is that physical gold can be borrowed at a cost of so much interest a month. Yes, it can be, and is, sold. This is somthing I never could understand. How can you give good title to something you don't own. Yet this is indeed the practice. At the end of the lease period, the physical must be returned. In the interim, the borrowed gold is sold and the sale proceeds are reinvested i Treasury obligations or other debt instruments that yield a return higher than what borrower must pay for the lease of the gold.

Dear Hipplebeck:

Your question is an important one that has been analyzed and commented upon since before this site was born. Even so, many of us do not pretend to understand all the implications and ramifications of it.

In any case, you will find all you are looking for in the archives. There is also a wealth of information over at Gold Eagle (if you can find your way through the poorly-organized labrinth over there.)

Good luck! The answers to your questions will illuminate the whole subject of gold.

As of August 24, 1999, released at 3:30 p.m. on August 27, 1999, the commitments for COMEX gold futures showed commercial insiders long 124,090, short 68,671; speculators long 16,211, short 75,298. Small traders were long 36,478, short 32,810. The average historic ratio for commercials is 2:3 long to short; for speculators, 2:1 long to short. Commercials were thus net long 55,419 while speculators were net short 59,087, which represents a modest improvement from two weeks earlier. This indicator remains STRONGLY BULLISH.

This info is best used by buying gold when the insiders are long and speculators are short..........and vise versa...

In follow up to Hillary's shorting gold just before BOE sale in her "blind Trust" ..did anyone catch the Bloomberg story on the "5 people assested in Croatia for telling the press about Hillar's offshore bank accounts" ..where do you think the money is comming from to purchase a 1.7 million dollar home in NY..furthermore the hollywood croud is shorting gold
and feeding it back to the Clintons legal defense etc..

Thank you, gentlemen,
It seems there is some mystery here.
I am going to study more ( gold-eagle and the archives)
I have a feeling that this is very important
Michael Hipple
Hipplebeck@aol.com

Peter Asher (9/1/99; 22:56:08MDT - Msg ID:12641)
FOA #12639
Thank you for devoting so much writing time to your response. I understood all of it quite clearly. I realize that the operational words are "Cash settlement."

Peter, we talk again! Your comment:

-----One question, regarding your <<< I believe that in fits and starts, all paper gold (any comex paper outside of spot month) will be sold down. Driving the perceived physical price lower until no more can be delivered. >>> That event would show up as "backwardation" which is regarded as an extremely bullish factor. Would that not trigger a definitive reversal, giving birth to a runaway upward movement in the spot market?--------

You are right, if we use our past gold trading history as a guide. The problem is that there have been only a few full cycles in the gold market. And, just as I offered before, the market has "evolved" after each go around. It's not the same animal most gold bugs started out with. Using the past "probable reactions" of traders to what were bullish signs on established markets then, could send one into trouble today. Look at how many positions were established these past few years, only to see traders reverse and pull out over and over again.

I think, the first time that Comex can't deliver, all future months will be called into question. Most likely, the officials will "Bunker Hunt" the exchange long before anyone knows what's happening. Let's face it, no one has ever seen Comex react when there were almost 500,000 OI contracts on
their option side? Not to mention a world full of derivative contracts looking for relief!

Your call my friend! I'll be watching if you (or anyone else here) want's to try and ride it. I agree with Leigh's take on this (hello and thank you Leigh) , " stay with physical"! It will pay off more than you could spend anyway!

------One thought I am still wondering about, was my conjecture that the apparent motives of Gold carry profits, politically driven debt bubble controls, Central Bank cash needs and collusion driven short sale profits, while all true, could be lesser activities behind a plan to corner most above ground gold and to acquire the ownership of many of the mines.-------

I'm not going to head into the political issue until finished building the basic mechanics of this. It's too confusing not to have a springboard of thought to jump from. I need that background so as to dodge the bullets. I'm smiling as I write this because some out there put an extra shell in their gun every time I write this analysis of Another. Crossroads #12665 wrote a good piece about how we
all see things (hello CR and thanks for the repost). One of the reasons I write the way I do is because I am "born in the USA" and still retain a true "Western view" of things. In other words, I know how some of these conceptions came about and how people will mentally fight to retain that
view. In essence, Another sees that sometimes it's better if hard riding hombres don't fully understand your concept as your words relate it. In the end it still aggravates them enough that they study it hard to find every flaw to throw back at you! Welcome to the new age school of advanced education or is it "if you build it they will come to destroy" (smile)! Just shows you how different worlds think. Oh well, I don't intentionally try to be vague, as it's a very complicated subject.

Peter I'm saving this and will get back into the oil gold politics later.

I may be here over the next few days? Or may not? Thank everyone for contributing (TownCrier, you're the best) FOA

http://news.excite.com/news/r/990902/19/health-bioshieldI believe we should keep an eye on this.

cananami! any comment?

There was lively action to report on all fronts, and amid tearing out hair to report on it all, we'll hit the high points and let you fill in the details reading the assortment of news and financial articles posted throughout the day.

The biggest and best news would be that the Round Table itself seems to be glitch-free and sailing along smoothly. This is a trend we hope continues!

Wall Street got off to an ugly start with big losses posted at the opening bell. Big losses were slowly trimmed to moderate losses on the market indices. Weighing on the markets were comments by Fed Governor Edward Kelley in an interview with Market News International in which he said we shouldn't rule out an increase in interest rates again this year by the Fed. The Labor Department's report on productivity (defined as the amount of output for each hour of work) increased at an annual rate of 0.6 percent in the second quarter (April-June). This was well below the 3.6 percent rate in the first quarter. Hmmmmm...must be a growing batch of day-traders out there. Anyway, employers are apparently paying more for less work. Unit labor costs rose at an annual rate of 4.5 percent during this same second quarter. This development will surely give the Fed Chairman a fitful night's sleep.

As said, the stock indices suffered moderate losses after gaining back much of the initial morning plunge, but the market internal stats were ugly. In all stocks, decliners lead advancers by a 2-to-1 margin, and on the NYSE 115 issues set new 52-week lows with only 23 reaching new highs.

In the wake of Mr. Kelley's statement, the 30-year bond lost 20/32 in price, pushing the yield up to 6.141%.

After a level performance overnight, gold hit the New York streets running. It knew only one direction all day, and that was up. Interest in gold contracts pushed the December gold futures (GCZ9) through the range $255.30-$257.00, ending off the high at $256.7, up $1.10 on the day. NY spot took the cue and was quoted at $255.20, up $1.50. At some point, spot gold will no longer be the passive dance partner in this blissful carnival of dreams (Blissful, that is, to all of us aggressive physical gold buyers.) The day will come when Spot will lead the dancing, but will also call the tune. We might be starting to see the first signs of this now...check this out. We haven't paid too much attention to the gold lease rates in these closing reports, but smoke signals from The Castle got our attention. "Horses...approaching... ...bring... ice-cream..." No, wait, my smoke-signal deciphering is a little rusty.

If I read my signs right, it would appear that there is an increasing demand on gold, pressuring the "here-and-now" moreso than the "sometime-around-the-bend." Gold lease rates increased across the span of time, with the biggest move for the one-month lease rate...over .55%! That's big. Expressed as an annual percentage rate, the one month lease rate is at 3.878%. Further out in time the annualized rates diminish, a condition we are quick to note is not present in the other metals. This is indicative of strong short term needs...it would seem that someone can't wait for the September 21st UK auction.

Looming in the gold market future is the jewelry manufacturers buying season which typically starts after the US Labor day holiday and lasts through mid-December. Coupled with increasing U.S.-led Y2K demand, and growing concern over bursting bubbles...

What's that you say? You don't believe in bubbles? Give this Reuters report serious consideration where they interviewed Nobel Prize winning economist Milton Friedman. "The U.S. stock market exhibits some of the characteristics of a bubble. If this turns out to be true, then the United States will experience a deep collapse of the stock market. That would be a true danger for the continuation of the unusual economic expansion of the past nine years." Friedman said that the current U.S. stock market exhibited uncanny parallels to the U.S. market of the 1920s preceding the great crash in 1929, and to the Japanese market in the 1980s before their collapse.

The horses are on the track...

Gold's strong performance today tossed aside the desperate bleatings of the IMF in regard to their *need* to sell some gold. IMF spokesman Thomas Dawson told a news briefing that the IMF hopes to have a board level resolution on how to conduct this gold sale operation without disrupting the gold market at some point prior to the annual meeting of the IMF in late September. He said because of the initial oposition, the IMF was "looking at a wide range of options including what are termed off-market transactions" which would most likely result in the IMF selling its gold in private transactions to central banks. All of that planning and deliberation is a wasted effort if the U.S. Congress holds firmly to their prevailing oposition. I guess this is another sign of the falling productivity as reported by the Labor Department!

Busy day at COMEX depositories, particularly at Republic National, where 3/4 of their entire Eligible gold inventory was wheeled under armed guard right outta there. Destination unknown. This was no small operation; the departing gold tipped the scales at over 2-1/4 tonnes. When you add in the Eligible inventory at Scotia Mocatta, the day started with only 5 Eligible tonnes in COMEX possession. We'll wait and see if this Republic gold resurfaces at Scotia tomorrow. (It's happened before.) Or maybe it's gone for good.

And that's the view from here...after the close.

I will attempt to summarize and perhaps bring out a few points that are not generally discussed. Please bear in mind that I am just a long time observer and certainly do not have any inside knowledge or connections.

Firstly, most gold leasing is alleged to be done by bullion banks. No mystery about this, at the end of the day they are just like the bank down at the end of the street.

Bullion banks take deposits and can lend out the gold. USUALLY this gold is sold for cash and then later a truck shows up with a pile of the physical to pay the loan off. This has become popular, allegedly, because of very low interest rates 1-3% annually. Basically peanuts. The fees probably cost more.

In recent years, it has been alleged, the bullion banks have got a large infusion from central bank leasing. At the end of the day, the end result has been the same as it would be for the bank down the street - currency devaluation. If a central bank dumps a load of new money into the bank down the street interest rates drop (large inventory to move) followed at some point by inflation (currency depreciation due to more dollars chasing the same swimming pool). And so it is for gold. Low interest rates (1% per year at times) and a depressed price.

Now it gets a *little* murky at this point. There are a number of *wrinkles* that have to be considered.

1.)Where does the bullion actually go? Since the intent of most, if not all, gold leasing is to convert the borrowed gold for cash, the actual bullion does not have to leave the premises of the bullion bank, theoretically. That is, the borrower simply sells the bullion back to the bank and walks out with a cheque and a low interest rate. However, the bullion bank has to come up with the money somewhere and it makes no sense to borrow cash at 6% (say) to lend it out at 1%. Especially to dubious credit risks like mining companies on the verge of bankruptcy or high flying hedge funds.

Because of this, it is *assumed* that the bullion actually does leave the premises to be sold to third parties that eventually send it off to coin collectors and farmers in asia - never to be seen again.

2.)How will the loans be paid back? With more gold being consumed every year than what is mined, and with the miners slowly but surely going broke, it is widely assumed that every ounce sent out by the central banks will never ever return.

What does this mean? It is widely assumed that the central banks will have to write these loans off. It will be hard for the Brazilians, for instance, to confiscate gold held by indonesian farmers. If it is not politic (being *very* droll here) for the central bank to announce that they lost all their gold through bad loans and general incompetence, then it is widely assumed that the central banks will paper over these bad loans by calling them "sales".

3.)Who are the major borrowers? It is generally said that the major borrowers are miners and hedge funds. As long as the miners can stay in business (big if here) it is felt that they will pay off their loans. There is no way the hedge funds can pay back their loans unless they buy gold held by the Indonesians, etc. It is generally assumed this will only happen by a huge rise in price, causing hedge funds great losses. It may be that the hedge funds are waiting for the day that the central banks capitulate and will accept cash rather than bullion.

One could chose to see the leasing game as kind of a game of chicken where the hedge funds and central bankers are waiting to see who will blink first. It is widely assumed that they central bankers will blink first.

4.)Does all of this mean that gold will go up? Not necessarily. At least not right away.

Firstly, sharply rising gold prices in a currency is a widely acknowledged sign of a failing currency. Because central bankers are supposed to be the custodians of the currency they will try to avoid this. In this sense they are in the same boat as the hedge funds. They both have an interest at this stage of the game to keep the price down. Firstly, it will justify the central bank "selling" a useless, depreciating asset. Secondly, the hedge funds will be able to cover their loans and stay in business rather than dragging down several banks in an ugly bankruptcy or bailout.

Unless something changes, all the gold miners will go broke and the farmers in indonesia will start bidding up the price to get it from the coin collectors in the western world and vice versa. Likewise for jewellery.

5.)Does this mean that I should avoid gold and gold mining stocks? You probably should avoid the stocks for the time being. Gold is locked into a death spiral not of its own making. The mining companies are on the short end of the stick and that is that.

Depending on your time frame and your general market outlook you may want to buy physical gold at these levels if you think that some day you will be able to sell it to that indonesian farmer for a lot more than what you paid for it.

6.)Excuse me, but why do I get the sense that it is more complicated than this?

Probably because it is. Based on what I have written so far, one would be lead to believe that the only people in the world who are interested in owning physical bullion are people who like jewellery, farmers in asia and a few *cough* eccentric small investors and survivalists.

I would say that certainly is the official view taken from the pages of the Pravda's of the world. However, there *may* be a few others.

6a.)Big Asian money. If a little guy in indonesia can make a fortune on his gold and buy more rice paddies and cattle, what about the big guys?? It is inconvenient to buy a chip fab with bullion. A cheque is much, much more easy. Also, you get less sniggering from all those western bankers you have to do business with. No one wants to be seen as a nut, even if you think you *are* fabulously wealthy.

6b.)The Asian Financial Establishment. Woa! Didn't you just imply that these guys might think that gold is "quaint" like everyone else. Yes, I guess I did. I don't know for a fact but I would guess that they would laugh at holding this stuff just as much as any other Harvard graduate.

However, they have another problem. Right now they hold a lot of american dollars as reserves that are supposed to be a foundation for their economies. This means they are loosing control of their economies to the US Fed. Aside from nationalistic feelings it is alleged that the asian establishment does not like this because they do not necessarily, ahem, with american policies. With distinguished retired politicians stating that that the american markets are in the hands of "psychopaths" the previous sentence is probably understated at this point in time.

There are three alternatives to the US dollar for widely held currencies: the yen, the euro, and gold. The problem with the yen and the euro is that they are the currencies of former colonial powers in those parts who actually *were* psychopaths in many instances. Some choice.

Gold is the only standard that is politically neutral that has any credibility.

The reality is that they are currently too intertwined economically with the US to make major changes at this time. If the americans really are psychopaths and their bubble pops, then there may be a case to be made. Please note that this does not prevent asian central banks from accumulating the stuff in anticipation of that fine day. The chinese central are alleged to be major buyers.

6c.)The European Financial Establishment. On the one hand they are very much in the same boat as the asians. No one likes seeing their economies being dollarized at a time of an all time historic market bubble in american financial assets. On the other hand they have their own "psychopaths" to worry about: the LBMA, bullion banks, hedge funds, etc.

It is alleged that the french and germans are very attached to their gold and will not part with it. However, we have recently witnessed the Swiss approve dumping some of their stuff in a national referendum and so I think this point of view has to be really questioned. I would not be shocked if the bullion desks of their central banks already have.

6d.)Others. In the early days of Kitco there were allegations of big Chinese money playing with gold in a huge hidden international market. At the end of the day there is no way to validate the existence or size of this market.

The famous Another and others have postulated that some oil producing nations are accumulating a small portion of bullion as part of their oil sales. Again there is no way of confirming this or what may have happened with any gold they may have accumulated.

Peter,

I did some defamation law in law school, and a little bit in private practice, but I haven't touched the field in ages. I know there are some differences between Canada and the U.S.. Generally speaking, Canada is more plaintiff-friendly than the U.S. when it comes to defamation law - i.e., it's easier to sue people, though the level of damages probably won't be as high. At a site called stockhouse.com, some posters to a stock board are being sued for negative comments. Some other posters claim it's a way for the company (a junior on the VSE) to raise money. We watch together as internet law evolves, and is defined.

A couple of editorial corrections for my previous post.

"because they do not necessarily, ahem, with american policies" should read "because they do not necessarily, ahem, agree with american policies"

The last paragraph: "The famous Another and others have postulated that some oil producing nations are accumulating a small portion of bullion as part of their oil sales"

should read: "The famous Another and others have postulated that some oil producing nations are accumulating bullion as a small portion of their oil sales (which could amount to a large portion of bullion by now)."

Sorry Another.

Republic National Bank of New York is one of the highest rated commercial banks in the U.S. Its wholly-owned Republic Mase Division provides corporate and project loan facilities and metal trading facilities to North American and foreign mining companies. Republic Mase provides a broad range of loan facilities from corporate revolvers with the largest North American producers to working capital loans for emerging producers. Banking staff is located in New York, Denver, Sydney, and Perth; and projects being financed by the group extend beyond North America and Australia to the CIS, Africa and the southwest Pacific.
Republic maintains one of the largest precious metals trading desks in New York and historically has been a major counterparty with central banks. fabricators, and commodity funds. In addition to New York, trading operations are conducted in Hong Kong and in London, where Republic is one of the five fixing members of the LBMA. Republic is a market-maker for a full range of gold and silver trades, from spot and in-process sales to forwards and options.

Sorry about this.

"Low interest rates (1% per year at times) and a depressed price." should read "Low interest rates (1% per year at times) followed by a depressed price."

For some reason, I'm sadden today with what I hear our (US) government MAY have done. THIS government in particular, THIS president specifically, gives me latitude to question the words in that song that came out during the Vietnam War, 'proud to be an American'. I'm not sure any more. I suspect this president may bring shame to the US up until the day he leaves office.

A friend of ours left the USA years ago to live on Grand Cayman. They've wanted us to move there. With this administrations track record, my mind is again questioning their offer. Probably would never do it, I love Oregon too much. But, I'm glad I have gold and I suspect it with spend on Grand Cayman. Anyone else not necessarily 'proud to be an American' in light of today's news??

Read all about the Princeton Economics mess. Is it any surprise?

http://biz.yahoo.com/rf/990902/baz.html

For those who may not remember, my fall-out with GATA stemmed from Chris Powell's insistance upon posting Marty's constant lies about gold and silver. I repeat. LIES. (P.S. Hey, Marty, are you gonnna threaten to sue me again, fartbrain? Please do, I'm sure you probably could use the extra publicity hehehehe)

I asked Chris and Bill Murphy several salient questions: is it not enough that gold investors have had to endure daily anti-gold media attacks/canards this past year without adding fuel to the fire by printing Marty's egregious lies about gold and silver on the GATA/Kitco/USA Gold websites? Why would GATA wish to shoot itself in the foot by aiding, abetting, and publicizing Marty's maniacal, distortions about precious metals?

Still, Chris insisted upon posting Marty's BS. That was the last straw for me. So, I wished them the best (I really do) and we parted company.

As I have said countless times in the past, goldbugs are often their own worst enemies. They desperately need to form a united, effective, group strategy (a la OPEC) and STOP SHOOTING THEMSELVES IN THEIR COLLECTIVE FEET TIME AND TIME AGAIN!

Until I see such unity, unfortunately, I remain bearish upon gold's prospects.

Until I see a World Gold Council that effectively sells the value of gold to the world central banks, then I remain bearish upon gold's prospects.

Until I see the CFTC properly discipline Barrick, I remain bearish upon gold's prospects.

Until I see true unity of purpose and compelling polemic from all major goldbugs worldwide, then I remain bearish upon gold's prospects.

For those who have enquired, sorry, I've been busy with other exigencies of life. As you know, I am banned from Kitco (I understand it may be renamed, Squirrelco, in honor of its most prolific poster and guard dog from Dipsville, CO and so I do not check in with the forum as often as I did in the past. Does Mozel no longer post? No doubt he failed the Squirrel test of merit too).

Good luck to all.

Thanks

F*

Excellent commentary today, Sir Town Crier; the 'pace' of your report was exciting.

One week ago I sold all stock, zero paper, 100% cash, and am waiting for a clear sign.

November 25 is golden day.

Canuck.

Good evening gentlemen. First I would like to thank our gracious host, Mr. Michael Kosares, for this Forum where the great and small can gather. I would like to thank all posters, both learned, and unlearned, for sharing their insights, observations, and questions.
Everyone here I'm sure thinks and/or knows there seems to be a coming short squeeze, unless there is some hoarded gold, or unless the shorts can hold some country's citizens up by their heels, and shake them upside down vigorously, until all their gold suddenly gets auctioned off by their central bank, to protect the shorts.
It appears that their is a control play starting, with certain parties who depress the price, then let mines fold up, and then take the deed, which strengthens their monopoly. Trash the paper, and buy up that yucky, obsolete, archaic yellow stuff, while its cheap.
Assuming that our system of paper selling doesn't totally collapse, and assuming that our paper money doesn't totally collapse, there doesn't seem to be enough gold to cover all the contracts written.
And now looking to the fall, we see seasonal gold consumption historically rising after Labor Day, and continuing until Christmas, lease rates going up, A.G. throwing out bear signals on stocks, strong demand in India and Asia, mine(s) closing, Y2K fear approaching, possible Y2K reality approaching, high employment, high oil prices.
So it seems like the shorts are shoveling s**t (can you say s**t on this site?) against the tide, trying to keep the prices down, as we head into the fall. Could it be that they have played their hand as far as possible, and now they are getting set up to control as many mines as possible, hoard as much of that cheap superstitious yucky stuff as possible, and take their mits off the price, and let it soar?
My big question is, what is best to put ones hard earned value in? If I had a ton of cash, I'd buy physical. Well, actually, I may buy physical in dribs and drabs, anyway. But what about the XAU? Which gold stocks wont go up because of forward selling by the mine? Which are positioned to climb? What about options? Is the paper system still gonna be around when the s**t (I use that word too much) hits the fan?
If I have made mistakes in this post, please excuse them, because I'm new at this, but please point them out if you have time, so I can learn. If there is any thing truthful here, it is certainly not my own thoughts or research, but only a re-assembling of others work, to whom I am grateful.
-elevator guy

Yes, it really is a war. Nothing less. It ceased being a mere dialectic when Bank of England set about to destroy gold's value even in the face of suffering a huge loss on their preposterous gold sale.

The Clinton government is patently, virulently anti-gold. They are not trying to suppress gold, they are trying to destroy it as a viable investment class. It's a war.

For that reason, our media presents an endless torrent of anti-gold rhetoric. It is a war.

Goldbugs will only win this war by taking their message outside the cozy confines of thier three or four prominent gold chat forums and actively introducing their concepts into the mainstream of America (Yahoo Chat forums, Silicon Investor, Motley Fool, etc.). It's a war.

For every news article that states gold is headed for the dumpster of history, every goldbug should post at least four posts on mainstream forums explaining why today gold investment makes maximum sense and conversely, why overvalued bond/stock investments pose significant risk. It's a war.

Take the goldbug message forcefully "into the streets." Or else, face the facts...gold will lose and die. It is a war.

Thanks

F*

Help! I am confused. I thought that when a demand deposit was removed from the banking system through an unspent cash withdrawal that a reverse action in the fractional banking system would cause a proportionate reduction in the money supply.

I also thought that when a bank borrowed money from the FED at the discount window that the money borrowed created an asset and a liability of equal value on the borrowing banks books and that the bank could not loan out the borrowed money multiple times as is allowed when a demand deposit is created.

If the above premises were accurate then would it not be true that

1) banks could not loan out moneys borrowed from the FED in multiples as they do demand deposits
2) although the cash becomes available to the bank to cover withdrawals it does not have the type of demand deposit liability to cover multiple loans outstanding
3) banks would have to call in demand loans to relieve the reserve problem that cannot be solved simply by borrowing money from the FED at the discount window
4) no matter how much paper the FED prints to stem the tide from Y2K withdrawals it will not make the loan at the discount window if the borrowing bank in question does not have sufficient assets to support the loan
5) at the point that the FED refuses to loan the Federal Reserve Notes to the bank in need that bank will fail and the dominoes will fall if the controlled press cannot keep a lid on the news


One other question. Doesn't it seem a little strange that the FED announces that it will be making the loans available at the discount window to stem the tide and then follow up by raising the discount rate as it did just recently?

Could some one please respond to help clear up these questions?

HBM

I think that you answered your own question VERY well, HBM !-- The BANK will lose profits and not make the margins that was expected on longer termed loans. -- BUT I shall also bet that the next loan that the BANK makes, the interest rate will be increased to makeup for that loss !
<;-)

FOA thank you again for responding. I've downloaded your and Tom Cat's posts and will probably lie awake in contemplation. "There is an old joke of the "Twist of a famous quote" variety, "Work is the curse of the drinking class" Well work can also be the curse of the Forum poster, just enough time today and tomorrow for the reading. Hope to be up to speed by Saturday.

Canamami, thanks for answering. Freedom of speech versus freedom from slander, The Internet is the new arena.

GDF, a superb essay, welcome aboard!

Crossroads: Really well said commentary on posting ethics!

I'm burnt tonight, guys. I am going to take a dose of Robert Jordan, volume four and crash. ----P.

http://www.lp.org/
From Leigh (9/2/99; Msg ID:12648) Bill Murphy of GATA told about Hillary Clinton, shorted gold financial instruments just before the Bank of England gold sale announcement on May 7, 1999. There is apparently no shortage of insider trading by government officials and a large amount of criminal activity by members of congress as indicated in a Libertarian Party press release that follows:

- From wife-beaters to drunk drivers,
Congress is a crime wave, study says

WASHINGTON, DC -- A new investigation reveals an
astonishingly large number of wife-beaters, drunks, shoplifters,
check-bouncers, business failures, and drug abusers in the U.S. House
and Senate -- which ought to make Americans think carefully before
turning to Washington, DC for moral leadership, the Libertarian Party
said today.

"Mark Twain once said Congress may be America's only
'distinct criminal class' -- and this new study suggests he was
correct," said Steve Dasbach, the party's national director. "If even
half these charges are true, expecting Congress to serve as a moral
role model is like asking Bill Clinton to serve as a poster boy for
monogamy."

According to an investigation by Capitol Hill Blue, an online
publication that covers federal politics, a remarkable number of U.S.
Representatives and U.S. Senators may have spent as much time in a
jail cell as on Capitol Hill.

After researching public records, newspaper articles, civil
court transcripts, and criminal records, Capitol Hill Blue discovered
that:

* 29 members of Congress have been accused of spousal abuse.

* 7 have been arrested for fraud.

* 19 have been accused of writing bad checks.

* 117 have bankrupted at least two businesses.

* 3 have been arrested for assault.

* 71 have credit reports so bad they can't qualify for a
credit card.

* 14 have been arrested on drug-related charges.

* 8 have been arrested for shoplifting.

* 21 are current defendants in lawsuits.

* And in 1998 alone, 84 were stopped for drunk driving, but
released after they claimed Congressional immunity.

Capitol Hill Blue did not list the names of all the
individual members of Congress accused of the various crimes, but did
note that some were "serial offenders" with extensive tracks records
of fraud or violence.

For example, reported Capitol Hill Blue, Rep. Corrine Brown
(D-FL) has a "long, consistent record of deceit," including tens of
thousands of dollars in unpaid bills, allegations of bribery, and
numerous lawsuits against her. And Rep. Jim Moran (D-VA) faces
charges that he beat his wife, has a history of barroom brawls while
mayor of Alexandria, and has publicly stated that he likes "to hit
people."

"With a rap sheet like that, you have to wonder why Americans
expect Congress to solve the problem of crime -- since Congress seems
to be causing so much crime," said Dasbach. "In fact, if this study
is correct, the best way to cut crime may be to lock up Congress and
throw away the key."

And given the obvious economic incompetence of so many
Senators and Representatives, you have to wonder why voters trust
them with the federal budget, he said.

"Here are politicians who routinely bankrupt businesses,
write bad checks, engage in fraudulent practices, and have bad
credit," said Dasbach. "That could explain why the country is more
than $5 trillion in debt, why federal programs are so wasteful, and
why taxes are always going up. Are these really the kind of
economically illiterate people we want to trust with our money?"

If nothing else, said Dasbach, the Capitol Hill Blue
investigation may help puncture the myth that Senators and
Representatives are somehow superior to ordinary Americans, or better
equipped to solve the nation's problems.

"By its very nature, politics tends to attract venal people
who crave power, who want to control the lives of other people, and
who think they are above the law," he noted. "This study makes that
point clear -- and illustrates that when it comes to politicians, the
only thing worse than their voting records are their criminal
records."

AREM

http://www.usagold.com/wgc.htmlTHIS WEEK IN GOLD features the weekly gold market commentary of the World Gold Council's global staff. Click the link above to read about the significant events that shaped the world gold market for the week August 23-27, 1999. Enjoy your research, and hurry back!

http://www.gold.org/Gra/Recent/IMF/IMF_1.htmFor anyone who feels at the mercy of "officialdom" and that their side is at an advantage because they employ all of the sharpest economic thinkers, think again--particularly where the IMF is concerned. Click this link to examine three letters of correspondence. The first is an appeal of the World Gold Council to the IMF to rethink their gold selling strategy. It's an adequate conveyance of the message. The second letter is the IMF's totally unoriginal and uninspired counterpoint response. With the third letter, a rebuttal of the WGC to the IMF letter, Miss Fukuda (WGC CEO) demonstrates that the WGC is not an organization to be dismissed lightly. It is the level of response in this third letter that reveals how weak the IMF letter was by comparison.

And lest you harbor any doubts as to the "official" position on gold, (a rather important one that counts) here's a refresher course on the straight scoop sans subterfuge. Bank for International Settlements general manager Andrew Crockett commented in June "I have the strong impression from conversations taking place at the BIS that gold will continue to play a major part in reserves, and that most of the major gold holders are not contemplating selling gold, so I do not expect there to be major changes in the role of gold."

It's high time for this old geezer to take a break from the world and all its problems --- gold manipulation, Hillary, Waco, Y2K, Congressional crooks, high taxes, the China warmongers, Bill Gates, petty dictators, the Russian mess, people who bush a cart full of groceries through the express checkout, violence on TV and, God help me, the Internet.
Yup, it's time to hightail it to Yellowstone and chat with the bison, breathe air you cannot see and stare a geyser or two. I'll leave it to you experts to keep the world spinning in proper fashion in my absence.
I still don't get it. Why do we have an IMF whose only function is, as far as I can see, to shake down the American taxpayer and shell out gazillions of our dollars to the national crooks of the world? And, if the IMF can buy gold with my tax dollars, why can't I?
Cherrio.

http://www.goldline.co.uk/London AM/PM fix site.

Gandalf the White and anyone else with an answer regarding my MSG # 12712

Thanks Gandalf for the response and insight! It is much appreciated. I was driving at a question, which has been constantly gnawing at me--Is it not true that a local bank cannot loan out monies borrowed from the FED in multiples in the same manner that it can loan out demand deposits? If so wouldn't the following be true:

1) Even though the cash for panic withdrawals is made available through the discount window, the loan from the FED would not put the bank back in the same position as before the cash withdrawal, ie reduced demand deposits mean reduced capacity for the bank in question to make loans.
2) This reduction in demand deposits would in short order force the bank in question to call in customer loans, which are on demand.
3) Under this scenario the money supply would begin to implode
4) When a bank is in trouble the discount window privilege my be withdrawn
5) The fact that the FED has made grand assurance that it would be there when the cash is needed such grand assurance is merely a smoke screen to divert attention from the real issue of the deflationary effect of cash withdrawals from the banking system--the real problem.
6) If the FED does indiscriminately loan these Federal Reserve Notes to any and all banks as they need them and it does not stem the implosion of the money supply yet prices could explode even while the money supply is contracting. As strange as this phenomena may sound it is no stranger than the huge expansion of the money supply in the U. S. with low inflation in everything but financial paper assets.
7) The SMOKE SCREEN is to hide the TRUE FEAR of the FED--loss of control of the money supply.

I admit that using the word FEAR in connection with the FED may be a little na�ve since the FED is not only arrogantly all powerful in its own eyes but also may be orchestrating the whole scenario down to the GRAND FINALLE--the destruction of the U. S. dollar as a reserve currency.

HBM

Regarding gold leasing,
Thank you for responding to me.
I am still studying this subject. There are a few things I am struggling with. I haven't found out the volume of gold leasing yet. I am trying to picture the whole thing. If I lease out a ton of gold at 3% for 1 month, at the end of the month am I to recieve the 1 ton back+ 3% in gold, or does that 3% get paid back in cash or what? If the party that leased the gold from me sells it and invests it, then at the end of the month does he have to buy 1 ton + 3% of gold to repay me? If so, aren't I accumulating gold? Can a person lease gold and repay in cash? If so, aren't I , in reality, selling gold? Why would the lease rate be higher for 1 month than for 1 year? Has anyone out there in forum land ever seen and read a lease agreement?
Please be patient and forgiving of my ignorance, but right now I feel like Columbo.
I promise I am researching and not just asking, but I am so curious any help would be greatly appreciated.
Thank you,
Michael Hipple

In case you folks haven't heard yet it's out that Canada sold 170,000 oz. of reserves last month.

Is this good or bad? Bad they sold, or good that more damage was not done than we've seen?

~p

Sometime in the last six weeks someone did an analysis of the gold accumulation of the oil countries in the last 20 years. I think it may have been Black Blade. The estimate of the total gold accumulation I think was 11,500 tons. Can anyone point me to the post number? I have not been able to locate it again. Thanks.

http://www.usagold.comOne month lease rate jumped to 3.94%, and shorts dipped spot by $2 at NY open???
http://infoseek.go.com/Content?arn=a0874LBY779reulb-19990903&qt=gold+silver+platinum+palladium+rhodium+-olympic+-olympics+-medal+-medals&sv=IS&lk=noframes&col=NX&kt=A&ak=news1486

????????????

It looks like somebody this morning just nailed the price of gold and silver - gold dropped more than $2.00 (it has since rallied a bit) and silver was dropped close to $10.00, both in no time at all. This is obviously manipulation, and it's grinding investors down.

Hipplebeck, your basic question revolves around this: "If I lease out a ton of gold at 3% for 1 month, at the end of the month am I to recieve the 1 ton back+ 3% in gold, or does that 3% get paid back in cash or what?"

First things first. The 3% would be an annualized rate, so divide it by 12 to get the interest amount owed for one month (3/12 = 0.25%). You get you started down the right track on the rest of your question, I'm going to employ a old trick--a tried and true method of discover (word replacement.) Let's look at an altered version of your question:

"If I lend out a million dollars at 12% for 1 month, at the end of the month am I to recieve the million dollars + 1% in dollars, or does that 1% get paid back in rubles or what?"

First, you'll see that I took care of the interest rate mathematics so we can focus on the core issue--what is borrowed and what is repaid. My guess is that you already have the answer you're looking for. [[This is partly why I believe GATA will fumble the ball...they know tons about mining for Gold, but apparently not so much about Gold itself. At the end of a long and valiant effort, GATA will have "discovered" two things that are hopefully already well known to everyone who frequents this Round Table. They will learn 1) that Gold is MONEY, and 2) that bankers have been granted the privilege of fractional reserve lending by the grace of their fellow man.]]

Back to your question, just in case the rewrite didn't make things abundantly clear. When someone lends money or currency such as a million dollars, they don't care whether they get back the exact same dollars that were lent. Dollars a fungible. One is as good as another. If you borrow dollars for a month, the lender wouldn't call you corrupt if you sold those dollars to a car dealer for a new car. At the end of the month, you aren't expected to reclaim those dollars from the car dealer (plus interest) in order to repay your loan. It is expected at the time of the loan that you will have access (earnings?) to additional dollars a month from now. The loan was to bridge the gap.

With Gold leasing to Gold miners, for example, this seems quite natural, just like lending dollars to an American with a job. The interest is not paid in rubles, or yen, or anything else. The interest by loose definition is a fraction of the loan principal. I don't care how thin you slice it, you'll never find that 3% or 0.25% of any bar of Gold is composed of dollars. A small percentage of any pure Gold bar is simply a smaller Gold bar. That's why the lease rates on Gold are so much smaller than typically found with currency loans such as dollars, pesos, or rubles.

Does the original Gold that's leased leave the possession of the lender? Maybe it does, maybe it doesn't. When a bank lends you money, do you leave with a check, or with paper cash? Similar deal. Hope this helps. The key to much of this is to understand the two elements in my earlier parenthetical statement.

Gold. Earn you some; it's REAL money. ---Aristotle

Canamami,

Remember that 510 silver means $5.10 silver and your $10 means $.10. FYI.

This was written by a person whose net handle is RSA. He has given permission to reprint this. He posted this at the stockman@megahits.com net letter.

SteveH

In response to David Debertin's comments on gold, this is from a piece
I wrote in early March 1999 for RSA

*****************************************************

Through this severe bear market phase, the commentary about gold has
been pretty negative in the financial press, which is typical of bear
markets. Quite often we hear that gold has no monetary value as
currency, it has lost it's luster, a fad of the past, gold is dead,
gold is now just another commodity.

These people either do not have clue what they are talking about or
have sold gold short.

If these pundits were correct and gold is just another commodity we
would only have to look at supply and demand to determine it's price
direction it would be so much easier. We would just have to watch for
fundamentals that either increase or decreased inventories with the
resulting price movement. Not so easy with this 'just commodity' gold,
we have to consider many other things not present in your everyday
commodity such as central bank policy/leasing, politics, FED and
government policy, hedge funds activity and the carry trade.

If these pundits are correct, why is gold the only commodity Central
banks hold as a reserve.

If gold was just a commodity why is it's price among the data that
Alan Greenspan watches according to a past Rueters article "Among the
data he looks at, Greenspan said, are money supply, gold prices and
the Treasury's new index-linked debt."

If these pundits are correct, why do the Swiss have to hold a
referendum before they can sell their gold.

If gold was just a commodity, why to we baste ourselves in it's beauty
as jewelry or a coin to hold in ones hand. Why don't we just have a
brass or copper wedding band.

If these pundits are correct, why has so much gold been sold short in
the paper market than there is available in the physical market and
when the fundamentals are so bullish. Any other commodity would never
have this kind of short position with over whelming positive
fundamentals of supply and demand unless it was being manipulated.

If gold was just a commodity, why did Korea, ask it's people to turn
in their gold in time of crisis.

If gold was just a commodity, why the fascination, why am I writing
about it and countless others. You can find new articles on the web
about gold on a daily basis.

If these pundits are correct, why has it become so difficult to locate
and buy a gold coin.

If gold was just a commodity, why in times of war does the enemy walk
right past your banks vaults full of paper money and steal your gold.
No this isn't a thing of the past, it happened in the 1990s with Iraq
and Kuwait.

No, gold is a lot more than a commodity, it is in field of it's own,
it is an Institution, it is money, beauty, wealth and power, it is
durable and long lasting, it is sought after around the world and at
the same time it is feared by many bankers and politicians, it has a
much longer history as money than any paper currency. No other
commodity has a monetary value that can be used as world currency,
other than perhaps, silver, poor man's gold. At the same time, no
currency has the same unique qualities of gold.

When I hold a gold coin in my hand, I can feel it's weight and beauty,
I think of the long history of gold, the Spaniards and Incas. I know
people toiled to find the gold and mine it. I know it was weighed
carefully and the coin was minted with care and precision. Hand a gold
coin to anyone, they are in awe, they hold it, feel it and examine it
carefully.

Give them a $5, $10 or $20 dollar bill and they barely glance at it
before it is stuffed in a wallet or pocket and passed on to someone
else. When I think of paper money, I think of a press going Chunk,
Kchunk, Kchunk turning out millions of duplicates at a push of a
button. I see it's value continue to erode. I know that no paper
currency, in the history of earth has ever retained it's purchasing
power over time, because it is just to easy to make and exploit.

There is no doubt, gold is different and unique, it is not just
another commodity and it is no where near dead.

Inflation, Deflation and Gold

Unlike paper currency, gold has survived the test of time and is well
known and talked about as a good hedge against inflation. This is
true, but the problem with the price of gold lately is that there is
no inflation. In fact gold is a good leading indicator of inflation
and is one of the reasons the FED watches it's price. What the drop in
gold has been telling us in the past two years is inflation is heading
down which is a documented fact now. What many fail to recognize is
with golds drop down to $300 and less it has been screaming deflation.
The central bankers or generals are still worried about the last war
called inflation. They have been way too slow and have not acted
enough to easy monetary conditions, particularly the U.S., I have been
critical of this in the past and still remain so and is one of the
main reasons that I am bearish on the economy and markets. While the
U.S. economy has been doing well, the rest of the world is crying for
more dollar liquidity then the FED is supplying. This is very evident
with the plunge in commodity prices that you seen in last months
issue..............................................

******************************************************

I might also add

Gold remains the only objective money in the world Greenspan himself
believes gold is a currency and watches it closely. Last May his
comments were "Gold still represents the ultimate form of payment in
the world and is always accepted. Gold is perceived to be an element
of stability in the currency and the ultimate value of a currency".


The demand for gold is setting records. According to the world Gold
Council this past week, gold demand climbed 16% in the 2nd qtr., a
record for any three month qtr. ever.

The numbers are not in on whether or not central banks have been net
sellers of gold in 1999, the press is mainly feeding us the sell side
of the story only.

Whether or not the BOE sales were used to hold gold prices down, it
has now become very clear the BOE sales took place because the market
is running out of physical gold and these sales were a necessity to
provide liquidity. If the market understood this it would be a huge
plus and a bullish factor for gold, but instead the huge short players
and the gullable taking heads of the media put a negative spin on it as
CBs unloading unwanted gold when in fact they sold in a desperate act
to provide gold to a market that is in such huge demand there is
little gold left. The CB sales have been recieving huge negative
press this past year when in fact CB sales last year were lower than
as recently as 1996 when we seen the peak in the gold price at $420.
The press is only emphazing the sell side of the story and their is
little news on CB buying that has been obvious from public statements in
China and Japan and perhaps others that received no press at all.

Gold import statistics released for June show that South Korea's
imports of gold skyrocketed to 72 tons from 44 tons a year ago (that
is one month only, June). The January-to-June total for this year for
Korea gold imports is 264 tons, up 38% over the same period last year.

In Taiwan, June imports were 94 tons, twice that seen in May of this
year, and more than twice the previous year. Year-to-date, Taiwan's
gold imports are 368 tons, up from 155 tons at this time last year.
Imports are also up in India.

Gold may just be a commodity to many in the U.S. who have experienced
a strong $ in the last decade, but that is not the view in many other
parts of the world, especially in the 1997 currency crisis when those
with mighty US$, had those accounts frozen or their banks closed
in time of need.

RSA
Resource Stocks Advisory & Struther's Future Tech Report
4-1565, 16th St E, Suite #221 Owen Sound, Ont. Canada N4K 6X8
519-374-9332 Fax 519-372-9621 Editor: Ron Struthers
Email resource@bmts.com Web "http://www.sentex.net/~resource"
Investment Opportunities & Strategies in the Markets for Tomorrow

It looks like gold was on a strong rally through the $256 barrier, powered by the news that the IMF was capitulating to pressure and agreed to sell their gold to the central banks rather than the open market. Then the unemployment report came out. The desperate traders of the world, sensing their impending doom, seem to have regarded this little payroll statistic as equivalent in magnitude to "The second coming." The Dow went up 170 in 20 minutes and the gold longs fled the Comex like a herd of spooked rabbits.

What I find most significant about this mornings Global market "Freak out", is that one single statistic report carries more momentum thrust than a MAJOR policy shift speech from AG. It appears that trying to apply any kind of logic to the probable direction of the markets at this moment in time is futile. Nevertheless the structure of it all becoming more like a house of cards than a brick --house, and when the big bad liquidity wolf huffs and puffs, those who built their house of Gold will live happily ever after!

weaker than expected employment figures, tying the last 4,2%
multiyear low of unemployment rate and sends bonds and equities soaring.
PM's down, of course.
I'm getting a laugh out of the concept of watching single economic indicators, as TC's tea leaves, suggesting the future FED action in terms of contemplating the direction of interest rates. The dire outcome of the underlying facts of a debt induced bubble economy may probably not be resolved by a set of numbers, indicating a somewhat more benign pace of growth.
So let's be resolved to make the best use of the prolonged window of cheap gold.
BTW, the days after labor day are more significant towards the future direction of markets, according to Wall Street rules.
All US friends - have a great long weekend - CB2

http://biz.yahoo.com/rf/990903/ov.htmlThis one-way flow of money should come as no surprise by now.

It would seem the BOC can sell gold on the QT but England can't. I believe these are last ditch efforts or sales of last resort to cover all those contracts where they are the guarantor. Every ounce sold in this manner would appear to be less ammunition in the pouch for later.

Towncrier,

Can you tell us the significance of this in a few sentences? You probably already did but once more if you would, please.

Steve

SteveH,

I already know and basically have always known that the silver ounce is circa $5.00. Just a brief cranial cramp induced by mrci's quoting the silver price in hundred ounce units, and my rushing to do something else. I don't believe anybody was misled.

http://biz.yahoo.com/rf/990903/jt.htmlNew job growth slower than expected, but unemployment fell in line with expectations. This might explain today's morning behavior of falling gold price and stocks and bonds rising sharply.

Investors seem to live each day independently of the surrounding weeks.

To whet your appetite just a quote: "... a credit derivative called CLOs (collateralized loan obligations)-soon to be renamed CLOWNs (collateralized loan obligations worth nothing)..." - sums up my thoughts nicely!

MARKET REPORT (9/3/99): Gold was down this morning despite the big two day hike
in gold lease rates. Historically gold lease rates rarely get over 1% and when they do it
usually portends higher prices. The current trend of higher interest rates and a tight bullion
market began in July and corresponded with the announcement by the Bank of England that
they were going to sell off most of the British people's gold. All the strange machinations
surrounding the present gold market seem to find their way back to what is going on at
Threadneedle Street and a strategy that appears to be directed toward its getting gold to a
counterparty in trouble on a gold loan. Some central bank wants their gold back and it
appears that a bullion bank associated with Bank of England in some way needs gold --
desperately. I would not be surprised to discover that recent successful efforts by Goldman
Sachs to tie up a good portion of the COMEX warehouse stocks is meant to deal with the
same need. Yesterday, there was another huge reduction in eligible gold stocks -- 72,469
ounces -- a further indication of strange scenes inside the gold market. With rates now over
4% and curve inverted reflecting a strong current need for leased metal, the BOE has found
a competitor for the world's gold supply -- investors worldwide who find the metal
attractive at these prices. The 25 tons of gold to be auctioned later this month by BOE will
have little effect on the supply deficit, and the psychological hold that the sales have on gold
pricing in will erode in time. One wonders what the BOE has in mind for the future. I
would not be surprised to see the British throw in the towel on the sales. When they do,
buckle your seat belt. It could blow the lid off the gold market as the financial world
discovers that the short squeeze is a reality.

That's it for today, fellow goldmeisters. Have a nice weekend.

The September edition of News & Views is a major you-don't-want-to-miss-it, highly
informative, and slightly irreverent blockbuster. We revisit our Five Horsemen of the
New Apocalypse -- the euro challenge, Y2K, the Asian contagion, the bubble stock
market and rising oil -- none of which have taken the summer off. We also preview the
Ten Reasons Why Main Street Worldwide Is Returning to Gold and Short &
Sweet (as is our custom) rambles with a hint of cynicism through a litany of world
political and economic events. You won't want to miss our look at the world of gold to kick
off the Fall investment season. The Season of the Yellow Metal? Just might be so...........

Please call 800-869-5115 (Ask for Mary Conway) if you have an interest in receiving
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I have stolen tese two posts from one of those other forums.
----------------------

Date: Fri Sep 03 1999 09:00
glenn (FOX-MAN) ID#423288:
Copyright � 1999 glenn/Kitco Inc. All rights reserved
The secret is so straight forward and simple. If you know what the employment report will be strong or weak you can make a fortune in the bonds or S&P's as the report comes out. The s&p is up 20.00 the last I checked.
The employment report is not a monthly average as everyone thinks. They do NOT count the total number of people working each day and divide by the number of days in the month. What they do is look at the employment in the US on the 13th of each month. That exact day is critical. If the 13th is a monday then it will be stronger because people are hired on monday, and almost no-one is fired or laid off on a monday. But if the 13th was a friday then it will be weaker. People do not start a new job on fridays, but alot of people have last days as fridays. Tuesdays are the second strongest, followed by wednesday and then thursdays. Last month had the 13th as a friday. It is so simply. THis is the third or fourth time I am telling poeple this, perhaps we can remember it this time.........I wonder why others do not know. It really shocks people each time....cnbc says "Oh my gosh, noone expected THAT!" and I say it was so obvious how could you not expect that?
Date: Fri Sep 03 1999 09:38
glenn (Slang & Cage ) ID#423288:
And next month ( Which the 13th is a monday ) the report WILL come out stronger than expected and everyone will go "OH WE NEVER EXPECTED THAT!" and stocks and bonds will tank. Plus having a 13th monday following a 13th friday will also add straight to the report since this is a fluctuation and does not represent what is really going on. ie- this month is really strong than what they are telling us and it will show up next month.

BTW-quite a coincidence -some of our leading papers actually printed the warning of an Austrian economist (Christian Helmenstein, IHS -Institute for (higher)Studies) on an impending Wall Street crash of up to (sorry - more like down to) 60%. a speech delivered last night at the Forum Alpbach, Tirol, which was contradicted right away by some of the leading bank analysts - calling for maybe a minor correction of max. 10%.
Coincidentally, I also found an invitation to a discussion from my main club in Vienna, "featuring" Marko Musulin, head of Investment banking at Credit Anstalt (formerly Austrias # 1 bank-taken over by Bank Austria) on the topic of "Aktiencrash 2000???" - Crash of equity markets 2000???
Coincidence?

www.kitco.comrepost. Important!

rhody (LEASE RATES: Disinflationary U.S. wage and employment) ID#410367:
Copyright � 1999 rhody/Kitco Inc. All rights reserved
figures for Aug. are sending stox to the moon and lease rates
up about .25% across the board according to preliminary figures
this morning. Shorts will sell gold a tonne today, and do
it into a thin, long weekend options expiry Friday. I cannot
imagine a more negative combination. People in China, watch
your feet, you could be struck by falling gold bars.
But. With one year lease rates at 3.70% and forward
rates down to 2.4% we are now in the territory where
Central Banks seem to loose control of POG. Unless short term
Treasuries yields rise, or lease rates come off again, the gold
carry is dead at these levels. I think I would just watch this
and see if the forward rates stay down here. As POG falls and
the shorts get overconfident, this gold market could really
start to boil. If you were a CB, would you lend gold into
this market, knowing that it would accelerate the decline of
your only real asset, and knowing that there is significant
risk of default? What these labour/wage figures have done is
drop the atmospheric pressure on a gold market which was already
close to a boil because of liquidity/risk concerns. FWIW

http://biz.yahoo.com/rf/990903/p1.htmlDollar getting a boost as fears ease of an October rate hike by the Fed.

http://biz.yahoo.com/apf/990903/kosovo_mon_1.htmlVeeeeeeerrry interesting...

Does any of this Armstrong business tie into gold and silver and his relentless tirade against the heavy metals?

(someone asked me)

Can anyone provide a link to any site that would display what long term hedge contract prices are, ie. 2 - 5 years out for a company wanting to start up a mining project and wanting to hedge future production. Thanks in advance.

Allow me to take a stab at this big question--I've answered it before, and Townie always looks so busy. It depends on what the meaning of "this" is. (Just having fun...) I'll assume you mean the Fed adding reserves daily.

The banking system is a vast collection of independent banks networking to stay two steps ahead of the general fraud they foist upon the unsuspecting public. They are, however, expected to operated within established guidelines, even though these guidelines might seem quite favorable to them to begin with (I refer to fractional reserve lending reg's.)

On one side of their balance sheet are their liabilities--money belonging to the depositors generally in the form of checking or savings accounts.
On the other side of their balance sheet are their assets--money that "belongs" to the bank generally in the form of vault cash and outstanding loans to others.

These two sides of the ledger must balance, with the additional requirement that the bank must maintain at least ten percent of their total checking account deposit value on reserve as cash. Any reserves on hand beyond this requirement are often "invested" with the Federal Reserve System, exchanged for interest bearing notes. When the banking system is a net buyer of these notes, the Fed is said to be "draining reserves from the banking system." When the banking system needs their cash back, the Fed is said to be "adding reserves to the banking system" often done through the repurchase of the notes. With me so far?

Why does the banking system turn into net sellers of notes, causing the Fed to add reserves through these overnight repos of the same notes? Because the banks need the cash. If a person with a savings deposit walks in and withdraws their money, the bank reaches into their pile of vault cash to settle the withdrawal. While their ledger still balances (an equal number of dollars was removed from each side--asset and liability,) this cuts into the ten percent reserve requirement that they need for their total checking deposits. The natural thing to do is to have the Fed repurchase some of those extra interest bearing notes, turning them back into cash on hand.

What happens when all the bank's interest bearing notes have been exchanged, and the last bit of vault cash has been handed back to a depositor? You end up with a bank that only has outstanding loans (as assets) balancing the remaining deposts (as liabilities), and the bank would be in default of its reserve requirement. Any depositor seeking their cash couldn't get any. What's the bank to do? It must either call in some loans (never an easy thing to do) or seek a loan for themselves from the Fed or other banks.

You can see how the Fed truly is the lender of last resort. They will lend dollars (Federal Reserve Notes) to our governments in exchange for U.S. Treasuries (bills, notes, bonds) when no one else can be found willing to do so. They will also lend dollars to various banks during a quasi bank run. The rub in front of Y2K (other than the obvious profits distress to the lenders) is that there is simply not enough paper to go around, even though the Fed would be happy to credit the bank's accounts with digital money as needed.

Gold. If it's in your hand, it didn't come from thin air. ---Aristotle

http://biz.yahoo.com/apf/990903/economy_5.htmlThat's low!

This Associated Press article is full of data from today's Labor Department jobs report.

Climactic buying foreboding the last spike of the old bull or the last feeding frenzy before hibernating - of the bulls -, since Wall Street bears usually start roaming in October.
Late Summers, AG and his little "fed" indians are stampeding the remaining herds of sheepish buffalo to the Centennial Cliffs (Mitchener) in order to weather winter storms by scalping all for food and shelter. Don't get crushed in the rush.

http://biz.yahoo.com/apf/990903/russia_ban_2.html"What? You say we stole your dollars? What dollars? We don't have dollars. We don' need no steeeenkeen dollars!"

(Apologies to Humphrey Bogart and Co.)

If you read Midas'latest post at the Cafe, he addresses the issue of Armstrong's companies having their assets marked up by Republic Bank of NY. Apparently, his hedge fund is underwater and he is heavily short gold and silver. The manipulation was to make the situation to appear better than it really is. He manages $1B in Japanese money which was placed with him to hedge against Yen currency loss.
Personally, I know Bill has strong feelings against Armstrong because Armstrong has publically demeaned Bill's intelligence for pursuing GATA's objectives, because he and I have traded msgs about the man.
Bill's feelings about Martin baby is summarized in the last paragraph of his current post, "I'll send a stretcher over to Comex for Him."

$255.10.

Thanks Ari and Cassius.

http://news.bbc.co.uk/hi/english/world/europe/newsid_437000/437038.stmBank of New York sacks second employee, and Russian representative to the IMF, Mikhail Zadornov, announced his resignation.

Come on and join the discussion and let us know what is happening with GOLD in your part of this little world!!
<;-)

I must pay my respects and also say "Hello", old friend. I could scarcely be more pleased with gold these days, though some would surely say they see the work of Saruman or Sauron afoot. Use your enemies' own momentum to your advantage. When else in time has anyone been able to obtain purest money so easily through honest efforts?

got smiles?

Just to add to Aristoles comments. If you borrow $100 at 10% for the year you have to show up at the bank a year later and pay them $110. It is the same for gold - borrow 100 oz at 3% you have to give back 103 oz. Gold has low interest rates because the loan is repayable in gold (totally) and theoretically does not have to take inflation, etc. into account.

Note that these are sophisticated players and so there can be any number of variations on this theme. But a simple gold loan lease is done in bullion and repayable in bullion. It is my understanding that if any fancy stuff is done, then it will be with additional derivatives to hedge the exposure of one or both parties. That is, in addition to the loan there may be puts or calls bought or written in some combination depending on what the innards of some poor chicken indicate on that day...

This is fine as far as it goes. But there does seem to be a major problem with the interest rates charged on these so called loans.

Woa! Didn't you just say you don't have to worry about inflation with a gold loan?

Yes, I did, but that is not the only factor to be considered when setting interest rates for a loan. There is one other important factor:

Credit Risk.

Until very recently the central banks and their partners in foolishness, the bullion banks, have deemed that extremely leveraged hedge funds and near bankrupt mining corporations (often residing in very impoverished nations) as being the finest credit risks on the planet (1%). Think about it. If you were willing to borrow gold, you were automatically given a higher credit rating than the US, Germany, Britain or Switzerland.

You can, if you quiet your mind and let this last thought flow through your mind and unfold in its full glory, realize why no one truly following gold over the last few years ever has needed hallucinogenics. (Alcohol, yes, but that is purely for medicinal purposes - pain management...)

Aristole, Peter Asher thanks for the kind comments!

GFD, that's a heck of a good point in regards to the insanity of central banks' credit risk.

I can also relate to your note on alcohol even though I'm not much of a drinker- man oh man, it sucks bein' out in the cold, doesn't it? And believe you me- as a commodities broker, I can sympathize.

Anyway, I just wandered in here to note that somebody took out a little under a ton and a half from the COMEX stocks today. Not that the market gives a rip- after all, it's party time on Wall Street, baby.

You know, when it finally comes down, when the fit hits the shan and the bullion banks are bust and all the paper millionaire stockmarket geniuses are stumbling through the streets with dazed looks on their faces like shellshocked zombies, I'm going to have to figure out a way to keep my mirth in check. I mean, a guy can't just be walking around snickering at people, pointing and laughing all the time.

~p

There is a fundamental assumption among most goldphiles that the current market conditions are part of an extreme cycle and will come back to earth. Because the cycle has been so extended - according to this thinking - so too must be the retracement. An utterly earthshaking collapse that will be heard through history.

I tend to believe they are right. Particularly if the "New Economy"/"New Paradigm" people are correct about us entering a new world of bits instead of bolts. Students of market histories will know that any major shift like this results in enormous dislocations that express themselves economically as horrific depressions - with or without a hyperinflationary preamble.

How bad could it get? One example. People assume when they talk about the internet that means software, which means Microsoft and it's cronies. The market cap for Microsoft alone is about 800 Billion dollars.

However, this is an incorrect assumption, that shows how little people understand the powers unleashed by the internet. The internet is really about pervasive knowledge. This is expressed in software as "open software" such as Linux and it's cousins. The technical capabilities of this software is growing at an astonishing pace as more and more people contribute to it's capabilities. Within two years Linux will easily exceed even the most sophisticated capabilities of Windows. In other words you will be able to get a better windows than windows. If you are willing to download it off the net it will be absolutely free.

Free.

Unless Microsoft can reshape itself as an entertainment giant or a service company (a thought almost as bizarre as the current gold leasing scam) it's stock will be worth a infinitesimal fraction of what it is now.

At the turn of the century, brokers would put the holdings of widows and orphans into the stock of American Buggy Whip. "If American Buggy Whip is not safe then America is not safe". Amen.

Let us imagine, just for the sake of contemplation, that the markets will come back to earth and that Another's Thoughts do come to full realization.

A very interesting and wondrous thing occurs.

In a world of Dow 1700 and (say) 30,000 gold a great shift will take place on this planet. A phenomenon never before seen in the history of mankind. A Great Balancing.

If you look at the people who still seek gold for their savings they are often among the most poorest people on this planet. People like farmers in India or Indonesia.

When the Great Balancing happens many of the poorest will suddenly find themselves at a level of wealth comparable to, if not greater than, those of us in the so called "advanced nations".

An utterly breathtaking thought. And thank you, Another, for it.

My hat is off to you! When I responded to Hipplebeck, I had a tiny window of time with which to sort through and organize a thousand thoughts. Upon a second reading, I'd have to say I failed miserably to convey the message with too many thoughts left unsaid, and loose ends left untied. It probably makes fine sense to everyone who already knew the answer, but I'm afraid it falls far short as an educational tool for a novice. But YOU, good sir...you've crafted another fine post and are surely a credit to this Round Table. I look forward to your future contributions and appreciate that you saw past my sloppy treatment of lease rates. I'll seek to improve, or at least stay out of your way.
"Squire! Bring this gentleman an ale, and let's hope he stays awhile."

Gold. Get you some. ---Aristotle

Hi all,
Read your post aristotle and appreciate your thoughts

Their answer to the cash shortage may be in the future of the currency evolution and the perpetuating of the new cashless society.
They may issue cash cards instead of cash similar to the new phone cards. If you want to buy something or withdraw cash they may try to give you a cash card for the same amount. Not exactly as good as cash but given the choice of no withdrawal (no paper cash) or a card we all no what John Q public will choose. Get your cash and gold now while the choice is still there.

Excellent posts GDF, one can see clearly the sea changes the internet will have on the very companys that helped to create the cobbeld monster that it is. Both software and hardware giants will change quickly, or die.... If i were playing the internet game FEDEX, UPS, etc. comes to mind. Replaceable only by a Startrek transporter.... and will reflect the growth of the internet with little risk after 2kay.
We can take our millions made on gold.. and rack up!!!

Take my advice..."Lets get Physical".....Gold...

Mom, Chelsea's mom said she could short all the gold contracts she wanted as long as she did her homework and said her prayers for the poor. How come I can't.
Honey I've told you a million times, when your father gets surgically connected to the Treasury, and I run for office then you can, but until then you'll have to be happy with these two-bit under the table derivative swaps.
WAAAAAA, I'm going to hold my breath. When gold crosses $300 and I'm gone you'll be sorry waaaaaaa....

OCULTIST to cure my myopic short sightedness on a scenario, proven since 1982. I must have had overlooked any potential clear day - seeing forever - back then. Calculating the lack of vision in terms of accrued losses since, I'm more than in a hurry to make up on lost opportunity on some paper gains, I've missed. Even, back in Oct. of 1987 my eye doctor, must have handed out microscopes instead of binoculars to curb my l.t(no, not tv.) view of the steep ascent dead ahead.
I, now do feel I've had all the short's'ighteness and it is time to get new glasses for the longer view. Far-sightedness escaped me , because of my myopic view of the scenic route to prosperity - then distant hills turned out (to build) mountains of wealth - as I tried to conquer these heights in the manner of Sisyphos - reaching for the top and finding to be on the verge of an avalanche ...the most lethal of avalanches, paper avalanches, as it turned out.
Rubbing my myopic eyes, after barely surviving I find myself blinded by totalitarian views, regaining my eyesight by looking into golden mirrors only. Others say, don't expose your tender sight to the stark and golden yellow, give yourself the chance to adjust your eyes - as Dr. AG prescribes - in a fashion of softer, even though, paper flashes, more accomodative to your vision(s).
I still feel in a hurry to see my oculist - evermore today, as more foggy numbers are numbing the l.t. vision of so many as they only see the end of the rainbow, promising a pot of true gold.... alas, in derivative contracts.
At the end of the rainbow - you'll find - that you'll never find the end of the rainbow!

...und das ist die Moral meiner Geschichte - mein Freund, Fremder/alias-Stranger!

Just some more thoughts on this cash problem.
I'm not sure how universal this rumor was a few years ago about a new currency being printed and a recall on the old currencies. This was toughted by many coin dealers as a good reason to by coins(still is in my opinion). The scenerio being that much underground cash would have to find a place before the recall or be forced to explain all that cash.
Maybe these stinkers still have that card to play. After we are into or maybe thru most of Y2k they say that all this cash out in the streets is not good for many different reasons (increase in crime, conterfeiting ....)They then issue the new currency and issue a recall on all old currency and maybe some new regulations on how much cash can be held by individuals for their own good . All that crime and conterfeiting you know.This scenerio is just a maybe right now but another reason to buy gold and gold coins . Enjoying Participating with you all again. MK was not the only one to have problems with computers. Had to go out and buy new hard drive and work the bugs out .

I just got home and found your postings! I am so excited!
If I have this right, the central banks are, in actuality, accumulating gold at the lease rate times the quantity they are leasing out. They are not buying but accumulating by leasing. Now if I can find out how much is being leased, I will have a better handle on this picture. If this business is truly done in gold, there should be a huge shuffle of gold, depending on the quantities that are being leased, and the length of the leases. Does anyone know where to find out what quantities are being leased?
What kind of collateral could possibly be accepted to cover the risks? I can't imagine these central bank people wouldn't cover their asses somehow. I would love to see one of these lease agreements.
Thank you,
Michael Hipple

http://www.thestreet.com/markets/marketfeatures/779696.htmlThis is a strongly recommended item to read.

Paul Krugman noted "Eventually the U.S. deficit and the rest-of-world surplus must be sharply reduced, perhaps even reversed, and while this adjustment could take place in other ways, it is likely that much of it will occur via a decline in the value of the dollar vis-a-vis the yen, the euro and so on."

Please do your best to get your mind around that idea. And read the article.

My logical train of thought is that if the central banks are accepting mining stocks and hedge funds as collateral, then driving the price of gold down will work to their advantage in the long run if they are planning to corner the market.
Isn't it just a logical train of thought to conclude that these people are about to corner the gold market and own all existing stocks and stocks in reserve, leaving only what us people have in our physical possesion?
I'm probably missing something here, but I am sure learning a lot
Thank you all so much for your patience while I tread the learning curve.
Michael Hipple

Tomcat said in (9/2/99; 11:22:58MDT - Msg ID:12671) that "the problem with using backwardation as a signal is that the spot POG is determined from paper gold transactions (thanks for this reminder, FOA)."

Holtzman here,

The measure you seek is not Spot, but Street.

You've correctly said that Spot is a creature of the Derivative world. It's the Paper price of a gold futures contract to be settled during the present month, and almost always to be settled for cash rather than for delivery.

As a result, it's no surprise that Spot POG is a better indicator of the Paper market since it is itself determined by constant repetitions of FOA's analogy of the two neighbours betting over the fence. Perhaps one in a thousand participants in the daily setting of Spot POG plans to buy physical gold or sell it. The other 999 participants are merely there to bet on it and claim their winnings in some other currency.

Put another way, how many people at a racetrack are attempting to buy a horse? If you want to know the going price of a physical horse, don't waste your attention on a racetrack.

If you want to know the going price of physical gold, don't waste your attention on the paper chase. And it's pretty obvious where we should look to find the going price of physical gold... I mean, after all, our very conversations here are being hosted by someone who spends his waking hours discovering that price.

The cash or Street price of gold is the number of dollars (or pounds, or euros) you take out of your wallet and hand to your friendly, neighbourhood coin dealer in return for a one-ounce Krugerrand.

Why a Krugerrand? Because it's the least numismatic, most commonly encountered, least lovely form of gold. It has no numismatic premium and no jewellery premium and no patriotic premium. It's even less attractive than a one-ounce 9999 ingot from JM or Credit Suisse.

That makes the Krugerrand the perfect unit of measure for Street POG. Its only special quality is that it contains exactly one ounce of gold (mixed with way too much copper).

The only thing which would disqualify the Krugerrand would be if suddenly coin dealers were willing to sell Maple Leaves or Eagles for less than Krugerrands. But to deal with that case, interpret Street POG as the price of the cheapest one-ounce coin available for sale at that moment.

The backwardation signal you seek will be when you see Quantity 100 Krugerrands selling on the street for significantly more dollars apiece than the Spot POG quoted by the paper markets that day.

A Krugerrand will always have a little premium built into its price (hi, I just bought these coins and I'd like to sell them to you without making any profit at all on the sale... my, that would be daft).

As things now stand, a month ago when Spot POG was quoted at $260, I bought a single Krugerrand for $268. That's within the range of normality. We're not in backwardation yet.

Let's say that Spot POG drops to $200 (easy, stomach, don't turn over now). What will a Krugerrand cost on the street then? If Spot POG drops no more abruptly than has been its wont in recent months, there's a decent chance Michael and his fellow coin dealers might then be able to profitably sell Krugerrands for $205 each. In that case, we're still not in backwardation and the shorts are still in control.

But if you see Spot POG drop to $200 while a Krugerrand selling on the street never falls below, say, $230-$240, hello new gold market. That's backwardation.

I think maybe the hardest mental hurdle for people to clear in understanding Another and FOA is this notion of two gold markets occurring simultaneously. There's an historical example (and it's Western :-) in which very much the same thing transpired...

In 1864, the USA and the CSA were reaching something of a stalemate in their war. Contrary to what most Americans learn today in (the winner's) school system, had but a very few decisions been made differently, the Confederacy would have won.

This, by the way, is why we see so many Americans (descended from both sides) re-enact Civil War battles over and over. How often (except on Monty Python) have you seen re-enactments of Pearl Harbour? The only battles worth replaying are the ones that could have gone either way.

In any event, to the average person living in Either the USA or CSA in 1864, the near term future was incredibly unclear and terrifying.

In the pre-war USA, national government funding was handled by the levying of import/export duties. The IRS was not yet a glimmer in politicians' eyes. For a nation at peace, duties provided sufficient income to run a minimalist national government.

In time of war, however, expenses magnify dramatically. Both the remnant USA and the new CSA needed to acquire vast funding very rapidly to raise an effective military. The both of them did so in the time honoured way: they borrowed the money. Have a peek at Lincoln greenbacks and Confederate paper money sometime. They are promises to pay the bearer with gold and/or silver at some significant time following the cessation of hostilities.

These documents were by no means the equivalent of today's Federal Reserve Notes (try redeeming a $20 FRN for a St. Gaudens sometime). No, Civil War paper banknotes were the equivalent of today's Gold Futures Contracts.

Oh, Lincoln greenbacks and Confederate dollars passed from wallet to wallet during the Civil War years as if they were currency, and in the first year or so they were regarded as 1-for-1 equivalents of coin. But as 1864 drew nearer, something odd began to happen.

"Howdy, I'd like to hand you this crisp $1 greenback in return for ten silver dimes change."

"I'll give you 8 dimes for a paper dollar, not a penny more."

Realise this happened in the North, in the remnant USA. It happened too in the Confederacy, but modern people remember it there only in association with the final default on paper which happened when the CSA government was extinguished.

But the sole difference between a Confederate dollar and a Lincoln greenback was that one paper issuer was still in existence in 1866 and one was not. In 1864, no one could confidently say that either government would still be there a mere two years hence.

Notice that, in this regard, not much has changed since then. In 1933 for US citizens, then in 1971 for the rest of us, the USA government voided its obligation to pay gold for paper dollars.

If you hand me silver or gold, I won't care whether the symbols impressed on it are from a reliable government, an unreliable one, or a defunct one. But if you hand me paper, I'd better be firmly assured the issuer will live long enough to pay off this debt to me.

Another and FOA, by saying wise people should avoid paper and only hold physical, are indicating that they expect the LBMA and Comex Gold Contract documents will go the way of the Confederate Dollar (or maybe more appropriately the pre-1933 paper dollar).

At the very least, they're saying the risk is so substantial that one should not be standing too near the fault line should the quake come sooner than predicted.

What the both of them are describing is an official Paper Spot POG (and its kindred future months' POGs) which may well plummet to $200 or even, as Another allowed some time ago, perhaps $10. Realise, though, that Another is by no means predicting that Michael will be able to profitably sell Krugerrands at $10 each. Far from it. What Another and FOA are anticipating is a situation much like the paper money situation in both the USA and the CSA in 1864: how likely is it that the paper contract you're handing me today will be redeemable for any amount of gold by this time next year? Tell you what, I've got a spare ten bob I feel no desperate attachment to. I'll buy your one-ounce IOU just for kicks. If LBMA completely expires, I'm out only a small amount. If LBMA unaccountably fails to expire, I've struck it rich.
Meanwhile, those of us with less of a gambling inclination will sleep more soundly holding physical. After all, a silver or gold coin remains silver or gold even after its issuer expires.

The one point of Another's and FOA's that I still don't entirely follow, however, is their contention that all mining stocks will go down to zero along with the Derivatives market. Certainly, any mining company which ties its future earnings to the paper market has also tied its future stock price to that teetering mass (Barrick, for example). And certainly, a low tide drops all ships, so that even those mining companies which are not involved in the paper chase will still suffer in the stock markets.

However, I have some difficulty seeing All mining stocks world-wide being extinguished utterly. Maimed, perhaps, but no matter how much trading turmoil occurs there will still be well-identified veins of gold ore sitting below ground, just waiting for someone to consider them valuable again. Yes, some of them may become nationalised. Yes, others will end up being sold at fire-sale prices. But I can't break myself from the notion that, much like the airline industry, the strong will survive and absorb the weak.

I'd dearly love to hear from either Another or FOA their thoughts on why they feel that not a single mining stock will survive. Or have I misunderstood you?

Yours,
I.V. Holtzman

What stellar company you are... The quality of posts at this round table makes one humble....CB2 excellent and in focus too... When i started to first read and then post at this fine Oaken table i had only a hint of the members gathered here... The faces were in shadows hidden by your guilded armored helmets. As my eyes became adjusted to the golden glow here and my ears adjusted to the softspoken words of encouragement and of golden truth, i realized that i was in the company of bravehearts. Hearts tempered by battle and minds of refined wisdom..Unselfish souls willing to share the timeless knowledge of the true Golden Ages. A time stolen from us that i did not even know was missing.... i soon learned that even i had something to add (meeger as it may be) to this Golden Quest, almost as if i were drawn here of purpose... Excuse me for some of my past posts dear Knights of the round table... for i did not then realize how tall the trees in this forest were... nor how firmly rooted their convictions, nay even of the rich soil of truth and justice from which they feed.....makes one feel small... but proud of one's place....

Having spent 10 years in the optics field many years ago..(you know the instruments surveyor's use)..I thought this topic may help in our perception of the current "Spot" price of Gold.
The first day on the job you learn what a reference point is: A STARTING POINT!!
A few examples: Time!, needs the Sun(starting point) and rotation speed of the earth plus the earths revolution speed around the sun to be accurate.
Sea level!,anything above or below can be measured in feet inches or any other liner type of measurement.
These are examples of fixed and accepted(worldwide) Starting Points.

Lets move on to the "Spot" price of Gold.
The starting point for Gold is;The spot price of Gold worldwide, it's tracked by the minute and based on current prices paid in a very small(in area) segment of the worldwide Gold arena. London,New York,Hong Kong,Tokyo, and Sydney. These sales set the "Spot" price because they can be very large amounts of Gold. See: http://www.kitco.ca/image/gold.gif

Is this "Spot"price accurate?(like a calibrated timepiece)...NO!!...WHY!!! This is why:
90% of the transactions setting the"Spot" price of Gold are paper transactions(Derivatives) 10% is actual Gold metal changing hands.
Let me make a try at explaining derivatives:
From Websters Dictionary: A substance or thing that can be made from another substance or thing in one or more steps.
A relatively new term in the financial field.(15 years?)
Simple examples: I write a personal check and sign it but don't fill in; Pay to the order of......this check can be passed around until someone fills in on the line; Pay to the order of.... This could be called a derivative.
Another example: I buy a $125,000 home with $25,000 down and borrow $100,000 from a bank. The bank can create many more debt instruments(See Sir Aristotles works in the USAGOLD hall of Fame) or the bank can sell my debt instrument(mortgage)......This is also a form of derivative.

Now since these Gold derivatives(paper Gold) outnumber real Gold(physical) by 9 to 1 they dominate the pricing ranges.
Therefore, "Spot" Gold pricing, which was originally set by supply and demand of metal Gold is totally distorted.(For metal Gold)

What's going to happen in the future? I go along with ANOTHER/FOA's prediction that the derivatives market(which by the way covers most financial paper) is going to seperate from the metal Gold market. It's all just another form of fiat money,and as FOA has said many times,"history has shown fiat money has always collapsed over time.
If anyone can name one fiat money system that is still in existence worldwide from 100 years ago, please do it.
By the way,I have a 1999 world coins catalogue that can varify the claim.

The future---Physical metal Gold prices can be and will be set by supply and demand using cyberspace.
A person who has metal to sell will ask for a bid.
A person who wants metal to buy will make a bid.
Honesty and integrity would be insured by a middle man,for a fee. Similar to the way internet stock trading is done right now.
A record of prices can be recorded with much coordination among middle men over the internet worldwide,thereby creating a real "SPOT'S' (with an "S") price of Gold.The reason for the"S" is the many different forms and amounts of Gold in existence right now,would command different prices,for age and condition'similar to the present day coin market........Real supply and demand would once again rule--A free market system......FWIW.......beesting

Dear Mr. Holtzman: I'm going to take a guess at answering your question about the mining stocks. The way I understand A/FOA's writings, (1) there is a strong possibility that governments may nationalize mines; and/or (2) the value of currencies will be so low that mining stock profits won't pay the rent. Am I correct, anyone?

Once again Wall St was dominated by a bout of panic buying as investors seemed certain that the supply of stocks and bonds would run out sometime over the long 3-day weekend. Don't worry folks...they can always make more where those came from. Now gold, on the other hand...

It never fails to amaze the various visitors who come by to chat and share this view from The Tower that the sea of humanity huddled before the marble doorways of Wall St has such a propensity to make such potentially consequential decisions on a whim, seeing only the current day's offering of data. Today was the Labor Department's report that showed unemployment in the US continues to fall, and new jobs continue to be created while wages rise. This would normally tend to give rise to inflation worries, but investors plowed ahead without a care in the world because the report was more benign than expectations. (KInda shows you how easy it is for Wall St to stack the deck...just provide some disingenuous "expectations.") While unemployment figures dropped to the lowest figure seen in 29 years (say...didn't something important happen back then in the gold market? 1971...anyone?), the creation of new jobs is moving at a slower rate than analysts had expected, and wages grew at a slower pace (0.2%) than had been expected (0.4%). Stocks and bonds both ZOOMED, and that's all I have to say about that, except...on the NYSE, 44 issues set new 52-week lows while 40 touched new highs. Go figure.

The question remains, what will the Federal Reserve do to interest rates at its next meeting on 5 October? Mr. Greenspan, with his "irrational exuberance" warning so long ago (December 1996!) tends to look at the larger picture. His comments one week ago in Jackson, Wyoming seem to have been disregarded already. You can't say you weren't warned...time and time again. Paul Krugman, an MIT economist, warned in a recent article, "Eventually the U.S. deficit and the rest-of-world surplus must be sharply reduced, perhaps even reversed, and while this adjustment could take place in other ways, it is likely that much of it will occur via a decline in the value of the dollar vis-a-vis the yen, the euro and so on." Foreign dollar holders worried about losses through weakening exchange rates will tend to shun dollar investments, which itself will reinforce the dollar's weakness. The Fed will most likely find the need to increase rates simply to maintain the foreign confidence that the dollar will not be allowed to erode through inflation...the same inflation demonstrated by their very same holdings of dollars. What a comedy! Like watching a magician pull an elephant out of a hat with amazement when all along you can clearly see the elepant standing there with the hat covering only part of its foot. Time to walk out of this one and find a new show...

The fate of gold today was caught up in the atmosphere of swirling confetti, and traders went home early on a short Friday before the Labor Day long weekend. The trading desks will remain empty until Tuesday, September 7th. Spot gold was being quoted in NY at $254.00 when the lights were turned out to end the day. Gold lease rates remain the big story, with the one-month rate now pushing well above 4% on an annualized basis. Check out these annualized rates for borrowing gold for one- and for two-month spans and draw your own conclusions.

1-month 4.1810% (change over yesterday +0.3030)
2-month 3.7460% (change over yesterday +0.1060)

Backwardation...seems that somebody is desperate for gold right now. Would YOU be tempted to risk your gold in the hands of a bullion bank for a 4.18% return? You would part with 100 ounces today with the earnings-expectation of one-and-a-half sovereigns next month. Hmmmmm...

They are rubbing their hands in Slovakia these days, and who can blame them? It seems that the Czech National Bank is considering the use of 4.5 tonnes of its gold reserves to cancel some of the unresolved claims to Slovakia which arose from the division of former federal property 6 years ago. As we are reminded today of Fed Chairman Alan Greenspan's words on gold, "Gold still represents the ultimate form of payment in the world and is always accepted. Gold is perceived to be an element of stability in the currency and the ultimate value of a currency," you just know Slovakia is licking its chops, NOT turning up its nose at this deal in the works.

We reported a mass exodus of 2.25 tonnes of Eligible gold from COMEX's depository at Republic National of New York. Today, and additional 1.4 tonnes of Registered gold left Republic for destinations unknown. These past two days have reduced the COMEX inventory by 10%, leaving 33-1/2 tonnes, mostly Registered...and mostly Goldman's(?).

Time for school. Some people still scratch their heads over derivatives. What are they? Many knights have tried to explain these esoteric investment devices, but this article we found will surely open some eyes. The knights have frequently called derivatives "bets" on price directions. Having a derivative is not the same as owning an asset such as gold, oil, grain, or even a share of ownership in AT&T. As you read the following article from Bridge News, picture yourself "owning" one of these described futures, and ask yourself, "What EXACTLY do I "own"?!!" This, my friends, is a derivative.
---------------------
HEADLINE: Fed funds futures see rate hike fears decline after jobs data
By Genevieve Sedlack, Bridge News

Chicago--Sep 3--Fed funds futures contracts at the Chicago Board of
Trade rose after supportive monthly jobs data, and the odds of another
rate hike in October slipped. This morning, the Oct contract showed a 28%
chance of such a move, the Dec a 52% chance and the Jan contact showed a
76% chance.

Fed fund futures contracts joined the floor-wide rally after
better-than-expected monthly US jobs data scrolled across the screens at
the CBT. Traders said that action lessened the likelihood
of the Federal Open Market Committee further tightening interest rates at
its meeting on Oct 5.

The Oct contract nears its high of 94.700, reflected a 28% chance of a
tightening, up from Thursday's expectation of 72%.
The Dec contract rose to a high of 94.630, reflecting a rate of 5.370%,
or a 52% chance of tightening in November compared to Thursday's 72%.
The Jan contact, which is being viewed as an indicator for what could
happen at the Fed's Dec meeting, rose to 94.560, or a rate of 5.44% and a
76% chance of tightening at the year's final meeting. On Thursday, Jan was
showing 92% chance.

One trader said the jobs data have "bought the Fed some time" on
further action, although officials will be watching domestic data closely
for ongoing signs of inflation.
"We still have PPI next week. We're not out of the wood yet, but we're
breathing easier," said one broker on the floor.***
(c) Copyright 1999 FWN Reprinted at USAGOLD with permission. For details please go to:
http://www.futuresource.com/internet.shtml
No further reproduction without written permission from FWN
-------------------------

October crude rose 51c to close at $22.00. Traders are now looking ahead to the OPEC meeting in Vienna later this month.

And that's the view from here...after the close.

http://www.globetechnology.com/archive/gam/Y2K/19990903/RBANK.htmlThis ties in well with some of today's discussion on the Fed and banking system reserves.

Sir Aristotle, I meant to say thanks earlier for fielding the inquiry of Sir SteveH. This article is my additional contribution to that matter.

Dear Leigh,
Please read Prof. von Braun's essay on "not all gold stocks are born equal" on either this site (excuse, I still can't paste) or at the metropole cafe.

While trying to cope with Prof. v. Braun's Scenario, where the message of default by overleveraging is more than clear. Meaning the bank will be able to "seize" the collateral or foreclose as in any other mortgage - the (unmined -and maybe pledged at 385$/oz as at ABX)gold reserve in the ground - may be at this risk, particularily if, even a low cost miner can't cope with the fallouts of prices, below real production (not cash costs- will gladly go into this discussion also) in the longer run.
Still, there are a lot of more or less unhedged entities out there, which as yet are not in the ultimate greenmailing claws of BB's. Most are operating on international concepts and go, where either the geology or the mining, tax and other laws are accomodative.
Finally, no government or their agencies ever,nor by the same token most major mining co's, have found a new gold deposit. Exploration is like new technology - (ad)venturous and (risk) capital intensive - so let the "cabal" seize assets of hedge fund "miners" as the likes of ABX- IMVHO the rest of the industry will prosper by weeding out the scam and scum artists, ultimately, proving (ABX being in the business by sheer and lucky chance anyway) some of the solid, if undercapitalised, but proven on geologist and other manpower, unshakeable convictions to find the bonanza, will survive - even while starving!

Sorry - dear Leigh - that's a view from the (gold) trenches..
Sorry for

Bravo, sir. Well done.

I do detect a change of slight heart with your latest prose.

If I can find concurrance among this group. If not, your words will ring just as true and fine, but neatly shelved as a golden nugget in the archives...a pleasant discovery for any that should pass down this row with a torch from this day forward.

Well said, and I absolutely agree with you.

http://www.usagold.comIknow three us cos as a consultant or board member.The first one,in the health sector,cannot find the professionals that it needs.of the other two,manufacturers in the midwest, one moved a thousand jobs to mexico because they could not find more workers necessary for their operations;the other,amidsized plant,needs 100 workers and does not even try to hire."there nobody around"I wa told.The job report should be read in this context.Dracip

One of the latest scams, SORRY, I mean plans, put forward by the IMF is that they sell some of "their" gold to the central banks. The central banks will then return the gold at a later stage in lieu of subscription they pay for IMF membership. WHAT??? Is the IMF now leasing gold to the central banks?
The IMF were to sell at 46/oz, the value the fund imputes to its gold reserves, but will now sell at market value and hence, make a "profit", which can be invested in HIPC fund.
I have one question : When the central banks return the gold to IMF, " in lieu of subscription they pay for IMF membership " will they return it at market value, or 46$/oz.
Assume they return it to the IMF at market value, and assume that market value is STILL about $255, then the net is a transfer of dollars to the IMF. Either the central banks currently have no dollars to give to the IMF, mmm....., OR maybe the central banks see an improved gold/$ rate in the near future,mmm....., OR maybe the central banks would DESPERATELY like to add to their depleted gold coffers in the next month or so.
I have assumed in the above analysis that the central banks hold all the cards, and are in fact the ones exerting pressure on the IMF to reduce its gold holdings.
YES, the IMF puppet is having its strings yanked. "The next UK sale is due on September 21, only days before the IMF's annual meeting ; its self-imposed deadline to find a solution to the gold sales problem."

Dear TownCrier: If Goldspoon's complimentary work is placed in the Hall of Fame, whenever someone else wants to say something nice about the Forum, they can write, "Goldspoon Dittos!"

http://www.stratfor.com/hotspots/korea/default.htm?section=3.4MUST READ..(Thanks Townie).. The War of many fronts i've been predicting for this month may be started by North Korea..(Chinese guard dog) may be ready to take a bite out of South Korea and provide a diversion so the Chinese can then begin the raid on the Tiwan hen house......As every one knows the U.S. has made public "We are only ready to fight a war on two fronts"....Would we be willing to fight both of them in Asia... thus leaving ourselves exposed at home and in all of the rest of the Globe??? We might have tried to stop China if it were the first to start things... but it looks the Chinese are going to play the ole Korean gambit move...
Korea is ready to try the waters once more... (see link)...

Here is an update from my neck of the woods, don't know if this is a correct linkage of events to the scriptures but this is what some folks are saying around here... just info not trying to be preachey....just a report on possible development on wars from my war lookout post...
Nothing like Global War to shake the stability of currencies and the Gold markets...by the way gentile Knights, would some of you learned schollars please provide speculation as what would be the first kneejerk reaction....A flight first to Gold.... or the Dollar and why????
Update from the Bible Belt... sign of the times??



Israeli troops will hand over more of the West Bank to Palestinian control and the two sides will embark on so-called "final status negotiations", including talks on such deeply contentious issues as water, refugees, Jewish settlements and the future of Jerusalem.

Withdrawl from lands given to the Jews by God, spoken of in the Bible as "The abomination of desolation"

Palestinian negotiator Nabil Shaath had earlier announced that the two sides had reached an agreement."We hope this will usher in a new era of peace and real success in implementing all the agreements that have been signed so far and in moving ahead to resume permanent-status negotiations."

"When they cry peace and safety then sudden destruction"...GOD

Oh, Goldspoon, now the Forum's going to go down! You said the "W" word!

As a compliment to someone, you would verbally give them a gold spoon as a prize for a post well done. As in:
"You served that dish up on a golden spoon! Keep the spoon for your efforts, most worthy Knight!" or, "A gold spoon to you, Good Sir!" An evolving forum lexicon will surely take care of this matter without my help. I'll just sit back and watch. For example, they call me Townie. I don't know why, and I never said they could. But they all do.

And I like it.

Thank you sir for your kind words! I have to say that I have enjoyed reading your posts. I had a bit more time to answer Mr. Hipplebeck and also to clarify my own thinking.

I ran this idea past those great guys in The Castle. Ok, it was just MK, but he runs the place and has the heart of ten men. Anyway, with the past system crashes, in addition to various requests that the archives be searchable by keywords, I asked whether he would consider making a CD-ROM available for purchase that would contain all of the archives. Imagine having that in the safety of your own Castle, come Y2K or gremlins that defy Jeff's best efforts. The real bonus is you could more easily search the vast amount of information for key words.

Any interest? It would be nice to have an idea whether to take the effort to put this together. Here's a chance for all you knights in the shadows to get your names on the screen...step forward with a yea or a nay. I imagine it could be done for a nominal fee, but that might depend on economies of scale. Feel free to weigh in on this now and any time throughout the following week.

First i want to say Thank You...My words were inspired by posts such as yours....And yes the W word did seem to bring out those who would like to supress such info "Jeff" may know for sure, but most probably my paranoia and coincidence.....

It is my impression that the whole gold banking scene is extremely secretive. As far as I know, no public commentator has ever seen any of these agreements. The agreements between the central banks and the bullion banks are probably considered state secrets.

If you look at the chain of liability, the bullion banks will theoretically be one of the many claimants for assets of defunct mines and hedge funds. Given the leverage of the hedge funds I seriously doubt anyone would get anything from a failure other than legal bills - if the bullion bank was lucky. Remember that the trend is to make the creditors of hedge funds "part of the solution" by making them all pony up more money to bail out the hedge funds. So the bullion banks may wind up with more liabilities than they started out with.

As far as mines go, the bullion bank would have to come up with some type of settlement with the rest of the creditors, bribe whatever dictators need re-bribing (er licensing) and get the beast going again. Possible.

As far as central banks go, I have not yet been successful in getting my head wrapped around what the central bank of Brazil would do with a bunch of bankrupt Rothchilds.

Goldspoon, I was just TEASING! I love your posts! Thanks for the link. I saw your message about the Chinese Christians and have worried about them ever since. The system seems to break for any and every reason - don't get paranoid here.

Thanks for your answers to my past questions and your kind comments.

Put me down for one of those disks, my son needs a good education and reading the "Hall of Fame Posts" are akin to reading one of the Great Classics.... Full of well crafted pieces from great minds who take a techinal subject and make it an entertaining, witty work of art. Reminds me of a dear departed writer of the same ilk and gift for turning the techinally complex into simple logic.... Isac Asimov (sp?)

I have amassed most of my Presious Metals before finding this city of Eldorado nesteld here in the tall forests of Camelot..... but, i'm sure everyone knows where my further acumulations will come from...providing it's avaliable...
"Goldspoon to you"

"cut and paste" Part 1
Please read Prof. von Braun's essay on "not all gold stocks are born equal" on either this site (excuse, I still can't paste) or at the metropole cafe.
--------------------------------------------------------

1) Click and hold left mouse button and move over desired
text, text is now shaded (possibly blue in colour)
2) Release left mouse button, click on edit, click on copy.
3) Go to desired position in same program or other program,
click on edit, click on paste.

When you have 'copied' the highlighted text, in resides in the computer's volatile memory, you can then 'paste' it wherever you want.
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To all:

Obviously not a gold topic, but soon Cobra will 'paste' us
golden topics.

http://www.gold-eagle.com/editorials.html
Cobra refers to "Not all stocks created equal- von Bron";
3rd or 4th editorial.

Take a look at these and see for yourself...

Aristotle - Read this post. Nice job! Couldn't do better myself, although I read it, understood it, and probably could give a similar dissertation, although never so eloquently. Studying under the 'masters' does have its' rewards. Thank you for your time, your thoughts, and your knowledge.

What do these bands say....

I have the honor (or is that honour, Holtzie) to nominate the POST #12765 for the HALL of FAME.
<;-)

Mr. Holtzman, thanks for putting forth such a balanced perspective on the reality of the street POG. Hopefully, someday we will be able to tell our kids that spot stands for the Street Price Of Things.

TC, I'm all for that CD ROM. If that doesn't succeed I will chip in for a search function in the archives. Along with posts like yours the archives are golden assets to be mined for the riches of understanding. Lets keep the CD or search function idea alive!

Aristotle, your #12,726 did the trick again. BTW, would you like to lease those German Wilhelm...?

Canuck, nice to have you back.

Koan, where are you?

Peter Asher, looking forward to your reply.

Goldspoon, those were some words. It is great that you appreciate the integrity of this forum and can put you feelings into such prose that touches the heart with such emotion. I am told that knights of old took pride in expressing what was in their heart. You are keeping the tradition alive.

The Stranger, your post on inflation hit home with such truth and the market today betrayed your foresight. A little time and more Greenspan repos will prove your case.

As far as I have heard, the conservative interpretation of the "abombination of desolation" or more accurately, "the abombination that causes desolation", is the act of the AntiChrist, three and one half years into the tribulation, when the Temple is re-built, and the AntiChrist sits on the throne in the Temple, and declares himself to be God, and causes the deceived to worship him. To interpret the abombination that causes desolation as the withdrawing of Jews from lands given to them by God, is more than a stretch, it is an exegetical error. FWIW

.

Perhaps Koan is depressed over silver tanking, yet again. Koan: cheer up, my friend! Silver will have its day in the... er... moon, and it may just happen before goldrise.

I hand wrote it while setting fence posts today, Now I have to weave the Holtzman post into it. Tommorow I'll set Forum posts. ---P.

Know when i am around....tooooo bad...USAGOLD disregard this stuff...please....

But these people know most everything...i'm sorry....i will be careful from now on....

Do people know when you are there?

Thanks for setting me straight. I don't know how I got the ideas I had; last night I looked in the Another(Thoughts) to see if I could find out and just couldn't find them there. A stainless steel spoon to Leigh!

May I come out of the dunce corner now?

Hello GFD, nice to have you at this roundtable.I have benefited from you posts. Yesterday you said,

"It is my impression that the whole gold banking scene is extremely secretive. As far as I know, no public commentator has ever seen any of these agreements. The agreements between the central banks and the bullion banks are probably considered state secrets."

There is a broker who posts on the Kitgo site with the handle uptick. His name is Len Kaplan and he deals with bullion banks and is in the midst of these gold agreements.

I believe it was on Friday, Aug 27, that uptick posted quite a few of his viewpoints. I don't recall if he discussed agreements on that day but he has done so in the past.

He does not not see a problem with the supply of physical gold at this point but I do not know how large a quantity of gold he deals with. He posts there several times a week and you could investigate this secrecy area though him. He answers just about everyones questions rapidly and is well respected on the site.

For all I know, some of the area is secretive. However, many of these agreements are connected to paper gold that you or I or anyone could buy. I would imagine that the agreements could be read by the buyer of such paper. The thing to find out would be: are there agreements that only circulate within a closed set of participants? If so, why and what are they about?

GATA would be another source of information. If such secret agreements exist it would benefit their cause to find out about them.

One also has to distinguish between information that is prorietary to a corporation and information that is secretively withheld from public view. If a corporation is a public entity they are also restricted from withholding certain types of information from stockholders. However this is not my area of expertise. A bullion bank like Goldman Sachs is a public corporation is is open to investgation by agencies like the SEC or the agency that deals with commodities and whose name escapes me.

Perhaps FOA or Another might know something about this. MK do you know much about this area?

Investigating this area would be a valuable contribution and is an untouched area in the quest for the Grail of the Golden Truth.

Thank You, Sir Tomcat for your kind words about my prose..the pleasure was mine sir....

Elevator guy, i belive you are correct sir... after revisiting the text i concour with your acessment....
This is the way i love to learn....from such a diverse and learned court..."A Goldspoon to you sir"

http://www.egroups.com/group/gata/193.html?Latest from GATA's Bill Murphy

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001JfzIBM keeps sending HYPER patches to programers on main frame computer programs "already deemed compliant". Lots of Geek Speek (programers talking back and forth about suddenly its too late to fix what they were assured was compliant.....
************************************************************
"The conveniences and comforts of humanity in general will be linked up by one mechanism, which will produce comforts and conveniences beyond human imagination. But the smallest mistake will bring the whole mechanism to a certain collapse. In this way the end of the world will be brought about."

Sufi Prophet Pir-o-Murshid Inayat Khan's prophecy (Complete Works, 1922 I, p. 158-9)
************************************************************
EXCERPTS FROM THE LINK:

If this is true, then we are in deep merde. I worked for Saudi arabian airlines for example in Jeddah, for three years - a totally IBM MVS/VM/TPF shop - no way did they ever keep up with the latest APAR's and OS releases...

Cory is right - these OS's are spread all around the world - quite simply many many shops just do not keep up with new developments - i.e. if it ain't broke don't fix it...

Then think of all the stolen s/w in for example Russia and China - no way will they have access to any new fixes...
-----------------------------------------------------------

pdf is a real pain..here is a small snipet.
IBM's Year 2000 Ready products are designed to function through the 1999 to 2000 transition without

interruption, but you should periodically check to determine whether service or maintenance should be applied

before the transition or whether there are any recommended, product-specific Rollover actions since some Ready

products may require user intervention. See Chapter 3, "Reviewing Vendor Support and Support Procedures" for

more details. See the Glossary at the end of this document for definitions for "Year 2000 Ready" and other terms.

1 There are other dates that may cause date-related problems, such as September 9, 1999, February 29, 2000, or

whenever an application starts to process year 2000 dates; while many of the issues and considerations are similar,

this document only addresses planning for the year end 1999 date transition.
------------------------------------------------------------
So, what is new here? Take a look at Microsoft's Win/NT. SP-3 was supposed to "fix" all the Y2K issues. But, guess what, it didn't. So, they came out with SP-4 (Y2K wasn't the only item addressed) that was the last word in "compliant." Well, there were so many problems with SP-4 that Microsoft announced a "service pack for service pack 4," the first time that they ever did such a thing. Once again, the "bug" was still alive, and we now have SP-5 out. Is it "ready" yet?
------------------------------------------------------------
ok guys........the game is up......with the IBM (PTFs) being used on a ad hoc basis in my area ....power generation utilities in the Australian power industry as luck ( bad luck ??) would have it I am stuck over here in the ole USA as a consultant for a local power comapany for y2k........and the news is all bad I'm afraid.......and oh just informed my CEO ....gave him the Zolt and Dans words in plainsspeak......ever seen a man blanch ?
------------------------------------------------------------
IBM itself on it's Y2K product compliance sites marked almost all of it's software as Compliant(yes) **.
The ** says "Yeah, it's compliant, but service is required"

They are leaving the door open to be able to cut a tape or warn you of a hiper on Dec 31st at 23:59. There are liability issues here, Y2K might enrich the legal community more than tobacco!

Any company that is not running a production image in an LPAR with the clock set ahead by now is in serious trouble...
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Guys...I work for a large multi-national, and our M.F. is crotchety of the BEST of days...I knew that we were in trouble when the remediation team all went in on tracts of land 'out there yonder' together. I goota bad feeling that the next few months are going to define that ancient Chinese curse "May you live in interesting times..."
------------------------------------------------------------
IBM's suggested reading for those planning the 1999 to 2000 rollover.
http://www.ibm.com/ibm/year2000/docs/rollover/rollover_english.pdf

Take your time and read the footnotes.

-- MoVe Immediate
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2. Of those entities, determine what non-applied HIPERs are in parts of the system that they do use
3. Determine what precisely will happen to those systems if the HIPERs are not applied
4. Determine if all those HIPERs in 1-3 will be applied in time
5. Determine if all those entities, (who are affected in 1-3 are aware of potential problems that might fail at step 4 by not getting them fixed in time), have completed workable contingency plans that address these potential failures
hyper viper, poison to the System
------------------------------------------------------------
Thanks, that was a good summary of the problems. But I must say, it sure does sound a lot like what Cory has been warning about for a long time now.
------------------------------------------------------------
You did not address the issue of Y2K HIPERs being issued at this late date. Wasn't that the main point of Cory's references?
------------------------------------------------------------
Some terminological comments: IBM uses the term PTF (program temporary fix) for their mainframe software patches. The term HIPER is used when the problem being fixed is one which may have seriously adverse effects. PTFs usually come on a tape that contains many PTFs, and there may be a new PTF tape roughly once each month.
Applying a tape of PTFs usually fixes some things and breaks some things, hopefully fixing more than it breaks. It is also a bunch of work. So, many sites wait a while to see what reports from other sites have to say about whether or not a given PTF tape has a bunch a bad fixes. They may wait several months before applying a tape, and when they do decide to apply, they may apply several tapes, up to and including a tape that fixes most of the buggy fixes in previous tapes, but which itself adds few new bugs and/or minor bugs.

So, if the HIPER bugs are within a set of tapes that has not yet been applied, they may be in good shape. Also, if the HIPER bugs are in parts of the operating system that they do not use, they may be in good shape. Otherwise, they may be in bad shape.

Hopefully, that was not too brief or too geeky.

------------------------------------------------------------
"Sorry for the long post.... hope this sheds some light on last minute fixes on fixes that were fixed when they were "compliant" after they were "Ready" to be ready already....

"Just keep on fixin' what you've already fixed boys..or we all will be in a fix... if these "last" fixes don't fix what you thought you've already fixed all "READY???" OH, and just for good measure one last one.....
------------------------------------------------------------I agree. How can I tell a customer that an IBM product is Y2K compliant, and then tell them that I have a couple of dozen YR2000 sourceid PTF's that need to be applied. Seems to me if a product is Y2K compliant, then there should be no new fixes, or perhaps the product is NOT really Y2K ready...

Got Gold Yet???
Take my advise..."Lets get Physical"....Gold...

http://www.boston.com/dailynews/244/technology/NetTrends_The_Other_Y2K_Proble:.shtml2kay bugs, and Hackers.... double whammy....

Hi Goldspoon, enjoyed your recent post probing the tentative computer disasters that may gift themselves to us next year. In particular, (and I had almost forgot about them) your suggestion that all the stolen programs in Russia/China would not have access to upgrades.
During the early part of this year, I was assigned to a project in Russia where I was approached by one of my collegues (Russian) with a copy of Windows 98 for the equivalent price of $12US. Simply stunned, I asked how he could do that, as that version had not been out for that long. He wouldn't go into any explaination, however, he assured me that: #1, He had the program before it was released in America, and #2, He would have any upgrades required, before they were released in America.
These are pretty outlandish statements, but the underground (black) market over there rivals imagination. I have absolutly no knowledge contrary to your submission, however, witnessing what they were capable of surfacing with in relativelty little time, makes me wonder if, indeed, they will "no way" be able to get access to upgrades to their "hot" programs.
No49

Tomcat, thanks for your feedback. As I said, these are my impressions based following the scene over the last few years. I have been quite busy recently and have not been able to follow Kitco that closely so thanks for the tip about "uptick". Certainly the leases between bullion banks and publicaly traded mining companies are not going to be that secret. They have to be summarised for their quarterly reports, etc.

However, the agreements between bullion banks and hedge funds are would only be open to those who have access to "the books" of those funds. Does uptick have access to Mr Soro's books?? I suspect that if he did he would not necessarily be posting on kitco...

Likewise, the agreements between the bullion banks and the central banks are agreements between very private organizations, from what I understand.

I am _not_ an insider so I could be waaaaay out in left field on this. However, if these agreements were available for perusal, I would expect Armstrong or Veneroso to be citing chapter and verse from them. And they aren't.

Tomcat, this is what makes gold so much fun. On the one hand you have uptick saying that there really is not much of a supply problem and on the other you have Mr Veneroso claims a deficit of 150 tonnes A MONTH! Clearly one or both of these gentlement are a tad off, shall we say.

GFD, you stated that:

"On the one hand you have uptick saying that there really is not much of a supply problem and on the other you have Mr Veneroso claims a deficit of 150 tonnes A MONTH! Clearly one or both of these gentlement are a tad off, shall we say."

I don't think there is a conflict between those two facts. All it would take is enough owners of physical to allow to gold onto the market either by leasing or selling. It is believed by many that the CBs are leasing quite a bit, which gets sold by the shorters, and providing enough to fill the markets needs.

The secrecy issue leads to another question. What type of documents would be necessary to shed more light on the truth of what is happening?

Between 11:36 (when he got up?) and 15:07, today, the poster known as Tolerant posted 37 times. (56% of all posts during that time.)

Why such a compulsion to post so little, so often?

Tolerant's the best! He's a true freedom-loving American. He comes up with the most enlightening articles about the Clintons, what the UN is really up to, and so on. I've learned a lot from following his links.

First, to address Holtzman regarding "Backwardation" between the price of coins versus spot. The spot gold price certainly is affected by immediate paper trading, but there is a present time physical market involved there. We see here daily reports of the movements of various portions of the million or so ounces of real gold on the Comex. Describing "Spot" as the <<< It's the Paper price of a
gold futures contract to be settled during the present month, and almost always to be settled for
cash rather than for delivery. >>>> appears to conflict with the fact of there being an actual future contract of some sort coming due each month. (Some months are major and some minor, but even September, which is never reported, shows up as trading on Quote Com.) If that were the case then the "Spot"price in any month would be the same entity as that months' future contract. Certainly, when an active month is in its last thirty days, we still see two separate quotes between that future and spot, usually converging on a zero spread as the expiration date approaches. I am open to correction on this, maybe we have a poster that has empirical data on the exact mechanics of Comex and London as regards Paper and physical delivery. I mean if I win the Powerball, do I bring my Brinks truck up to the Comex freight elevator for my six tons, or do I go somewhere else. Phadreus can you answer this??

I see one bullion and coin dealer is posting the spot price as the median between the (daily) bid and ask that he is buying and selling bullion for. Simultaneously he quotes daily coin prices which are currently $13.00 - $$16.00 above spot, for Eagles, Krugers, CML's and Phillies. The coin market is the retail, and bullion the wholesale. The deferential is related to several factors. The most basic would be the 'service' of minting and selling piecemeal. Secondly is the divergence of supply and demand factors between a commodity bulk flow, and the production flow of a manufactured (minted) product. Take as an example for this, the effect of refinery fires. Gas at the pump goes up without any curtailment of crude, which could even, in theory, have a brief decline in its spot price as the need for it temporarily slacked off. Finally, there is the fact of the purchasers of coins being a different market segment than the purchasers of (large quantities) of bullion. Y2K and other bubble bursting concerns are increasing the demand for coins while the increase in the supply of metal needed to produce them has not yet affected the above ground inventory sufficiently to impact the overall physical gold market.

When that overall market is impacted by the coin demand, short delivery, storing of value by bullion purchasing, and possibly an increase of currency reserves by some central banks; sufficiently to 'tap out' the available above ground supply, no amount of paper trading will be able to negate the effects of supply and demand on the price of physical. The POG will rise to whatever amount necessary to shake loose more gold. That rise in turn will increase demand and also diminish the desire to sell in some gold holders, even as that desire will be triggered in others.

That is when the ability of paper contractors to make good on their promises will become suspect. The conformation of that suspicion will be the occurrence of 'Backwardation'. Backwardation is a differential related to TIME. The difference between Spot and/or Bullion on one hand and Coins on the other, exists in any given moment as a PREMIUM.

Tom, one important aspect of lease rates are that they are in the end, a policy decision, influenced by the free market, yes, but not an empirical result of cause and effect. Your <<< If lease rates stay high for six to eight weeks then that won't be long enough. they won't catch enough of the short rollovers. But after three months, or longer, many rollovers will be affected by high lease rates. >>> is most significant in that light. Will the high rate persist long enough to dry up the CB loan supply or is it already dried up and the lease rate a corroborating factor? For that matter, will the present dog and pony show even last three months?

So, I think backwardation will be the hard evidence of physical scarcity even in FOA's new paradigm. It's what happens next that will be the end game. When Warren Buffet's acquisition was running up the price of silver, I believe backwardation set in about midway in the big move. That however, although quite large, was nevertheless one man's financial gambit, and therefore relatively finite. When gold futures trade for less than spot, a very big genie will be out of the bottle, and the gold shorts are not going to have the magic words to put him back in.

FOA, the Bunker Hunt situation was also one man's game played against all the others. He had just one vote at the polls and just one man's markers to call in. Couldn't paper gold contracts crash as stocks do, selling for pennies on the dollar to speculators who will risk a wipe out for a major gain. As they approach expiration they would approach zero in value. The exchanges only broker the contracts, the individuals who write them and buy them are on their own, correct? If at some point they close down market place contracts can still trade. Thirty years ago, if you wanted to buy a put or call, you had to go through a private broker. In the late fifties, I heard a tale of a fellow, who in the post '29 crash era, papered the wall of his den with worthless bonds. The company somehow struggled back on it's feet and was eventually able to redeem them. They sent a guy out to his house with a cancellation stamp and inked them out in place.

What I'm saying to you and Tom, is that I don't see the end game being one of paper pulling down the price of physical, I see the upward move of physical as being the precursor of the paper collapse. The first phase of that would be a definitive, classic backwardation event, IMO, of course.

Just received this from the bank that carries the truck loan.

"We have removed the automatic payment feature from your loan and ordered a coupon book. ----- ----- . If the reason for this request is for Y2K purposes. The bank will be printing out reports and ledgers on December 31 1999. If you like I will send you a printout then also."

I think I'll stop by and pick it up!

There is a more common scenario that will also be indicated by "Backwardation' That would be when unusually strong demand for a commodity is perceived to be short lived. While that could occur in a small scale short covering rally, or a singular effort to acquire a large position, it is hard to conceive of a major trend reversal in gold being a temporary condition that will be satiated in the near term by additional supply.

Peter, you said:

"What I'm saying to you and Tom, is that I don't see the end game being one of paper pulling down the price of physical, I see the upward move of physical as being the precursor of the paper collapse. The first phase of that would be a definitive, classic backwardation event, IMO, of course."

Good point, Peter.

Perhaps the first sign will be a delay in the time it takes the dealer to get his gold delivered. The second sign might be an increase in the street premium. The third sign would be the dealer having a hard time finding all the gold that he needs to satisfy his customers demand. The fourth sign might be the dealer starting to ge amused at the ridiculously low price quoted for the paper spot and seeing that the paper spot settings don't correspond to the real, over the counter, world.

Peter, I find it amazing that you post your posts while posting fences. If you run into trouble posting then try saying this rapidly:

How many posts could a fence poster post if a fence poster could post fence posts.

And the fifth stage would me the paramedics scraping short sellers of the Comex sidewalk.

And since it seems to just you and me tonight, how about ---

Peter posits posts while digging,
posts for cedar landscape fences.
How many daily Forum posts,
can he posit when he's quick.

I'll get serious again after sunset, we may have to carry the site for another two days.

http://www.gold-eagle.com/gold_digest_99/schultz090799.html
Harry is back and he makes Gary North look like a Pollyanna.

Peter, I have figured it out. Someone yelled "FIRE!" and the place cleared out and we didn't hear anything. Guess were the only ones left. Got any marshmellows?

What do think of ole Shultzie. I figure he's gonna hole up in the alps when the digits hit the fan. Only about 16 more weekends left. I figure about 12 more weekends till the show starts.

"I don't think there is a conflict between those two facts. All it would take is enough owners of physical to allow to gold onto the market either by leasing or selling. It is believed by many that the CBs are leasing quite a bit, which gets sold by the shorters, and providing enough to fill the markets needs."

You have to look at this in context. Given the ongoing supply deficit that has been unfolding for years people are under the impression that a lot of cb reserves have already been trucked out. With the current deficit running at 1800-2000 tons per year it becomes questionable how much longer this process can actually continue. You have to bear in mind that not all central banks are part of this scam. Some are actually accumulating.

Because central banks have chosen to treat gold trucked out on a lease but due back (gold receivables) the same as gold in the vault it is very difficult to get a handle on when the music will end.

The music could be going for years to come, or it could coming to an end soon. Unfortunately, when it does come it will come with very little warning.

The real question is what symptoms will the gold markets display when the end is nigh. This _is_ the 64 billion dollar question.

It would not be surprising if the symptoms were similar to what is happening now.

Hey Tomcat - how ya doing? We'll see now if after reading Harry's viewpoint the discussion here still focuses on paper and plastic. He certainly doesn't mince any words, eh?

Black markets and cash! What a thought! Maybe we'll hear some ideas as to how the governments will proceed given the possible loss of all of their holy trinity. What a scramble this is going to be.

Peter - I don't think you'll have to wait another 3 months to find out what is likely to happen to the monetary system. Everybody seems to be scrambling now! May only be another 3 weeks. I'll bet you by the end of the month gold is unavailable at any price in dollars.

ET

Us country folk were having a little marshmallow roast while everyone else is feeding the OPEC economies at the gas pump for three days. Pop a few on a stick and have a seat.

In my third paragraph of post #12814 below, I am addressing the "critical mass" factor required to move Gold up and away from (IMO) this 20 year double bottom. I believe the key to the mystery lies in the actual reality behind AG's statement about CB's standing ready to lease gold as needed to contain the price. If that were the TRUTH, I doubt he would have announced it.

As a new and already powerful voice here, perhaps you could spin us a tale or two this evening about how you perceive this immediate future that is destined to become legendary.

Hey guys I gotta stop talking for a bit and go over to the Coleman lantern and read that Schultz post. Don't eat all the marshmellows.

Glad to have you back. Peter and me were hoggin all the marshmellows so pull up a log and get warm by the fire.

I agree with your last post entirely.

Since its marshmellow time that gives me the right to opine a mite. I'm an ex-test engineer who believes the y2k thingy is what Harry Schultz and the BIS report say it is: trouble.

Therefore, within the next ten-twelve weeks or so this y2k thingy is going to undermine the good intentions of those that walk the Path of Pollyanna. In other words there are gonna be a lot of very surprised people out there as the herd of shorters rush to the exit. Ain't gonna be pretty.

Hey ET, what a pleasant surprise.

You know, last time I remember talkin I think it was about two weeks ago on a Saturday night. Think we were talkin about confiscation or somethin. Anyway, about one in the morning, on Sunday, I post eight messages and the site goes down! Of course, I had only saved one of the messages. Anyway, the one to you went down with the ship. Been feelin like I crashed the site but never had the nerve to admit it. Well, there it is.

Yes, ole Schultz sure is saying it like it is. The world is about to collapse and he's right at home humming his tune; might have been Nero in past life! Trouble is I think he's right. Damn.

Say, ET, have some more of Peter's marshmellows and opine a bit on how you think the next 16 weeks are going to unfold.

Ya know ET, this is kinda comfee-like. Sittin around and taking it easy. Pass me over some of Pete's marshmellows, will ya.

Well, well, well. That Schultz letter was almost identical to tonight's dinner table conversation, though we also had the pleasure of discussing the predictions of Sufi Prophet Pir-o-Murshid Inayat Khan's prophecy thanks to Goldspoons post #12804

The non-believers are blinded by the litany about the millennium bug. That is the fact behind Y2K, but it is not the point. All machines have a service life beyond which they wear out, break down or literally fall apart. Suppose you have a vehicle with a couple of hundred thousand miles on it and decide to drive cross country in it. There is a good chance that somewhere between Kansas City and nowhere, you going to be in a farm town for a week waiting for new engine bearings to arrive and be installed. Not only will your 4-day trip turn into 2 weeks, but you still have a clunker. Not only that, but you lost a week of work and you're probably tapped out, like most folks, so you've got some recovery and catching up to do (still having the clunker, of course). After that, you have to acquire the means to buy a new car.

That is the real situation with Y2K. This affluent, booming economy we live in at this moment is traveling on a machine that was never designed to operate beyond January 1st !!! It is a Clunker!!!

I see the breakdown occurring in three phases. I've named them Crises, Shut-down and and Phoenix. First will be the macro-version of a major storm-flood-blizzard event, exacerbated by the cash crunch and bank holiday phenomena. That will be the easiest to fix, analogous to changing the fuel filter, replacing the distributer cap and spark plugs, and flushing the radiator. But that's just a re- tuned clunker. It is Phase Two that will be the real disaster. The machine has to be rebuilt in some areas, replaced in others, and in many areas totally redesigned. That's a lot of downtime somewhere west of K.C. Eventually a new shiny economic juggernaut will rise from the ashes, but it will not be at all the same as last year's model.

Those that trust the clunker to get them where they're going are going to be stranded in the middle of nowhere. Those that have been saving up for a new car are going to travel in style.

Got Gold??

Hey Tomcat - I remember the night! It's too bad the forum went down. I was telling Peter that I've spent the last couple of weeks finalizing our y2k preps so haven't been around much anyway. We're pretty much ready to go, whatever the future holds.

As to the next few weeks, I'm lousy at predictions. As you know I've followed this issue for several years as have you and only now am I able to draw any reasonable conclusions. It appears the PR scam is coming unraveled as more and more failures are admitted to. I watched Paula Gordon and Jim Lord on C-SPAN this morning and they pretty much have given up on government. Gordon is advocating people forget the federal government and take this problem on at the local level. Did you catch the 'compliant' Social Security Administration story about them mailing out letters to beneficiaries claiming their benefits were going to expire Jan 1, 1900? Pretty much sums up the situation, eh?

I suspect the monetary system is on the verge of collapse and the insiders know it. I don't know what this bunch intends to do other than to buy tangibles and try to recover after the rollover. I believe Schultz is right about the idea that most will be freer people in a few months. I've been trying to tell people that since I've been here. I think if you haven't already secured something other than paper you will likely have great difficulty from here on out doing so. My friends and I figured August 31 was the 'dropdead' date for y2k preps but we may yet have a bit more time. As Paul Milne over at csy2k says, 'it won't be long now'.

I'll have to admit I'm looking forward to the next year or so. Being an old 'laissez faire' type, I've watched the world head towards this global socialism and I sure didn't want this to be the legacy we leave our children. I always knew the money wouldn't last but I was never sure when it would collapse. I guess we know now when.

Two items I've decided to add to my preps; a bottle of Dom and a good cigar for New Year's! I better buy them next week while the dollar still buys something!

It was interesting to hear Harry Schultz quote you almost exactly with his point about inter-bank payments being the achilles heel of the whole thing. You are right of course and it was great that you were able to warn people about this quite some time ago. Kudos, Tomcat!

Good to chat with ya again.

ET

I hate to say it but I've got to go. A huge storm has come up and I've got to turn this machine off and unplug the phoneline. I've lost two modems this year already. Catch up with you all in the morning.

ET

Interesting analogy. Gets one thinking. Tis debt that has weakened the vehicle and made it into a clunker.

I wonder what would happen to all the property if there were massive dominoe defaults. Would millions lose their homes? Who would own them. The banks would go under so that leaves the government. Do you think the government might take the ownership of most real estate and we would be paying rent?

Yes, it's getting late and I must go also.

But before I go I want to acknowledge your progress on your preps. It is quite a big job isn't it. I will be through with mine in two to three weeks. Have a place in the Rockies with some sane neighbors.

I see the next few months pretty much as you have laid out. I have a sneaky suspicion that banking crowd up top really knows what is going on Y2k-wise. When you think about it, they have done a better job in getting ready than many industries but they can see the catastrophes about to occurs in dozens of countrie. And what if the banking interconnectivity doesn't hold. Wow.

Sounds like you were around on the forums in late 97 and 98 when many of us were speculating how it might unfold. My call 98 was that if 20% went down then that could trigger and non-liner cross default collapse. I believe now that 20% of the big boys could be in real trouble by March of 99. So it could happen.

Anyway, time for bed. Good talkin to ya again ET. Good night Peter. Good night GFD.

Ive got an extra hour on my side of the fire so I'll leave this for you to read in the morning.

Last year I suggested in a post, that a major difference between now and '29, was that a much larger percentage of the population owns there home I believe it is now 66% of all families.

As I said then, there are lot more mortgage holding voters, then there are Mortgage pament recievers. The politicians who pass a principle residence mortage moratorium measure, will be the survivors!

Ive got an extra hour on my side of the fire so I'll leave this for you to read in the morning.

Last year I suggested in a post, that a major difference between now and '29, was that a much larger percentage of the population owns their home, I believe it is now 66% of all families.

As I said then, there are lot more mortgage holding voters, then there are Mortgage payment recievers. The politicians who pass a principle residence mortage moratorium measure, will be the survivors!

Thanks for the info about the Russian Black Market...very interesting!!! i remember in '72 when i could not buy gasoline at the pumps but i could go to the homeless section of town and buy gas from the hobos... they had it in one gallon milk jugs and used a funnel to pour it into your car. Made me real nervous about how much of it was really gasoline...i think that in a little while many people will be surprized how little there will be to buy in the stores and how much and what you can buy in the coming U.S. black market....
Thanks again for the post...

Thanks for the info about the Russian Black Market...very interesting!!! i remember in '72 when i could not buy gasoline at the pumps but i could go to the homeless section of town and buy gas from the hobos... they had it in one gallon milk jugs and used a funnel to pour it into your car. Made me real nervous about how much of it was really gasoline...i think that in a little while many people will be surprized how little there will be to buy in the stores and how much and what you can buy in the coming U.S. black market....
Thanks again for the post...

You said "The politicians who pass a principle residence mortage moratorium measure, will be the survivors!"

Good point. A mortgage moratorium combined with the need for banks to be liquid will also mean the FED will put bank liquidity ahead of solvency. The printing presses will role like there will be no tomorrow!

So in summary, it looks like firts their will be a illiquidity, default, deflation problem due to y2k and this will be quickly followed by a printing press solution providing an inflation similar to what happened in Germany between 1920 and 1920.

Because of digital money the inflationary ramp up might occur faster. How this plays out will also depend on how rapidly congress responds. If they pay things like a mortgage moratorium quickly it will play out much differently then if they wait a year or two to pass it.

I am sure the FED has its own contingency plans that include things like this. What you think?

Get more gold now before the rush!

I have read so many times here in the forum that central banks lease out gold and that gold is then sold by those who lease it. There is something wrong with this theory. If a lease is payable in gold, then the central banks are acquiring gold not losing it. They are acquiring gold at the lease rate. If a person leases gold and then has to pay back a higher amount of gold, where are they getting it?

Is it possible that these people leasing gold have to lease a little more each month to pay back what they have already leased? If so, isn't this wonderful! No way out in the end.

Do I finally "get it"?

http://www.stratfor.com/hotspots/korea/default.htm?section=3.4Knights, lets play connect the dots.....

1. TAIWWAN DOES NOT BACK DOWN.........
During a two-day party meeting ending August 29, Taiwan's ruling Nationalist Party (KMT) adopted President Lee Teng-Hui's redefinition of cross Strait relations "as special state-to-state to embrace the new page of interaction between the two sides."

2.China begins making intrenal moves that would indicate they are serious this time....
China has not forgotten about Taiwan. It is merely securing control internally, focusing on border control, internal dissent and the Falun Gong, before attempting any external action......
On August 26 China signed a border agreement with Kyrgyzstan designed to fully settle all border issues......
China also began issuing arrest warrents for dissadents and Christians....

3.A please don't nuke us when we invade, keep this conventional if you will, notice......
The Chinese Foreign Ministry pledged September 2 not to use nuclear weapons against Taiwan in case of conflict. Foreign Ministry spokesman Sun Yuxi said, "We will not be the first to use nuclear weapons and will not use nuclear weapons against non-nuclear weapons countries and regions, let alone against our Taiwan compatriots."

4.China will inform Clinton privately that Korea is ready to open a second war front if U.S. interferes with China's plan to take some outlying islands to make Taiwan back down and begin serious reunification talks.....Will also black-mail Clinton and remind him of skeletons in his closet that China is ready to expose if U.S. interferes...(Check and Mate).... Taiwan is on the top of the agenda for the September 11 summit between Chinese President Jiang Zemin and U.S. President Bill Clinton, Chinese Foreign Ministry spokesman Sun Yuxi said September 2. Sun said U.S. commitment to Beijing's "one China" policy is important, and that China asks "the U.S. government to honor its commitment with concrete action."...(Read... STAY OUT OF IT!!)"There is but one China in the world and Taiwan is an inalienable part of Chinese territory," Chinese President Jiang Zemin said September 3 at the Thailand Cultural Center in Bangkok.

4. What will begin as exercises will turn into an invasion of some outlying islands..... China plans to stage land, air and sea military exercises near Taiwan in the southern part of the Zhoushan archipelago in the Zhejiang province, the Hong Kong-based newspaper Wen Wei Po reported September 4......

5. Mean while back at the farm.... North Korea will test fire new long range missle and raise tensions to a rolling boil to back up the threat of a second warfront......September 9th wake up call begins panic buying of supplies. The banking system and markets (already in trouble)... begin to crack under the stress.....

666. In the second half of September the exercizes begin and goes badly for the Chinese, events spin out of control.....China resorts to the use of a Neutron bomb to avoid disaster...exchange of Neutron bombs occur (got to protect the environment ya know)...World Markets tank....curriencies colapse...Gold is King once more,.. oh,what a world..oh,what a world.. . 2kay is a non event (it can't get much worse applies) and crumbles what infastructure is left.....NWO emerges.. the seven years of tribulation has started...but! there is hope!.. events may slip into October..... perhaps, even Holloween.........boo!.. <):~l}

i pray... i am totaly wrong.... and the computer is still up for (YOU) to tell me so....

Sorry for the repeat post, but I got no answer the first time.

Can anyone provide a link to a site that displays forward sale prices for 2,3,4 to 5 years?

I would like to know what future production can be forward sold at, for a mining concern wanting to commit to starting up a new gold mining operation.

Thanks in advance.

Hello H,

Here is some data on gold leasing:

1. To my knowledge there are no CB published figures that state how much of CB's assets are physical vs receipts for leased gold.

2. Many on the internet have speculated that CBs hold much of their assets as leased gold receipts.

3.CBs lease this gold for 1, 3, 6 and 12 month periods. At the end of the lease period they have the right to get their physical back or extend the lease (called a rollover) at the new lease rate. The borrower would have to pay the new lease rate at the time of rollover. Many leases are rolled over.

4. Some leases have the interest paid in gold. Some pay in currency. All leases are not the same. Some leases are backed by a collateral.

5. It is possible that a CB could also lease gold.

6. It has been said on the internet gold forums that the US has not had an official inventory of US gold at Fort Knox for many years and has refused to have this done and that the amount of gold held by the US is in question. I do not know if this is true.

7. If the POG rises and the shorters can't find physical gold to cover their positions then many have said that the CBs will be stuck holding paper and will have to take the Bullion Banks to court.

8. Others believe that if the POG rises then physical gold will come out of the woodwork and borrowers/shorters will be able to pay the CBs back in physical but will take a loss in covering thier short position.

I hope this helps.

A pattern that has started is that CBs all over the world are going to doing all they can to liquefy themselves and have as much cash available to support their member banks for possible Y2k bank runs.

This will require that they unload foreign currency reserves which will include the dollar. Despite the dollar's attractiveness to them they will need currency issued in the the denomination of their own country. Thus they will sell many US notes, bonds, etc.

Thus the inflation that the US has been exporting will be imported (repatriated). This will drive down the value of the dollar even more and the US will then be faced with the problem of keeping the POG down by selling or leasing Fort Knox reserves.

What is not clear to me is what the Flight to Liquidity and a weaker dollar will do to the value of paper gold. Will paper gold increase along with the desire for more physical or will the flight to quality help expose the fact that there is more paper gold than physical? It seems to me that the increased inflation would be a threat to the shorters.

The China/Tiwan issue is too difficult for me to deal with. It is too horrible. This issue reminds me of Y2k. How silly it is to be worried.

Look, it will never happen. Experts behind the scenes are competent and will work things out. No need to worry. And if a conflict did start, the pros would be brought in and have it straightened out in a few days. This is America and we don't worry about things like that. If China was a problem it would be in the press.

Even our President says China is our ally. And he is the President. If fact, I can prove it. China will be in control of the Panama Canal soon. You know, that little thingy where all the ships go through. China would never be that close to the US if they weren't our allies. Right?

Besides, many who sell bomb shelters are going to profit from conflict-talk like this and make it seem worse than it is; just so they can make a buck. I hope you don't sell bomb shelters? They are such a waste of money.

Remember, people are very, very nice to oneanother.

Your <<>> could be the title statement of the operation. The wild card is what happens between now and January. The "flow through" of Savings into spending via equities, that I keep harping on, is the lifeblood of this paradigm. The present mission of the FED has to be the near paradox of keeping the 401-k parade in lock step, without a further runaway Stock market.

They just might be able to keep the populace believing in "The bump in the road" right up to the moment they plunge over the brink of the washed out bridge. On the other hand that "Faith in the great Bull" revival meeting on Friday had a relatively low volume for the magnitude of price move. Watching the averages over the next few days might give everyone a case of whiplash.

**** ********** *******

When we had that chain of Forum crashes last week, I started re-filing my posts by subject category. The collection delving into the above subject is shaping up as a workable single essay. If the day stays quite, I might take advantage of the available page room and post the composite after I derive some kind of (hah) prediction out of it. ---P.

I read somewhere in cyberspace a few weeks ago (I don't remember where), that if US intervenes with some kind of naval blockade of the Straits of Taiwan then China intends to use a short range ballistic missile to nuke one of the US aircraft carriers as a demonstration of their seriousness. This is the ONLY way China could have a real chance of taking out a US carrier.

Unfortunately it would mean that some 5000 US service persons would go up in a big mushroom cloud. It's hard to see how war could be avoided in such a circumstance. The pressure on US to pre-emptively strike at Chinese nuclear sites and destroy all Chinese strike capability would become inexorable.

Jiang Ziemin, the Chinese leader is about to visit Australia and the press here has been reporting that the Australian Prime Minister John Howard is under heavy pressure to make it clear; that if China starts military action against Taiwan, it will lead to general war.

Australia has been told that if US takes heavy casualties, Australia will be expected to join war, because of Australia-USA mutual defense treaty obligations. The gossip here is that US government insiders are scared to death that war is very close.

Regards 18K

http://www.nationalpost.com/financialpost.asp?f=990904/71530&s2=investing"...Watch the greenback over the next month. Failure to heed its weakness could be dangerous to your financial health."

***

I talked with my friend the coin dealer again. He started reading FOA and other gold related material found only on the web. He suprised me. He said, "Within my circle, coins, suppliers, other dealers, trade rags, etc. it is obvious to me that JP Morgan and Goldman Sachs are closing out their positions as quickly as possible."

I said, "Whoooh! Are you saying their short positions?"

"I am saying their positions. The big boys are going going to get out of this unscathed and the dealers and small boys will be left standing," he said.

He also said that the premiums on US Gold and Silver Eagles were rising again. He said the gold premium had gone up 10% in the last week.

He also told me that he heard refineries were extremely busy melting CB gold bars.

***

To my mind there are three gold markets: LBMA and COMEX paper market, LBMA and COMEX physical market, and the gold and silver coin market. Most of us are involved in the third one.

The Markets surged on Friday after the release of the job growth report, "The economy is Cooling " The question is,is it realy? How can a small increase of only 124,000 New Jobs Decrease Total umemployment.

The Question might be better asked HOW Many Workers are still Available?

Hi Peter Asher, TomCat, ET & GFD, I read your Saturday camp fire posts and felt like I'd been presented with a sit'n log, too. I've been saying for a long time that Y2k is a bigger deal than the fragile financial systems. It can't be controlled or manipulated and it also can't be posponed. Yikes! Even the Big Boys could funnel down the drain as the best laid plans of mice and men implode in a black hole of mutant 1's & 0's. I still think that-a-way. However, if there's one thing I've learned, it's that people aren't going to take Y2k seriously until they're directly affected. We became sort'a outcasts trying to get our family, friends and community to prepare. I finally gave up, realizing that the barbarians would have to sack the town before people woke up. In any case, I sure enjoyed spend'n a little time by the fire with you yesterday, even though I was there in spirit rather than than cyber digits. Dear God, are the people on this forum great, or what? I feel like someone opened the doors and windows in a stuffy room every time I spend time here. The crisp air is fresh and clean with a hint of pine. Thanks all!! DD (David)

Peter, thanks for your response. Could you expand on your statement: "The "flow through" of Savings into spending via equities, that I keep harping on, is the lifeblood of this paradigm." Apparently I have missed some of your harps and I would like to know more about this.

Yes, insolvent banks can remain open, especially with the governments help as we have seen in Japan. However, illiquidity in the face of a bank run leads to short life.

Peter, I believe the the populace may will follow the governments misdirection about Y2k. However, the smart money is already moving out as witnessed by the record issuance of corporate bonds in a desperate attempt to have have corporate liquidity in 2000. It the corporate world that counts and they know, they are acting, and the bond rate is on the rise.

The corporate run on digital money will spread to the currency run by business owners from their personal accounts. Several business owners have called me for advice (like I should know) on what percent of their millions should go to currency, treas. notes, bonds, gold, silver, etc. They said their financial advisors were clueless. Everyone one was a business owner who had earned every dime. They're smart, they take action, and they don't plan on losing everything because of a few percentage points. They don't don't need a course on paper money. Many have immigrant parents who have clued them in on banks.

Also, with every DOW rally, thousands of insiders are getting the chance to sell more of their shares which they will convert to currency and treasury bonds at the expense of the Lemmings.

So, look not to the populace response toward Y2k. The populace is unfortunately the supplier of the funds allowing that savvy to buy tickets for their flights to the islands of Liquidity and Safety.

The tragedy of y2k is not that of a government cover-up. The governments are trying in their own feeble way to do their best. Unfortunately the move with the agility of the retarded and should be pitied. The tragedy lies in the thousands of people in the know who are going to be ready, at least financially, at the expense of Joe Sixpack who, in his ignorance and greed, is reaching to the God DOW for financial salvation.

Welcome DD, it is great that you arrived at a time when Labor Day has stolen much our roundatable. Gives us more time for easy goin chat. I will never forget your statement:

"Even the Big Boys could funnel down the drain as the best laid plans of mice and men implode in a black hole of mutant 1's & 0's."

Tell us more about yourself and tell us about how the glitter of gold brought you to our presence.

What a dull day, everyone! Sorry I missed the campfire last night. I was in Providence yesterday and saw a billboard for the elegant new mall there. The sign went (something like) "Dispose of your disposable income properly." Huh? Are we talking about money or Kleenex here? Four months of following this Forum has taught me the importance of considering money as "a family's wealth," not something to dispose of or gamble with. Well, if we gold owners (and savvy landowners and possibly any farmers who haven't been driven out of business) are the only ones left standing after the meltdown, it will be because of that attitude - we held tightly onto what we had and didn't throw it after every breeze blowing past.

I was watching "The Sound of Music" with my eight-year-old son recently. He loved it - we watched it twice in an afternoon. We talked about the setting - World War II, Hitler, why the captain chose to leave his home rather than serve in the German Navy, etc. - and he really soaked it in. Afterwards, feeling very close to my son, I showed him a Philharmonic (from Austria, like the movie). He had never seen a gold coin before. I was going to give him the "gold is true money" talk, so I began, "What do you think of it?" He said, "It's the same color as Lindsey's (his beautiful little sister's) hair." Then he said, "Mom, I have a gold coin, too." He ran to his room and brought out a plastic gold-colored coin with Darth Vader on it and proudly displayed it. I said, "Well, honey, you know, you couldn't go into a store and buy anything with your coin." "That's OK, Mom, I still like it better. It says "STAR WARS" on it!" What do you call a little sheeple - a lamb? I wonder if he's ruined for life, or just immature? Oh, well, I was half afraid to show him the Philharmonic for fear he would tell the neighborhood kids and we would have a parade of children coming in the house to look at it. He obviously doesn't value it enough at this point to even listen to what I was going to say about it!

Hope everyone is having a nice holiday weekend.

The third paragrap should read"

Peter, I believe the the populace may follow the governments misdirection about Y2k. However, the smart money is already moving out as witnessed by the record issuance of corporate
bonds in a desperate attempt to preserve corporate liquidity in 2000. It is the corporate world that counts and they know about y2k, they are acting, and the bond rate is on the rise.

God that is embarassing. Maybe its guilt over stealing Peter's marshmellows last night. Damn.

Great read on the National Post article. The pressure on the dollar is now coming from:

1. The flight to stronger markets.
2. US fear of an overheated economy.
3. US stock fear of rising interest rates.
4. Y2k flight to liquidity.
5. Rising oil.
6. Massive trade deficit.
7. Rising repos.

And, given this, Greenspan et al might have to raise interest rates again. Should be on heck of an open market meeting.

Steve, that was some really surprising information about JPM and GS. Could it be that the shorters are actually finding enough phyiscal to get out of their postions?

Also, the remark about the refineries melting down the CB gold is interesting. Could it be that more physical is showing up from the CBs? You know, the right person working in a foundry could be one heck of a source of informtion.

Perhaps, if you get a chance to speak to him again, he will offer up where he getting his information from. That kind of information is not light stuff. Thanks for the post.

PLEASE do not BELIEVE everything one sees on the WEB ! -- after all, I believe nothing bad that I hear about you. If you read the speech by the President of China given in Thailand as printed in the Sunday Bangkok Post, you can see how reporters distort the thoughts of what is said !!! MUST be that translation problem, and translation of Chinese to Angrit is even more difficult.
<;-)

China raised the level of its threats toward Taiwan August 19, warning "At present, mainland China has already finished all preparations for any use of force against Taiwan. Military mobilization, troop movements, combat-readiness training, logistics support and other aspects are already arranged." The statement was made in an article entitled "USA, do not mix in" in the Global Times, a weekly magazine from the official Peoples� Daily. In the article, China threatened a military response to the perceived separatist statements of Taiwan President Lee Teng-Hui, saying, "if the Taiwan authorities think the mainland can only launch a propaganda or psychological war, they are mistaken." Along with re-emphasizing China's commitment to action, the article cautioned Taiwan not to rely on external support for help.

The article also cautioned the United States against trying to interfere with whatever action China takes. The article stated, "Although China has set a development strategy centered on economic construction and the United States the world's strongest military power, history will not forget that Chinese are never afraid of warfare ... or of difficult wars." More directly, in an obvious reference to the U.S. decision to send two carrier battle groups to the Taiwan Strait in 1996, the paper said, "China's neutron bombs are more than enough to handle aircraft carriers."

This is also a veiled reminder of their victorius (in their minds) involvement in Vietnam-Korea.

Thanks for the great analogy!!!! We can see in the public and press total denial of 2kay. It frustrates us who see a clear and present danger.....Also the clear and present danger of fiat currencies vs Gold..another frustration for those of us in the know....Add one more....China/Taiwan...
i am begining to sense that some of you are finally begining to connect the dots....and shake off the trap of being unwilling to face up to these disturbing developments... and thus go into total denial....
The Press has down played this because it would only add straw to the 2kay, currency camel....Developments in all three cases of denial will soon be a collective slap in the global face and panic will ensue....Welcome to the new millinium.....

An obvious attempt by your son to draw closer to you by finding something in common with you... Unfortunatley our over active male ego gets in our way..he really loves your coin and is happy you took quality time to share.. God bless and keep you, and yours...

That's a sweet way to look at it. Perhaps he will become a true goldbug in time.

"Be careful what you ask for. You may get (all 12KB) of it."

All money must first lie in either a bank ledger, wallet, strong box or under a mattress. All of us here have agreed with the empirical fact that money does not lie in the stock market. Even the money spent on an IPO becomes someone else's working capital, residing in their bank account.

So where is all that money? Unless the money cycles back to the bank, reducing fractionalization, or passes on to the Fed as a repayment from the bank who originally borrowed it, it always represents somebody's spending power. Therefore, the question is: "Who has that spending power and what might they intend to do with it?"

A record breaking amount of discretionary income has detoured through the equity markets. Instead of saving it, spending it on consumption, or capitalizing production with it, the earners of that income have decided to reimburse an owner of shares in a company. It is now the seller of those shares who makes the decision to either consume, capitalize, or spend. (Tomcat: That's the "flow through.")

Let us assume for now the continuation of the present level of sales and employment and therefore the same level of discretionary income. If stock market sentiment were to decline, then the spending decisions would swing back to the income earners. In that environment, would there be more homes and new cars bought, more businesses started or expanded, or more money saved? (The latter allocation, of course, would result in the banks expanding the money supply and then issuing loans for consumption or capitalization.)

An expanded money supply, demanding more goods and services from a fixed quantity of production facility, (consumption) would be inflationary. On the other hand, if a lot of spending power were used to create more production facilities (capitalization), it would not. Finally, if there were an excess of production facilities created, there would be deflation. Recession or depression only occurs if the cycle of production and consumption breaks down, from whatever cause.

Envision the free market economy depicted in the way justice often is, by a sculpture of a blindfolded woman holding a scale. One side weighs production, the other consumption. It all comes down to a question of balance.

In a falling market, the *outstanding money supply is changing hands, not changing in size*. If the stock market declines, gradually or otherwise, those who get less for their stock than they paid for it have allowed some of their earnings permanently to remain in the hands of others.

I believe that last year I posted a concept that stock certificates were the fifth currency, after the dollar, yen, mark, and SF. Other than the right to take part in company affairs, the only difference is the form in which that (stock) currency is exchanged. That is why the wealth effect exists. People perceive their stock as a saved currency that will increase in value against the dollar. When less money cycles through the market, more spending will be decided by the original earners of income, and less by the sellers of stock.

It is not the inflated values considered to be the "Bubble" which I see as the danger. It is the magnitude of the dependency on the overall investment capital that is passing through the equity conversion machine and exiting as spending money.

The challenge to AG & Co. is to keep that flow-through steady without expanding the bubble or scaring investors out of it either. It would appear that the investors' fear of loss is becoming strongly counter-balanced by their fear of missing out on exorbitant capital gains. AG could be shrewdly playing this "like a violin."

One day, he makes an optimistic comment or an expected rate announcement. A few days later, a discouraging word. The market rallies; the market corrects. Investors are no longer 'making' their twenty percent. At some point, they are just breaking even. But they never know if next week everything will go roaring upward again. Damned if they sell, and damned if they don't.

I've stated that money is a form of bookkeeping and that a dollar is a "production chit." So, let's say a dollar is a note that says, "Pay to the bearer on demand one dollar worth of goods or services from the people of the USA." My point is that the government is not the writer of that note. The USA is the Title Company guaranteeing that note. The government doesn't really owe it; that note is based solely on the American people's ability and willingness to honor it.

As long as the citizens of this country are getting up and going to work and keeping the economic machine going, they are the underpinning of the US dollar. There is, of course, the secondary factor of how the trade value of the dollar floats in the currencies game. The massive debt that results from printed money represents goods and services consumed in return for goods and services not yet created. So, maybe there is a check and balance there. If global money games devalue the dollar, then the demand for American goods and services will rise, the trade balance improve, and the debt level decrease. The threat to the global economy comes from excesses. If default or devaluation of sufficient magnitude (Y2K Phase II, "Shut Down") occurs and the domino effect gets triggered, then there will be real trouble.

The gist of all this is that fiat money depends on maintaining the agreements behind it. (Dun and Bradstreet's motto is: "Credit: Man's Confidence in Man.") If the agreements can not be held in place, then a medium of exchange is necessary to hold onto value earned, and this is where GOLD has always functioned. What the central banks are wrestling with at this time is whether to continue to back their currencies with gold, or to purchase more national 'necessities' such as weapons, welfare or favors?

The money supply expands or contracts depending on the loaning or returning of funds (credits) out of or into the banking system. The effect of a market crash would certainly be, first and foremost, the devastation of "TheWealth Factor," which is nothing more than stockholders' expectations that future stock sales will be paid for by money 'saved' out of future earnings.

Years ago, people used to say, " I have some stock in AT&T," not, "My money is in AT&T." That's all people have, a share in a company. The only money that is actually IN the market, is whatever bid is on the floor of the exchange at that particular moment. If at noon tomorrow there are bids for 2000 shares of AMZN @ $50 per share, and nothing else, then in that moment in time, the total wealth factor of the company could be seen as $100,000. The first guy to sell his 2000 shares is the one who 'gets' (some of) his money out of the market.

If that flow-through of savings into stock sales were to diminish, spending would depend on what money people were earning, and whether they saved it or purchased consumer goods with it. If they saved it in banks, it would contract the money supply. If they kept it circulating, purchasing things, then price inflation or deflation would depend on the dynamic of the willing buyer and the willing seller, which is the heart and soul of economics. My definition of the cause of inflation is: "The power to command price." When Y2K empties the shelves, prices will probably go up. For deflation to occur, there would have to be enough goods eagerly seeking the small pool of buyers who still were willing to spend.

I would define a depression as a situation where people cannot find the opportunity to produce for and exchange with each other. The government can always print our way out of a depression. But then those who still have purchasing power would not have the opportunity to buy up the world for a pittance. So, the question then becomes: "For whom will the government be working?"

There is one cardinal difference between gold (and silver) and bank note currency. All bank notes are credits. They will purchase things from others, but only so long as their debt is honored by the society that uses them for rights of exchange. Gold or silver or precious stones are, in effect, credits transformed into ownership of portable value. That value may fluctuate, as it does for a currency, but it cannot be destroyed by default. I have defined Gold as 'asset' money and currency as 'credit' money. I keep coming back to that as the basic criteria for analyzing the relationship between gold and paper.

.The liquidity to be created by the extra billions in Y2K greenbacks can get into circulation by the withdrawal of deposits, or by the writing of loans. If loans are written, up goes the money supply. (Fractionalization is a decreed rule, not a law of physics, and therefore can be altered or repealed.) If people withdraw their demand deposits, all that has happened is that a ledger entry has been replaced by a receipt. That's really what a banknote is. It is not an IOU, but a UOI. You, the people of this country, owe me this numerical value of goods or services. So, when you take that currency out of the bank you are saying, in a sense, "Hey, tear me out that piece of the page where you have my deposit written down. I'd rather hold on to it myself."

So, FRN's are the last refuge of credit money. No matter what fails in the world of electronic or paper ledgers, holding your own "ledger-to-go" (as Aragorn has described it) is the safest solution for holding on to and using 'credit money', but only gold protects against lost value.

Well, that turned into a complex weave of edited posts and additional thoughts. But, as usual, all the threads lead to -- Gold.

When I read this letter from I.V. Holtzman (USAGOLD (09/03/99; 15:13:20MDT - Msg ID:12765)I really had to lean back and smile. That was good, very good. I looked up from the computer screen and gazed easily out the window. Out there, across the ocean, someone sailed the seas with very deep thoughts. Perhaps, what he once saw on the horizon as a mirage was now becoming a little more real.

Earlier I posted an introduction and chapter one (Msg ID:8633) of "Gold: Saving Real Money In A Time Of Transition". It concluded with: "In chapter ((2)) we will build upon the workings of the gold market as it represents oil, the most strategic world commodity.". In that framework, Another is editing each chapter. In as much as I would like to quickly proceed, the question of "Gold Mines" is becoming more urgent. Another sees no need to go into this as his world holds little purpose in these investments. Yet, in my world, "the Western view" these securities are widely held in place of gold. Perhaps it is time to "Stand the ground and do battle upon the enemy before it devours our private wealth."
Mr. Holtzman, FOA here, broadcast being prepared:

FOA speaking:

Mr. Holtzman,,,Over here!,,,,Are you out here?,,,, Can you hear me?,,,,,,Are you out there??

Oh well, Damn this fog. That man must have one good transmitter. Sending messages over such a great distance, yet his signal comes through clear as a bell. Amazing that even his thoughts are not garbled and nothing missing in the train of logic, either.

Mr. Holtzman,,,,,,,,,Over here!,,,,,,,,You out here??,,,,, Hope you can read me!

This fog has been hanging over these waters for as long as it has the recent gold market. Trouble is, as long as it continues, no one can find the right direction. Especially with these GPS units built during the early gold trade. Wish I had a communication system as good as his. Bet he was born
with that transmitter because money just will not buy a message maker that everyone can understand thru a fog.

Holtzman here,,,,,,Holtzman here!

FOA: There you are. Didn't hear me talking to myself on the mike did you? Good! Ok,, sorry about this old mental system, but my next transmission is in the works. Thanks for
listening.

http://www.yourdon.com/articles/y2kendgame.html
Hey Tomcat - thanks for the response (my modem is still intact!). Speaking of the next few months, Ed Yourdon has published a new piece (at least I think it's new), concerning the y2k end game and how we might address it. It's a long but interesting read as he compares the game of chess to the options that remain. Thoroughly entertaining and eye opening.

Y2k is certainly a mixed bag of circumstances and I'm still unclear how it might play itself out in general. I agree with Schultz and DD however that the chances of those with paper fortunes coming out intact is likely zero. Confidence is the only thing that will allow that to happen and even the recent PR spin isn't lending a lot of confidence to the markets. I suspect soon one big player will make a quick dash for the exit and that will be it for positive market sentiment. Milne has always posited it would be Japan that would set this off and maybe we are seeing that now. It beats me; I've given up trying to figure out the paper flow.

Despite Friday's action, the charts all look bad for stocks, bonds and the dollar. You know, if Another is right and traders are backing away from the late 1999 contracts, we could see this start to play out in all the paper contracts with few wanting to take the buy side. That only leaves the central banks to take that side and provide any liquidity at all. It looks to me to be a race between loans melting down at any ever increasing rate as money is injected at an even faster rate to keep the markets open. I think I'll watch this from the sidelines. One of the old axioms of trading is that you can go long, go short, or go home. It's a probably a good time to sit around the house and reread some Mises or Hayek for some clues from the past how this might all work it's way out.

Be talking to ya.

ET

Continuing <<< If stock market sentiment were to decline, then the spending decisions would swing back to the income earners. In that environment, would there be more homes and new cars bought, more businesses started or expanded, or more money saved? (The latter allocation, of course, would result in the banks expanding the money supply and then issuing loans for consumption or capitalization.)>>>> However, if there wasn't a demand for new loans due to a crash in consumer confidence, then that money would exit the Money Supply.

http://www.stratfor.com/SERVICES/GIU/082099.ASP
Goldspoon, you sure have a way with words. As you can see today, I have a way with typos.

I actually think that the members of this forum are quite aware of what is happening internationally but, like Y2k, many of us try not to bring it up unless it has a connection to precious metals or something that has an obvious connection to precious metals.

Personally, my vote is for you to keep posting in this area because if you see something that others miss then it could be of real value.

BTW, stratfor.com has some very interesting views on China. They recently said (see the about url) that internally China is in such a mess financially that it needs, and is using, the Tiawan situation to keep political control over a dissatisfied citizens. They said that China has unofficially devalued its currency thru subsidies and it needs a crisis to happen to help cover the bad news when they go public on their devaluation.

If China devalues its currency then the repercussions for the Asian sector are significant in that the compeition for labor will be affected.

Wow. I read it and got the idea of 'flow through'. You know, I used to do some sleight of hand magic for friends and business aquaintances. This forum sure beats that. All you do is ask and the forum genies produce it almost instantly.

I also agree with you point on the bubble and the fact that consumer dollars are supporting it. All dollars are not equal.

Peter, I will print this out and take the time necessary to absorb it. Thanks friend. I appreciated it greatly.

www.gold-eagle.comTomcat,

My friend gets his info from a few trade rags, being a keen observer of life, reading a special disk of usagold, kitco, and gold-eagle stuff, plus Bill Murphy's stuff. Plus he was a coin dealer through the 1979-80 gold rush. He doesn't get on the Internet and knows FOA through the special disk. He has picked up and focused on posts and information that I missed or gleaned over. He is not a guru nor a gold-market pundit, just a smart coin dealer. I credit him with filtering through countless posts and deciphering information with the best of them. So his information is opinion with a twist.

Here is a little something from gold eagle. Notice the nature of gold in the 20th century has been to stair-step. It is as though it was a financial safety valve. It would seemt that the pressure builds, lets off in one-big wooosh, and then the process repeats, but always with gold at a higher plateau. There is much wisdom in this gold-eagle poster's observation, eh?


@Flambeur @Vronsky - Dow/POG = 2
(frank) Sep 05, 17:40

I was reading the Kaplan site at http://www.goldminingoutlook.com earlier. He also discusses the ratio of the Dow/POG.

He states on August 25, 1999 the Dow hit a intraday high of 11,334.59 and spot gold was quoted at $252.40/ troy oz giving a ratio of 44.9. In a severe bear market, the Dow's yield could touch 7.5% as has happened before. A 7.5% yield would equate to a Dow of 2100. Now, if you take the average POG for the years 1979-1983 and adjust it for inflation, you arrive at a POG of $1050. 2100/1050 = 2

Also the 1999 Franco-Nevada annual report page 5, viewed at http://www.franco-nevada.com, has a chart of Dow/POG going back 100 years. The Dow/POG ratio stood at 1.01 in approximately 1897 moved upwardly to 18.40 in the late 1920's. It then dropped a low of 2.01 in the 1930's and steadily moved upwards to 28.28 in the 1960's. The ratio then moved down to a low of 1.04 around 1982 or so (the start of the current US bull market). The report is dated May 1, 1999 and shows the current ratio had moved up to 36.0. Kaplan shows the ratio to be around 44 now.

I suspect that the Dow/POG ratio will soon start to move back towards its equilibrium point (whatever that may be) and then towards 2.
Have a golden weekend all.

+ .3 on the overseas opening; what will the London mice play, while the N.Y. cat's away??

Hey, Rocket Man! Thanks for all the boosts.

BTW did you ever see my request for a definition of "Delta V", I was using it for analogies.

I have to go now but hope to be back late this eve.

SteveH, I went over to gold-eagle and read some more posts on the DOW?POG ratio. I am trying to make sense of it. More to discuss.

Peter A, I look forward to continuing. Thanks for the boost acknowledgement. It was nice to hear after my typo disaster.

ET, I have a partial response to you that is not finished.

FOA, I have gone back to read that historical review. Looking forward to your reponse to Mr.H.

Goldspoon, great to have you here.

To the exent that anyone can "get" it in this business you have it.

A couple of caveats.

Firstly, the primary "debt holders" are the central banks. As I mentioned before they may not feel that skyrocketing bullion is in their best interest nor destroyed hedge funds. This means they may simply forgive their outstanding gold loans, possibly disguising this process as "sales".

This has implications for them politically in the sense that someone may have to explain to outraged voters why they "gave away" their national treasure, yada yada... This fact could be reinforcing the current practices in a perverse way because many may believe that when gold hits 200 (or whatever) that "no one will care" and the little episode can be swept under the carpet.

This still does not change the demand picture. As Another pointed out very early the asian mentality is a bit different than the western one. Simplistically, western investors walk away from a "looser" while asian investors flock to the "bargain". Given the fallout from asian contagion, gold purchases will be seen to be extremely wise. Particularly at these levels or lower.

This game will only end when the central banks vaults are empty or they decide that they have had enough.

To all. Sorry I missed the camp fire last night. I will be away for a few weeks. Will check in when I can.

Good hunting!

China will only attack Taiwan after it sparks off a war in the Korean Peninsula(art of war;distraction)......although they will suffer hugh casualties, the phychological impact far surpasses high casualties (1:4 - 2:4 deaths on a beach assualt if the attempt is made for the mainland). uniting a restless mainland(china) with patriotism and 'subtle hints' of force(for those with other ideas).

Taiwan is not as hapless as we all think...they have 'recruited' the restless mainland chinese population with thoughts of freedom and wealth over the years and created a 'disgrunted' society(with the help of inefficient and corrupted chinese infrastructure).

China is very unlikely attack USA at its backyard (but the aircraft carriers will bear the brunt)....they much rather the population work for them to presure the govt to mind it's own business and not send their son's to die for other peoples war then to antagonise them and allow the govt to whip up patriotism and support for more involvement.

the possibility remains high (50/50) as Taiwan plays a dangerous but timely game of cards when China appears to be having serious social/economic problems (art of war; distraction)

for the sake of human kind....I pray everything I enacted here is absolute rubbish...because that I can live with.

The following is paraphrased from the current "Barrons":

Friday's market excitement may not last. One reason is doubt concerning the accuracy of the August employment figures, which didn't entirely jibe with other recent statistics. For example, state unemployment insurance claims have been
under 300,000 for six weeks in a row, signaling a strong labor market. And the loss of 63,000 manufacturing jobs does not square with corporate reporting; the employment component of the national purchasing managers' survey is
at a new 11 year high, and personnel companies generally indicate increasing demand for jobs. Finally, how is it that manufacturing jobs plunged in a month that saw record automobile sales?

Probably the August figures were a statistical reckoning for outsized employment increases in June and July. The result may well be a rebound in September. The one number in Friday's report which did sound right was the national unemployment rate, which dropped to a 29-year low of 4.2% in August from 4.3%. This may alarm the Fed, since productivity growth increased at only a .6% annual rate in the April-June period while Labor costs rose at a 4.5% annual rate.

And what about the other recent indications of emerging inflation?. Commodity prices are the highest they have been in 10 months. Business and consumer confidence levels are unusually high. Stocks are breaking records. The dollar's decline threatens higher import prices and places greater demand on exports. Then there are the unions. After years
of capitulation and anemic wage boosts, some are achieving big pay raises, increasing the chance that currenttight labor conditions might finally cause wage inflation. In a major coup, machinists at Boeing recently won a 10% bonus and annual salary increases of 4% for two years and 3% in the third year. In another, Northwest Airlines offered flight attendants pay raises averaging 25% over five years and an average 80% boost in pension benefits.

Stranger's Comment: Thanks to Nightrider and Tomcat for keeping an eye on this important story. Thanks also to whoever it was who brought up the item about the 13th of the month falling on a Friday. I would credit you by name, but I am afraid that going back to look you up would cause me to lose this post. Anyway, I am intrigued by your theory and can't wait to test it out on next month's report.

Hey ET, hope you are still around. I downloaded Yourdon's article and being an old chess player I liked the way he is using the end game analogy.

I agree that Y2k is certainly a mixed bag of circumstances but it is becoming clearer to me that there has been a pretty gross underestimation of effort to crack the problem. I also agree that the bottom line is confidence and a PR spin isn't what builds confidence. I believe that bank runs might start outside the US first and undermine confidence via the sensationalism on TV.

Milne and North no longer look like such a doomers. Amazing that Milne may be right about Japan.

You said that it is: "a race between loans melting down at any ever increasing rate as money is injected at an even faster rate to keep the markets open." That is a great summary.

Lets stay in touch. I always get a lot from your posts.

That coin dealer sounds like a great contact. I know three coin dealers and not one of them is on the internet. The guys on the front lines often have some very valuable insight. That is which I put so much faith in MK and uptick(Len Kaplan). When they speak I really listen.

The Dow/POG ratio is interesting. If you pick a number where you feel the ratio will end up after the crash you get some interesting insight. Lets say that the ratio will end up at 6. If the Dow drops to 6000 then the POG would be end up at 1000. If the Dow drops to 1800 then the POG would be 300.

Lets say we had a repeat of the 29 crash where the ratio went to 2 and the DOW went down 90%. With those two numbers we would still get a POG above 500.

BTW, I tried that gold-eagle link to get the historical graph of the DOW/POG ratio but the link did not work.

Thanks for the Barron's paraphrase.

glenn over at kitgo has been reminding posters about how the day of the week affects the statistics. He has a track record of calling the market based on the markets over-reaction (up or down) to the stats. He predicted this month as well. I think he said Mondays and Fridays give the biggest swings. If I can find one of his posts I will let you know but I don't think their search function is working. He brings it up a lot and he brought it up over the last two days.

What is your take on the recent FED repo numbers? Do you know if there is a site that follows them or interprets them?

Can anyone provide a link to a site that displays forward sale prices for gold for 2,3,4 to 5 years OR provide this data directly?

I would like to know what future production can be forward sold at, for a mining concern wanting to commit to starting up a new gold mining operation.

Thanks in advance.

Call Goldman Sachs or JP Morgan.

Otherwise I don't know.

www.kitco.comDate: Mon Sep 06 1999 09:19
jims (Reprint of Gambler's 00:26 - worth consideration) ID#252391:
Copyright � 1999 jims/Kitco Inc. All rights reserved
Date: Mon Sep 06 1999 00:26
Gambler ( Old Gold / Armstrong ) ID#434132:
Copyright � 1999 Gambler/Kitco Inc. All rights reserved
It is crystal clear that Armstrong IS short gold. He can deny buying it and then selling it, but he can't deny
borrowing it and selling it. He has used the "gold carry" just as he used the "yen carry," and this is one of the
reasons ( being short yen ) his firm is in big trouble now on their derivitive exposures. Armstrong NEEDS a
lower gold price to bail him out of his sour yen trade.

Some CB officials HAVE personally, greatly benefited from leasing to the bullion banks and/or mining
companies, hedge funds, etc. as they have in some cases been heavily invested ( directly or indirectly ) in the
very institutions they authorized loans to.

At this point in time, this practice is changing because of the concerns about the credit ratings of some of
those institutions. The ratings get worse by the day as interest rates continue to climb. With Y2K at hand, the
CBs are concerned about liquidity problems as corporations compete for cash to have on hand for payroll
and other budgeting matters. Bonds are being dumped for cash and foreign CBs are dumping US treasuries
and converting back into their domestic currencies. Bullion banks and hedge funds ( short gold ) are
vunerable to highly leveraged derivative positions in currencies, bonds, precious metals, commodities, etc.
Knowing this, CBs want their gold back before any defaults occur from rising interest rates.

If just a small number of these banks and hedge funds were to fail, a domino effect would ensue "bringing
down the house of cards" so to speak. Investigations would uncover the irresponsible, criminal nature of the
activities of some CB officers. CBs officials would be blamed for the loss of its gold reserves and in some
cases personally benefiting.

The sustained, rising gold lease rates reflect the current financial risks to the market. It signifies that the game
is up and the rules are changing. Besides, the CBs NEED their gold to keep control of the gold market.
They cannot afford to divest themselves of their fiat currency insurance, gold.

The CBs, bullion banks, Martin Armstrong, etc. would love it for all to sell their gold as they could unwind
their short positions. It would be foolish for Armstrong to take any other position than the one he has. He is
lying!

Someone needs to tell ol' Marty that it AINT GONNA HAPPEN! It's too late for some of you gold shorts!

BUY GOLD! BUY SHARES IN UNHEDGED MINING COMPANIES. DIVERSIFY - geographic
area, gold, platinum, silver, etc.

www.kitco.comCheck this out and answer, why is the BOE telling us what they value their gold at?

Date: Mon Sep 06 1999 03:23
GO GOLD (BoE breaks its silence!!!) ID#428141:
Copyright � 1999 GO GOLD/Kitco Inc. All rights reserved
I guess what they are telling us is that they do not believe the price will fall below $210. Would love to know how they came to a figure of $209.59 though!!!
UK GOLD RESERVES VALUED AT $209.59/OUNCE IN FISCAL 1999-2000
London--Sep 3--The UK's gold reserves are valued at US $209.59 per troy
ounce in the current fiscal year, the Treasury confirmed today. The UK will
auction another 25 tonnes of gold on Sep 21 as part of its program to sell 125
tonnes in this financial year. The first auction on Jul 6 saw the full 25 tonnes
sold at $261.20 per ounce. ( Story .12938 )

Tomcat, you said,
<<Lets say that the ratio will end up at 6. If the Dow drops to 6000 then the POG would be end up at 1000. If the Dow drops to 1800 then the POG would be 300.
Lets say we had a repeat of the 29 crash where the ratio went to 2 and the DOW went down 90%. With those two numbers we would still get a POG above 500.>>>

I noticed you stuck to only one comparison. I would be interested in your views on the price of gold when you factor in the 5 horsemen. I like your thought process.

I swiped this post from Robert Folsom at csy2k;

September 6, 1999
Dow Jones Newswires
Y2K Bug May Cause Glitches To Commodity Markets
By HAMISAH SAMAD

SYDNEY -- The Y2K computer bug could cause supply hiccups in a number of
commodity markets, particularly in the metals sector, at the start of 2000,
if systems collapse in countries such as China and Russia, analysts say.

Metals, such as zinc, aluminum, nickel and copper, are considered
especially
vulnerable, while there is less of a threat in the agricultural sector,
where there is a surplus, analysts and traders said.

A severe disruption in the supply chain could cause panic buying, placing
excessive upward pressure on prices, creating shortages and forcing some
operations, which rely on primary raw materials, to shut down.

The Y2K computer problem refers to old computer programming codes, which
read the 00 digits in the year 2000 as 1900.

In "certain sensitive parts of the globe, like the former Soviet Union,
China and Vietnam, Y2K adds another layer of unreliability," Lamon Rutten,
an officer with the United Nations Conference On Trade and Development in
Geneva, told Dow Jones Newswires.

Rutten is responsible for commodity marketing, risk management and finance
with Unctad's Commodities Branch.

China and Russia are Category Four countries - the ones worst-equipped to
meet the Y2K challenge - according to U.S.-based Gartner Group Inc., an
information technology consultancy company.

Both China and Russia are major producers of zinc, aluminum and nickel.
China is also a major producer of copper.

Andrew Smith, a London-based analyst with Mitsui Bussan Commodities Ltd.,
said the Y2K computer problems pose the highest supply risk for zinc,
followed by aluminum and nickel, because of the metals' risk exposure to
China and Russia. Supply risk is lowest in copper because the market is
expected to have a huge surplus at that time.

The world's zinc market is expected to be in a slight deficit in 1999,
while
aluminum and nickel are seen to be in a slight surplus.

Should customers start stockpiling, the surpluses could be wiped out.

Even copper is now at risk to the Y2K bug, Smith told Dow Jones Newswires.

"There has been more noise to (copper) supply cuts and more mergers. (The)
demand side has (also) improved," he said.

-
Y2K Increases Risks Of Contract Defaults
-
With the level of automation low in countries like China and Russia,
producers in these countries could switch to manual operations should their
computers fail.

"If the computer doesn't run, they can opt for manual production," Tim Tu,
president of United Metals Enterprise Co. Ltd., a trading house in Taipei,
said of his trading partners in China. But there would still be concerns
about transport and other infrastructure.

"I'm more concerned about shipping, the rail, and forwarding. A malfunction
of the railway computer or money transfer, these are likely," Tu said.

Taiwan buys some 65% of its 220,000 metric tons of zinc requirement from
China annually. It also buys about 60,000 tons of Chinese lead each year,
which accounts for about 60% of its requirement, said Tu.

Any hiccups arising from Y2K-related problems will cause his Chinese
trading
partners to default on contracts, Tu said.

"If prices are higher, Chinese traders would always try to find excuses not
to deliver the fixed-price contracts," he said.

Many primary metal end-users in Taiwan, exposed to contract risks with
China, will defer the start date of their annual long-term contracts in
2000
to February instead of the usual January. They will purchase their
requirements for January in the spot market, Tu said.

Tu said customers don't want to be hostage to their suppliers and be forced
to shut their plants should there be problems with the raw material supply
out of China.

On the London Metal Exchange, where the Dec. 15 contract is now the
three-month benchmark contract, traders are already buying up the date,
causing the market structure of most of the base metals from the
three-month
date onwards to revert into a backwardation.

In the zinc market, for instance, the spread between December and January
prices is now in a backwardation of around $24 a ton. It's expected to
widen
out to $30/ton by the time the December date becomes the cash date.

This wide backwardation between the two months contrasts with last year's
contango of $4-$5/ton.

A backwardation refers to the three-month prices trading higher compared
with the forward and the far month contracts. A contango is a more usual
pricing pattern, where the far prices are higher than the near prices.

"I've been tracking the forward markets. There's evidence that people are
taking positions on Y2K. Open interest is building in the options. In the
forward markets, there's more kink on the forward curves," Smith said.

-
International Trade Houses' Role Reduces Supply Risk
-
In developed countries, the inventory buildup among consumers has been
"phenomenal," said Unctad's Rutten.

"Everybody in the production chain has an extra week's cover of apparent
consumption," said Damien Hackett, Credit Suisse First Boston's director of
Commodities and Resources Strategy in Melbourne.

In May, the U.S. National Association of Purchasing Managers revealed that
35% of their members intended to build inventory ahead of possible Y2K
disruption. Of these, 57% aimed to add one to 20 days extra inventory, and
40% some 21-40 days of contingency stocks.

The degree of any potential disruption from Russia is less than that from
China, because Russian-produced base metals are distributed by
international
trading houses, believed to be better able to handle any Y2K contingencies,
Tu said.

Supplies of agricultural commodities, in particular soybeans and other
grains, are unlikely to be affected by the Y2K computer problems as trading
of such commodities in world markets are handled by large trading
companies,
Unctad's Rutten said.

AWB Ltd., Australia's monopoly grain marketing concern said its customers
across the Middle East, India, Indonesia, and to a lesser extent China, see
no potential disruption to wheat supplies.

Australia is the world's fourth largest wheat exporter.

In any case, with prices at 20-year lows and a market surplus, most wheat
buyers aren't rushing to stock up.

"Our customers contacted don't expect major problems. They don't see a huge
need to stockpile on wheat," Peter McBride, AWB Ltd.'s corporate
communications adviser, said.

AWB's McBride said the company is taking precautionary measures to avoid
any
slip-up in its delivery schedule to customers. The company, which usually
will have exported some 80% of its supply by December, is staggering
shipments to minimize any potential disruptions. There will be more
shipments just before and after the New Year, McBride said.

-By Hamisah Samad; 612-8235-2957; hsamad@ap.org

If I were the Fed, I would be trying to weaken the dollar still further by continuing the recent money supply expansion. Such a policy would improve America's balance of payments, make it easier for commodity-dependent third world countries to pay off their loans, bail out the American farmer, etc. In other words, it would help finish the job of keeping deflation away from the world's door.

At the same time, I might undertake the largely ceremonial act of raising interest rates a few basis points. This would send a message of caution to corporations and labor unions which might respectively be contemplating higher prices and wage demands. It would also serve as a warning to over- aggressive stock market speculators.

All of the Fed's recent behavior is consistent with a strategy of this kind.

The short to intermediate term investment implications of this are, among other things,further deterioration for bond prices, rising real estate prices and further gains for commodities (including precious metals, of course).

Thanks for asking.

http://www.egroups.com/group/gata/194.html?GATA's Bill "Midas" Murphy
takes aim at Hillary Clinton
and Martin Armstrong.

You might try ORO over at kitgo. He follows similar numbers. The World Gold Council might know but I have no url. The LBMA might also have the numbers.

Tomcat - A spirited discussion on China and Taiwan.

Your comment: "The China/Taiwan issue is too difficult for me to deal with. It is too horrible. This issue reminds me of Y2k. How silly it is to be worried." I agree, worry is not good. Education and preparedness are keys to any situation. The problems won't go away just because we choose to ignore them. We've found through real experience that the more you know the better you handle things and less likely to be afraid.

Your comment: "Look, it will never happen. . . . . . .". And : "Even our President says China is our ally. . . . . . ." You're a better man than me. When it comes to this president, I can't get that wagging finger, with it's denial, out of my mind, or the comment about misleading his family and the public. I think it was lying, but I could be wrong.

I've read it somewhere that the best predictor of future performance is past performance. It's stuck with me many years. Your comment: " Remember, people are very, very nice to one another." Yes they are but, I am continually appalled with 'man's inhumanity to man' and the regards for human life overseas and here in the USA, etc., etc.

I enjoy your words and gain a little insight into your thoughts and beliefs. Isn't it great, we have freedom of speech. Only in America, God bless America. I'm with you and hope Y2K and the China/Taiwan issue don't happen and just go away. But past performance is telling me otherwise. (Coverups, greed, corruption, etc., etc., of the past don't point to a positive outcome and not, in your words "Look, it will never happen", but I pray I'm wrong!)

Gold will play a very important part for people in Taiwan. What they can purchase and hide may prove to be very beneficial to their future.

GREETINGS ALL!
I HAVE BEEN A LURKER WORKING ON HIS MASTERS DEGREE AT THE UNIVERSITY OF USA GOLD. I HAVE BEEN STUDYING THE GREAT WORKDS OF ALL WHO HAVE POSTED HERE ISNCE MAY OF THIS YEAR. MOST OF MY TIME HAS BEEN SPENT TRYING TO CATICH UP WITH THE LATEST AND GREATEST WISDOMS THAT CROSS THIS TABLE ROUND. WITH THE HOLIDAY I CAN FINNALY TAKE TIME TO MAKE MY FIRST POST.
I FEEL THAT I AM BEGINNING TO GAIN AN UNDERSTANDING OF THE WORLD GOLD MARKET AND THE GENERAL ECONOMY AT HAND. TO THE EXTENT THAT I AM MORE RESOLVED THAN EVER TO HOLD ON TO THE YELLOW STUFF PURCHASE AT $390/OZ AND AVERAGED DOWN THRU $259. THANK YOU ALL FOR YOUR GREAT WIDSOMS!!!

STRANGER, IN YOU LAST POST YOU SAID"The short to intermediate term investment implications of this are, among other things,further deterioration for bond prices, rising real estate prices and further gains for commodities (including precious metals, of course)."

I AM INTERESTED IN THE PART ABOUT REAL ESTATE RISING IN THE NEAR TERM. YOU SEE MY WIFE AND I ARE WANTING TO PURCHASE A HOME SOON. I WOULD PREFER TO MINIMIZE OUR MORTGAGE EXPOSURE, AND HOPE THAT MY CASH AND METAL HOLDINGS WILL ALLOW ME TO PICK UP A HOME OR BUILD ONE AT BARGAIN BASMENT PRICES IF THE TIMING IS RIGHT. WHAT DO YOU THINK THE "INTERMEDIATE TERM" IS AND AM I SEEING THE NEXT YEAR IN THE CORRECT LIGHT ?

BOY,
NOT A GOOD WAY TO MAKE A FIRST IMPRESSION. I THINK A SPELL CHECKER WOULD BE A WELCOME ADDITION TO THIS BULLETIN BOARD. THAT OR I NEED TO HAVE MY MOM PROOF READ MY POSTS!

Thanks for your reply. I hope that AG can do just that without bringing the stock market down too much.

Could I play Devil's Advocate; not to outright disagree but to learn.

It seems that if the Y2k scenario wasn't there there would be more of a chance for AG to be successful. However, in preparation for Y2k, corporations are selling bonds to raise cash and this us putting upward pressure on bond rates. Countries are selling Treasury instruments to raise cash for Y2k bank stability. In addition the FED has to keep liquefying to prepare for US Y2k. These three actions I have referred to as The Flight to Liquidity

Y2k aside, the Japanese are also selling Treasury stuff to invest in their recovering economy (Flight to Quality).

In summary, these Flights to Liquidity and Quality are putting upward pressure on bond rates. So if, in this environment, Mr.G and Mr.S continue to weaken the dollar, they will risk putting even more upward pressure on bond rates. If the bond rates do rise enough that could destabilize the stock market.

AS LONG AS I HAVE MY FOOT IN THE DOOR.....
THIS HAS BEEN GNAWING AT ME FOR A WHILE.
WHY IS IT THAT BACK WHEN GOLD WAS PEGGED AT $35/OZ THAT MINING COMPANIES COULD STAY IN BUSINESS, BUT TODAY AT 7 TIME HIGHER GOLD PRICE OR $250 ITS THE END OF THEM ALL. I DO NOT THINK THAT INFLATION ACCOUNTS FOR ALL OF THE EFFECT.


THOUGHT?

>>>>>>why is the BOE telling us what they value their gold at? <<<<<

So their countrymen will see that they are selling it at a profit, of course. That "market price" they see at LBMA is some paper fantasy, right?

I knew the "Emperor had no clothes" but these guys are trying to parade him down the street, flayed to the bones!

BTW, I'm sure you noticed that the POG recovery stopped exactly at the point where gold would have traded higher then the price they gave it away at. The already aroused populace might have gotten real serious if the POG went higher than the auction figure

Welcome, GD. I think right now would be an excellent time to lock in a mortgage(buy a house). In a few months a $100,000 mortgage will probably cost you $75/mo. more than it would today, and homes nationwide will cost 2 to 3% more than they do now.

I should caution you that many respected prognosticators are saying just the opposite. They believe the economy will cool, slowing the rise in home prices and taking mortgage rates back down to where they were last year. The bond rally on Friday occurred precisely because the employment report offerred a glimmer of hope to those who espouse that point of view. I wouldn't bet on it, though.

Until the Fed begins honestly restricting monetary growth, it will be full steam ahead for real estate and mortgage rates throughout most of the U.S. Under the circumstances (low commodity prices, struggling farmers, struggling third world countries, etc.), I wouldn't expect policy to change for awhile. In short, providing there are no other reasons not to, go buy yourself a house, but hurry!

I know what you mean about the spellchecker. I proof all my posts at least twice, and I still look like an idiot most of the time. This posting, if nothing else, will sure improve your writing skills, however. Once again, welcome. It is nice to have you here.

Note to Gandalf: Gandalf, don't you think it's time you filled us in on your Southeast Asian experience. I am really wondering about you, man.

Note to Chan: I live in Utah, USA, but I spent a week in Singapore last year. My wife and I stayed at the Raffles(Wow!), and I have never had a finer experience in my life. Marvelous country, marvelous people! So, it is good to see you here, too.

<<>>>

Money transfer makes the world go round. --- I'll bet even Goldfly can't rap that around a decent tune.

We not only have just in time inventory these days, we have just in time money. Not so long ago money took days or even weeks to cross oceans. In 1964 I was seeking work in Paris and needed a little help from home. Wire transfers between banks were taking over a week and were subject to temporary disappearance in the clerical chain. The by far the fastest way to move money was to buy an American Express money order and mail it to Amex Paris tourist mail pick up were I could also cash it. This took only two days. Now we assume instant fund transfer as the norm. When the pumps go down on the money pipeline, that cash lubricant will not be reaching the wheels of the global economy.

What do you suppose the carrying costs of a 5 to 10 day float on the Global money supply is?

Then there is the fact of suddenly needing to be credit worthy for the float, or having to wait for the shipment to be made.

Hey Goldfly! How about "For the times, they are a-chang-ing."

Dear Richard, I intended that piece to be a satire (a written work exposing human weakness and holding irresponsible people up to ridicule).

I am sorry. I obviously failed in my attempt.

I never intended that anyone would take it literally or seriously. I should have ended that post with a ; ) to acknowledge the non-serious nature of the post. I apologize and hope I did not lead you astray too much. Your sincerity is much welcomed, needed, and appreciated by me.

I consider the situation in Taiwan to be a tragedy. I fear the Taiwanese might get sold out just like the Panama Canal was sold out. Like Y2k, I don't feel many people care about the Taiwanese people who are our allies. The Chinese Government has a long history or repression and mass murder and I am against strengthening them the way our leadership has done.

You have a good understanding of what is going on. To respond to your posit about rising bond rates destabilizing the stock market, however, I would emphatically suggest they already have. Have you seen the NYSE advance/decline line lately. As of Thursday, at least, it was below even the lows of last September, when the Dow stood at only 7500!

One can get on thin ice trying to predict these things, but, under the circumstances, I would not expect a general decline in stocks so much as a continued shift towards cyclicals, which includes producers of basic materials(yes, gold too)and perhaps renewed strength in American exporters. These are, after all, the weak dollar beneficiaries.

DO YOU THINK THAT Y2K WILL CAUSE A RECESSION, IF SO, WON'T HOUSING PRICES REVERSE? I AM OF THE ILK THAT I WOULD RATHER SAVE 5%-10%($15000-$30000)ON THE SALES PRICE OF A $300K HOUSE THAN PAY +1-2% ($1500-3000/YR) IN INTEREST ON A $150K MORTGAGE.

ALSO, THE LATEST TALK IS THAT FOREIGN MONEY WILL BE HEADING TO OUR MARKET FOR PROTECTION AGAINST Y2K PROBLEMS IN THE HOME COUNTRY. THIS, SO THEY SAY WOULD CAUSE INTEREST RATES TO GO DOWN LATER IN THE YEAR.

THE WIFE IS KICKING ME OFF THE COMPUTER. I' CHECK BACK LATER

THANKS IN ADVANCE FOR YOUR RESPONSE.

Please consider this advise, GD. -- Using ALL CAPS in most conversations is considered by most to be YELLING ! -- This has not yet been done at the TableRound as far as I can remember, but as the excessive trumpets blaring is known to have an adverse effect upon our Host MK, I am sure that others would appreciate your input in a more restrained and quiet format. --- Thanks.
<;-)

Hi Clint, nice to have you back. Clint, I do not know how to interpret the DOW/POG ratio. I find it interesting, I plan to study it more, but it is not something I use as a tool. I was glad when SteveH posted about it but mainly becuase I am hoping to learn how to interpret it. I don't think that it is useful prior to the early 70s because the POG was fixed before than. If you have any insights about the ratio I would be all ears.

Clint H, thanks for the acknowledgement. Here is my view of the POG and a few of those horsemen you asked about.

I expect a strong recession or mid depression due to Y2k.I opine that Y2k will cause a brief deflationary problem followed by an inflationary response from the government. I expect gold/silver to go higher as we approach 2000 and then possibly drop in January when folks think Y2k is not too bad and then rise again when the printing presses get more active in the year 2000 problem phase (later in the year).

I expect a increase in world turmoil in 2000 which will stretch the weakened US forces thinner than they are now. I expect the US to be perceived weaker in a global sense. I believe that the POG is very dependent on the strength of the dollar combined with our perceived military streghth. Thus I expect this to have an upward pressure on the POG in the long run.

I am preparing for a bank run either in the US or elsewhere.

I believe that the market is going to correct in a downward fashion in the next ten weeks. I have no idea if this will be a large or small correction. I believe that the POG will be pressured downward with the falling market. If the dollar weakens enough then this could offset the pressure of a falling market re the POG.

I believe that oil producing nations are in trouble Y2k-wise and militarily. I opine that the POG will rise after oil goes into the 30s and higher. I do not believe Russia is as weak as they want us to believe and they are playing a covert game in the mid-east behind our back. This will help them financially. This will put an upward pressure on the POG.

I believe that a world wide flight to liquidity has already started leading to the repatriation of the dollar. This is inflationary and will weaken the dollar even more. This will put an upward pressure on the POG.

Toward the end of this year I expect tremendous pressure on the gold and silver shorters who I believe will have to settle in cash. I believe that the Another/FOA scenario of paper gold going down and physical getting scarce is very possible. That is why I hold physical and have bought at recent prices.

I am very conservative financially. I lean in the direction of Aragorn/Aristotle/FOA. I hold physical gold/silver/currency, and have a family retreat. I do not invest in gold/silver; I hold them for wealth preservation. I daily live the philosophy of "Prepare for the worst and create the best". I hope for nothing.

I have been self employed for 25 years and I feel that I am responsible for keeping myself marketable. Like Aristotle I like to see my profit in gold and as the POG drops I buy more. I am prepared psychologically to keep buying down to about 200 but don't expect a fall that big. I hold silver as a confiscation hedge.

I have a small amount cash that I invest with but that is gambling money and I do it to gamble and I seem to learn more about the economy when a play the market a little. I short the market a lot and have not lost anything yet. Haven't made much either. I find it fascinating that my personality is not investing or gambling oriented. I am very impressed with The Stranger's long term views of the market and envy his market maturity.

Clearly, this is only my take on the POG and those horesman that get under our skin. I would love to here someone elses take. Any takers?

Greetings, Knights! May a traveler pose a question herein?
How does one find out if a mining company is "un-hedged", as it were? Can any one recommend a large cap mine that has not sold forward?

I will likely draw some flak for this, but, no, I would not expect y2k to create a recession. No one has a better handle on how well prepared for this the world is than corporate insiders. Yet, corporate insiders continue to be net buyers of stocks.

There have been MANY tumultuous events in recent decades... Vietnam, the Kennedy assassination, hostages in Teheran, war against Israel, the invasion of Kuwait, the Clinton impeachment, etc. We survived most of them with little if any impact on the rate of economic growth. Yet, none of them were broadly predicted beforehand.

Now we approach the most widely advertised tumultuous event ever, and yet people expect the wheels to fall off of everything. Well, maybe they will, but I am not going to hold my breath.

Stranger's aside: I only state these views because I was asked for an opinion. Anybody who wants to debate, be my guest, but please leave me out. I have argued myself silly in here on this issue and do not wish to re-experience what I now call Peter Asher syndrome (ie. running around in decreasing circles until, etc., so-named because the phenomenon was first articulated at the Forum by one Peter Asher, Knight of the Round Table).

The closest thing to what you seek is probably Newmont Mining (NEM), which trades on the NYSE and is the largest gold mining operator in the United States. They have recently done some hedging (groan), but they have more gold price exposure than any other large operator I know of. Good luck!

There are a few sites on this net catering to Gold...if we don't align in thought...we will find no more adds...no more trust...then no more sites...think about it...only a thought....

Tooo survive....that's all boys and girls...

We have, or have the illusion that we have, free will-
depending on your beliefs. Some believe in predestination.
Yet even so, we do not have foreknowledge. Therefore, to
all intents and purposes, life can take many paths. So,
this take on the POG I am proposing as a path that we may
take on the "balance of probability".

In any unstable system, the system can go from a steady state to a disrupted state, but there may be many alternative disrupted states which, by definition, are not well controlled. So, by this argument, I would suggest that it is possible for any bubble economy to go down the path of inflation or deflation at the turn of a switch. A different set of factors could lead to a different result. Yet, the Federal reserve has been pumping in liquidity while undertaking a minimal process of interest rate rises. This is one factor I believe will prime for inflation. Another factor is the declining trend of the dollar and the recovery of the Asian markets. There are inflationary pressures reappearing in labour markets while deflationary pressures from cheap imported goods will evaporate. Since gold is traditionally an inflation indicator, its price must rise- eventually.

The US stock markets will crash and the european markets will soon follow. The flood of investment money leaving the US will require interest rates to be raised to retain some of that investment. Hence related treasury yields will go up, by a lot, and the stock markets will tank. The market crash process will trigger waves of panic selling- the people who are selling to save their investments will be forced to sell everything available to gain liquidity. This will include gold stocks, which will fall with the rest of the markets. Every effort will be made by vested interests to keep the POG from rising- do not underestimate the determination of the powers that be to avoid the signal that a rapidly rising POG will inevitably send. Therefore, I expect the POG to remain mired under the artillery of the powers that be until they have used their last horn of powder. It will be a battle royal. However, if you haven't already staked your claim you may already be too late. Many people will lose out through the failure of the paper gold system. Those who have taken delivery will find that the laws of supply and demand have not been repealed as the supply of physical is revealed to be a very different beast to the supply of paper.

The supply of stocks, other paper investments, and dollars is so much larger than the volume of the PM markets that the collapse of the paper markets will give rise to an explosive rise in the POG. I look at the $850 POG of the '80s to consider the real possibility of the POG going to $1000 or more. But I ask, what would the value of these new dollars
or pounds be? What if the unthinkable happens, and the dollar devalues like certain Asian currencies did in their crisis? Then you might have POG at $30,000 but "New dollars" will be traded in at the rate of 1 for 100 "Old dollars". There still remain many uncertainties. What will the POG be in pounds/euros? Will investment switch to Euroland, or will Asia look like the bargain of the century?
Certainly the initial progress of the euro has left a lot to be desired. But whatever happens, physical gold will be the best way of preventing loss of value.

This site will surely come into its own when we join the debate about when the POG will start to fall!

http://www.iea.org/ieay2k/newlinks/imports.htmUS Oil Imports Y2K Status. Here's a chart I came across, on the subject of oil imports from various countries. A good reference if you are trying to predict in that area.

I see pretty much the same "movie that you do there, except as regards gold. After the Phase #1 "crises" has run it's course, the new financial paradigm will have arrived. Gold will have attained a higher price on much more than coin demand and other Y2K factors. It may back and fill in the eye of the storm that some will presume to be a return of calm weather, but the uncertainty of equities and currency will be firmly ensconced in the minds and souls of investors. Therefore gold will be playing it's historical role quite strongly.

As to the price direction at this time, I see a holding of this double bottom of $252, as each sell-off seems to abort swiftly and at a slightly higher level, and go up to a slightly higher peak. If lower prices were going to occur, I believe the last two downward thrusts would have continued. (I could have egg on my face in less than 24 hours, but if tomorrow's Comex closes up, I would feel very sure about this) The BOE needs to save some face, and some value, if they are, in fact, part of the price control Cabal, It behooves them to get a little more for their sale this time around. If they were to sell the next package at a lower price than the first one, they would be kicking an even bigger hornets nest.

My "take" on it, is that the game has moved from pushing the price down, to careful accumulation.

The potential to come out whole from any short sale play at this level is too low to warrant the gamble. Though 'They' may still use that gambit again at higher levels. Eventually the laws of physics will enforce what the anti-trust laws will not. It is said that "Time heals all wounds" and that quote has been cleverly altered to "Time wounds all heels"

Think like all others ....welll you know what i mean...not this particular site by any means...but there are others....

Great idea for debate!

http://biz.yahoo.com/rf/990906/b.htmlHe is saying just about everything possible to help curb a would-be speculator's perception that the yen might strengthen further. Just talk, or is there substance behind these words?

Coins will have a great life from here on in to year 2000....

the week after that...then there is the third friday of the month...who knows what could happen....

I know that sounds korny....but how true...we just have to wait...korny tooo....

Check the chart of pdg...bollinger bands...one way or the other...if you believe gold has hit bottom....then do what your heart tells you...if not...welll the other thing...but it is there....ready for something...

Let me preface this by saying I like everyone on this thread a great deal, so these are just some thoughts, nothing personal: I think the stock market for the most part is just going to keep on trucking. I do not think many are calculating accurately the increasing productivity of modern technology, in general, and the dominant position the US has, which will be reflected in increasing production. The above subject (computors) is to point out how the speed of development and productivity is increasing and will continue to do so. There are many bright people on this thread that know the above computors have already been developed at a rudimentary level and what that will eventually mean in a few decades is artifical intelligence many times greater than our own; and in the meantime the US will just keep on producing more and more.
The internet has turned the world into one big interconected brain.
I do worry very much about China and Russia - they have primative political systems that are unstable and dangerous - and nuclear weapons - bad combination. Also, given the speed at which new technology is developing anything is possible from a pandemic disease to nuclear war to time travel - no one knows and I don't think anyone can even guess very well.
I also think we may lose control of technology as it becomes too complicted for our little primate brains. How will we control our nuclear arsenals when the defensive and offensive systems become too complex. In the next hundred years it is make or break for our grandchildren, I think, probably break I am sorry to say - let them eat strawberry's now!
One last point, the human species does not learn or adapt quickly. We hang on to old wornout ideas, bad ideas and prejudices like a life raft, and that may be our undoing.
By the end of this rambling I had realized that I was actually making a pretty good case for the doom and gloomers - buy gold. I think the young kids on this thread are going to witness a metamorphas and watershed of the human species that only the most far out science fiction can imagine. I have no idea what the point of this post is, just thought it needed to be said - something to think about; and I have no idea how it relates to gold, but it probably does in some way, so I thought it would be appropriate for a holiday. I stop by and read the posts most days. Stranger, I see you are still fighting the good fight; and Tomcat, Peter, and Cavan Man it is always comforting to see you still posting.

Leigh, Your story about your son and the Darth Vader coin has motivated me to tell a story from 1974. My oldest child was in the third grade, and I noticed that her friends seemed not to have a grasp on money or exchange. I volunteered to teach a class, during school hours, on Exchange. I engaged the eight-year-olds in games and demonstrations, plays and discussions, about goods and services, trading, and so forth.

But the pinnacle event was EXCHANGE DAY, the last day of the course. Everyone bring goods or services to trade. Temporary currency was issued. I warned them all to remember that the "money" was just for today, and it would not have any value tomorrow. They jumped in with enormous enthusiasm. Some kids brought their stuff and traded it around. Some provided services: piggyback rides, manicures, photography.

There was one little boy who was the most popular merchant of all. He had brought his baseball cards. He sat like a little Midas, raking in the currency, positively glowing with Pride of Ownership. Toward the end of the day, I went to him and reminded him to go and use some of his hard-earned money, to buy some of the goods and services all around him, but he was completely caught up in his success. And when the bell rung for the end of the game, I looked at him.

His face fell several stories in the span of a few seconds, as he realized - as it HIT him. The baseball cards now belonged many of his classmates, and he...well, he had a huge pile of worthless paper money.

I've often wondered what became of him, and whether he benefited from his hard-won lesson.

Greetings all, be of good cheer.. welcome new posters.. i see the population grows...perhaps M.K. will contact the stone masons as the Castle is in need of expansion... while your at it a Pub would be nice... ummmm... golden colored brew..... Ahhhhhhh...
****************
Ah..Yes, when you see Platinum breakout on the upside and sustain the breakout, Gold will follow....but first Palladium will pass the price of platinum higher thus causing many industrial users to switch to Platinum usage then thusly..... in follow the leader fassion..Palladium(which is ready to assume this role)will lead the charge.. then Platinum will surge and help panic the shorts and then Gold..will breakout of jail!!!... and its off to the races!!!
Just picture in your mind a train... So step right up now!! no need to push Leigh!! watch your step Tomcat punch these peoples ticket Townie.. get your tickets, M.K. is blowing the whistle and this baby is about ready to leave the station and climb the hill.......Watchout!! engineer!! people are still on the tracks..uh, them's not people.. only shorts.. All Aboard!! and Full Steam Ahead!!!
*****
Little known fact about Platinum Eagles... to have enough platinum to coin them, the Pentagon had to lend the mint 20% of the stragic reserves this year, repayable in about 4 years.....Probably didn't want to push spot prices up by having to buy on the open market physical platinum thus spook the other metals. "Got to push them prices down"-the CABL.....
***********************************
Irwin Messer, of DPM Brokerage, was quoted in Reuters as saying "Base metals have rallied and some of the hedge funds have taken a good hard look at platinum and palladium, which can only be good for gold�The other thing is that as the economy picks up, demand is going to pick up for these things." Reuters also reported that Steve Kearney, chief executive officer of South Africa's Impala Platinum Holdings (Implats), forecast continued robust growth in jewelry demand from China, and that a strong year for demand should help push prices up to $370 to $380 an ounce.
******************************
BOE-$209.00 "Look citizens at the profit we made for you on the sale of your gold...... by selling it at $268.72...what good stewards we are"....

...An aside to the private shorts from BOE...."Hurry up and cover will ya?... can't keep this up much longer... they are begining to catch on"....

Superb! That's probably the best and most instructive story to be found on the internet today. How very appropriate that you chose Labor Day to share it! I hope a great many people have a chance to see it, because there's no one that will fail to grasp the meaning and the relevence to their own lives. Well done!

Gold is payment-in-full. Why settle for less when you don't HAVE to? ---Aristotle

http://biz.yahoo.com/rf/990906/ew.htmlTheir paper...our paper...it's ALL just paper.
The article includes a summary table of the effects of the past asian contagion crisis.

I am also interested with forward sales of mining companies.

I didn't follow your motive, please elaborate. A couple of posters have mentioned purchasing 'unhedged mining stock'. I am entertaining this option. There seems to be very high risk in purchasing 'forward sold' shares. The article at Gold-Eagle (Kaplan, I believes) alludes to this. It also seems to me that purchasing stock of unhedged companies is risky in that in POG decreases below cost of operation this may bankrupt the mine.

Access to forward sales seems to be difficult to obtain. My understanding so far is this:

Barrick - forward sold 3-6 years
Angogold- forward sold 1-4 years but 'unwinding'
Newmont- possibly only forward sold a year.
Gold Fields- no forward sales.

If anyone has further info., please post.

Thanks in advance.

P.S.: Read recently, when gold rises, gold mine shares rise at a rate of 3 to 5 times that of physical, dangerous game to play but possibly worth the risk??

Hi All - Well, here's my 2 cents worth which is probably about the right price before adjusting for inflation.

I'm pretty sure that perception and emotion is going to be the gating factor for what happens in the next 120 days. Fear and greed have always drivin the stock market, especially in times like today. If I were going to pick a single most important factor in how and when things will crash this year, I'd choose confidence. In particular, I'd focus on the confidence of the American "investor". When the confidence in the "new paradigm" fails, the party is over. Not just here, but globally. What could cause this loss of confidence? Who knows. But the list of potential pin pricks is long. I believe the confidence game is nearly over.

The joker in the woodpile is, I believe, Y2k. In the history of mankind, we've never had a situation like this before. There's no precident. But I've spent the better part of my working career as a CEO in high-tech and now as a CEO mentor and business "systems" consultant. By systems, I don't mean only computer systems, but business systems (how we work), too. I find it somewhat baffling that most businesses function at all. The amount of vision and real leadership in most businesses could be put in a tea cup along with our integrity and honor. But I digress.

If we believe that the geniuses running our businesses and governments are on top of Y2k, I think we're in for a rude awakening. Even the ones who are doing a good job will be dragged down by the ones who are not. The world, for the most part, is one massively interconnected system that cannot be made Y2k compliant. It simply cannot be fixed and it won't be fixed. It's terminally broken right along with our understanding of the connectivity of all people and systems.

When the systems break, the truth of our reliance on fragile technology will make itself known. Y2k will not be the pin that pricks the current financial bubble. More likely, it will be the eruption that covers the town with hot gas and ash. If the truth shall make us free, this is the time that we will learn the truth about technology, systems and the vested interests. When the smoke begins to clear later in 2001, gold will still be here. The question becomes, what won't be?? Here is where I go with the "got physical" group. Another/FOA and others believe that physical gold is the way to go. Me too. The POG? It's probably irrelevant. What is probably much more revelent is if you hold it in your hand. The old Irish ballad says, "Until we meet again, may God hold you in the hollow of his hand". And I might say to you, "Until we meet again, may there be a loving glow upon your face and golden ray in the hollow of your hand." The rambl'n man runs out of gas. Thanks for listening. Truthfully, you people on this forum are the best. DD (David)

I watched that employment number last week very closely and the final outcome did turn my stomach. How many 'reputable' sources were quoted and how many analysists were wrong?? Too many for my liking. How does a drop in unemployment from
4.3% to 4.2% translate to a 4% increase in the Nasdaq??

This 13th business is scary. Sept. 13th is a Monday, let's see if we get a 180 degree reverse reaction this time.

http://www.seattletimes.com/news/technology/html98/glit_19990904.htmlThe Social Security Administration does the soft shoe around an admission that letters were sent last month to more than 32,000 people indicating that certain benefits would end on Jan. 1, 1900.

Yep. That's a r_e_a_l confidence builder!

Hi, Buttercup! I was glad to hear from you! It's great to have another female on the Forum.

Your story was so cute. Well, I can tell you what happened to your little student. He now works for Goldman Sachs - he is the most ruthless gold shorter of them all. He is working furiously to get as much of the physical "good stuff" as possible, but he wants that worthless paper, too, and lots of it. He wants to make sure he is never, never broke again.

In fact, maybe he's lurking here RIGHT NOW! Your story about Exchange Day has just taken him down Bad Memory Lane, and tomorrow he's going to make someone pay!

(Just kidding!)

A "well done" from you has much value, and is well worth the service of writing the story. As one of the leading voices on the Forum and having gained the respect of many readers, your opinions have exchange value. When people value what someone has to say, they listen, and answer. They GIVE their attention. When they don't value someone's opinion, they turn a deaf ear, and offer no attention or valuable comment of their own in exchange.

Your concept of what happened to the young Midas is probably spot-on, and I am reminded of Donald Duck's (Scrooge McDuck?). The one with all the piles of money and gold.

Other females on the Forum - are you willing to be counted?

How are you Sir; read your 'leasing' posts.

I am just beginning to follow this 'leasing' thing, may I pose a couple questions?

The CB's are leasing out their gold at the current rate. Better to make a percent or 4 than have the physical gathering dust, yes? Apparently, the leasee then can do whatever they desire, sell it, re-lease it, melt it down and make coins(as a poster mentioned earlier), toss it into the Pacific Ocean, yes? The only obligation of the leasee is to return the gold plus X%(the value of the lease), whereby X is either gold or money depending on the details of the contract, at the end of the lease, yes?

I believe this to be the nature of leasing in its most rudimentary explanation.

As a citizen of my country, do I not have access to information regarding what reserves 'I have'. Do I not have the right to know exactly how 'reserve' my CB has? Apparently, amounts of foreign currency is known, but gold holdings, be it physical, stored, leased, whatever seems to be a mystery. Why is that?

Someone, a few months ago, posted that the USA has 8,000 tonnes of gold reserve, recently someone mentioned 2,000. Is this to imply 2,000 tonnes are stored and 6,000 leased.
I believe yesterday someone mentioned that none of the gold is presently held, Fort Knox is bone dry. Why are exact amounts not known?? CB holdings, whether physical or paper,(one would think physical?), stored versus leased would define CB 'overhang', would it not? Amount of CB gold holdings would begin to define 'shorts' a little clearer as well. 'Cabal crook A' had to lease 50 tonnes from CB Peter this month to pay CB Paul, meanwhile 'Cabal crooks B thru Z'
did the same thing. If CB leasing info. was readily available we would understand the 'short' position, no?

I don't understand this mess, please elaborate if you have the chance.

Thanks,

Canuck.

Check Steve H.'s post 12877. Please ask 'Gambler'(I don't have access to Kitco forum), for info. re: forward sales of mining companies, please let me know.

Thanks in advance,

Canuck.

Koan! Pleasant suprise. Nice to have you back. Enjoyed your #12913 especially your time travel into tne next century. Rumors were being spread about your absence. I am still very long on silver and was looking at Hecla. Did you survive the this last silver run into the toilet?

Anyway, we need your sense of humor so next time don't go away for so long. ;)

stranger,
On your comments in regards to no recession. I will offer no debate but maybe a qualifier on your comments.I believe that the coming disruptions whether large or small will have an effect (negative)on our economy.Having said this,whatever happens next year will be spun and lied about (same thing) to the degree that noone will quite know what is going on at any given time.
I think that next year will be written about in history quite differently than what many will seemingly experience.
We know that today we our experiencing a lot more inflation than what the man on the street might answer if asked.The perception created by the bogus inflation indexes in the minds of most in the USA is a good harbinger of what is coming. We know that those who are incharge of creating perception at the highest levels are fairly confident of the gullibility of the american people and after the acceptance of Clintons antics by the public with a no
outrage to almost anything that goes on, they are ripe for just about anything they will come up with next year.
This is not a prediction either way,just maybe a reason for caution.Those in charge may even believe that their power to control public opinion is close to omnipotent which sets them up also for a fall.
I do believe they will throw a lot of money(paper) at the problem (adding liqidity).The question marks come from without our country. We will be tested at a time that we our at our weakest militarily, and at a time when when for the first time our motives have been drawn into question in world politics not only by our enemies but by our friends as well.India and Taiwan, for example, have and are being forced to ally themselves with former enemies.We have a world created by the politics of the last 6 years that has made the world a time bomb waiting for a spark .
Y2k may or may not be that spark , but with all the problems in financial land , and with us at the mercy of the spinners, with a forseeable made to order crisis, we had all better find a safe harbor (as much as possible)and wait it out.
Most of the time, things are never as bad as one might think or as good as sometimes expected , but once in a while they are worse than expected and better than planned.What will happen will happen despite our pontificating . I have now learned to be patient and have found that the more that is known the less sure one becomes
You may be right , but by reading your posts your not betting on it, nor should anybody. Preservation of wealth should be utmost at this time as is the advice mostly of the good knights and Ladies of this forum.
I myself , have been educated to a new understanding of money and gold from those gathered hear and have joined in the line that now follow in "The Footsteps of Giants". I'll take a second to thank again those hear (I will not name names in fear of leaving someone out, you know who you are)
This education could not be found, in this manner and format,anywhere else I believe and have been forever changed by it. My thanks again to all and to MK for this roundtable of the most noblest of friends

The Dow-to-Gold ratio is a number 'derived' by dividing the DJIA by the POG. The ratio shows a 'spread'.

The only reason I point this out is someone mentioned that if the ratio went to X, then the POG would be Y. The ratio is a product, a comparison of the 2 numbers.

If I study my chicken to egg ratio, the ratio doesn't make eggs nor chickens, they make the ratio.

Which came first, the chicken or the ratio??
(Sorry, severe digression)

Agree with all your thoughts . The only question is who will be the first to leave the short ship. I heard its the rats first.

ITS DIFFICULT TO READ YOUR POST IN CAPITALS.

Hope to hear from you again soon.

Da chicken....!

Buttercup, I wonder if I might ask you a couple of questions? Do you have a background in economics or banking? Just wondering how you come by your interest in "exchange." Also, when I first started lurking on the Forum months ago, I think I read something by your husband saying that you were the first one in the family to become interested in gold. How did that come about, and did you have any trouble persuading your husband?

I hope these questions aren't too personal. Please answer them at your leisure if at all.

I sure wish my son had a teacher like you!

Gandalf, sorry to repeat your response to GD, I has posted before I read yours.

Elevator Dude, please see my previous post, let's see if you, Desjardin and I can expand the list.

"I would not expect y2k to create a recession. No one
has a better handle on how well prepared for this the world is than corporate insiders. Yet, corporate insiders continue to be net buyers of stocks."

... "Corporate insiders", yes. They are indeed inside. Do they ever get outside for long enough to see larger alternative pictures? Like everyone else, they've never had to encounter anything remotely like what is coming. They are, perhaps, like the insiders of the 19th century declaring the (then-new) telephone technology to be useless and, commercially, a "fraud" (verbatim quote). Or perhaps like economist Irving Fisher of Yale, who declared a scant few weeks before the crash of 1929 that stock prices had reached "a permanently high plateau". These men, these insiders -- very prominent figures in industry and finance, in their time -- were not capable of seeing outside of their respective boxes.

"There have been MANY tumultuous events in recent decades... Vietnam, the Kennedy assassination, hostages in Teheran, war against Israel, the invasion of Kuwait, the Clinton impeachment, etc. We survived most of them with little if any impact on the rate of economic growth."

... None of those events had even remotely the same potential to impact industry and finance in the way that Y2K clearly does, excepting the possibility of the wars escalating into strategic nuclear conflicts.

"Now we approach the most widely advertised tumultuous event ever, and yet people expect the wheels to fall off of everything."

... "Widely advertised"? Seems to me more like widely dismissed, discounted, disregarded and otherwise DISSed. Media coverage has been nearly uniformly of a "bump in the road... we're alright, Jack!" nature. Who are the people (aside from a handful of utterly marginalized characters like Gary North) who "expect the wheels to fall off everything"?

(BTW: I do not *expect* the wheels to fall off, but I think that there is an unacceptably high risk that they will. I do not either think that we are going to undergo strategic nuclear war... but I think that there is an unacceptably high risk that we will.)

PS: DD put it beautifully (09/06/99; 16:45:40MDT - Msg ID:12919): "The world, for the most part, is one massively interconnected system that cannot be made Y2k compliant. It simply cannot be fixed and it won't be fixed. It's terminally broken right along with our understanding of the connectivity of all people and systems."

bravo!

***An extra-light version with no U.S. market activity***

Reuters reported that the London bullion market was listless in the absence of U.S. traders due to the Labor Day holiday. The London PM gold fix was marinally up from Friday's $254.40, with London gold dealers recommending a price of $254.60 per oz. Spot gold was last quoted at $254.50/$254.90 a troy ounce as trading ended on the day.

However, despite the obvious lack of U.S. activity, some dealers suggested that the thin market reveals a growing concern over the effects of Y2K, manifested in "bigger illiquidity" towards the end of the year.

The Tower is quick to point out that they used the odd phrase of "BIGGER illiquidity", and not just plain ol' "illiquidity"...implying that illiquidity is already present in the gold market. A bullion dealer ellaborated: "People are very concerned that there will be a lot of liquidity problems over the year-end. A lot of people might want to allocate their metal, leaving it free and off balance. People are just getting nervous ahead of it." Gold lease rates eased a bit today, yet remain near the historically rare level of 4%, reflecting the difficulty of attracting willing bullion lenders under current conditions.

In currency news, the head of the Ministry of International Trade and Industry (MITI), Kaoru Yosano, expressed concern about the weakness in the dollar's value in the face of a rising yen. The Japanese Trade Minister said a high yen hurt Japanese exporters, while a weak dollar was troubling because "Japan holds huge amounts of overseas assets," as reported by Reuters. Yosano said the larger problem of the two right now is the dollar weakness because this affects countries worldwide that use dollars for trading purposes. In an obvious effort to talk talk down the yen in favor of the dollar to the world's taders and speculators, Yosano said the Bank of Japan needs to maintain its monetary policy of guiding overnight interest rates to zero. However, he disagreed with any further easing through a rise in money supply. "...There are many firms that are surviving largely because of low interest rates," he said. "So, the present zero interest rate policy needs to be maintained." On his stance against adding more money to the system, he said such a quantitative easing would be ineffective because "a situation of excess liquidity already exists," with banks unable to find borrowers. .....The ol' classic condition represented well by the phrase "pushing on a string."

And to wrap up with a quick Y2K note, U.S. commodity giant Cargill earlier confirmed it would avoid doing business in South Africa over the millennium period. In a letter to South Africa's Department of Agriculture in July, Cargill indicated, "We plan to avoid entering into or executing trades in maize, oil seed, wheat or any other commodity from December 15 to January 15," citing lack of confidence stemming from the risk the millennium bug posed to communications, bank settlement and other sectors.

If anyone has doubts as to whether Y2K concerns are well-founded, just look at the red faces over at U.S. Social Security Administration. It turns out that they mailed letters to over 32,000 people indicating that some of their benefits would be ending on January 1, 1900. OOOPS!! That's not the kind of thing you expect from the first federal agency that the president paraded about as attaining the holy grail of Y2K compliance. Let the bank runs begin...

And that's the view from here..."after the close"

Well put.

Maybe those respective boxes were their offices and because they never looked outside they failed to realize they weren't in on the ground floor (double meaning intended) then when the exits got jammed they simply stepped out the window and------

Canuck and Desjardins, Here is a little more date that might help.

The formula for the lease rate is:

Lease Rate = LIBOR - Forward Rate

Here are two July 99 posts from Dabchick over as Kitco regarding the lease rates. Note that the title of the first post is: "Lease Rates are a deception"

Date: Wed Jul 14 1999 17:41
Dabchick (kiwi ...your 13:38 ...... .) ID#258195:
Copyright � 1999 Dabchick/Kitco Inc. All rights reserved

Right On !!

I can never understand why so many here get excited about trying to look for Black Magic in the entrails of the lease rate data. ( No doubt someone will enlighten me one day ) .

If only people would realise that the lease rates are no more than a different way of presenting the data from Comex futures market.

For example, here are today's closing data on the gold futures contracts going out to August 2000.

EXPIRATION TODAY'S
CONTRCT DATE SETTLE

GC 07 99 07/28/1999 255.00
GC 08 99 08/27/1999 255.00
GC 09 99 09/28/1999 255.50
GC 10 99 10/27/1999 256.10
GC 12 99 12/28/1999 257.40
GC 02 00 02/25/2000 258.80
GC 04 00 04/26/2000 260.60
GC 06 00 06/28/2000 262.40
GC 08 00 08/29/2000 264.30

If any one would care to calculate the annualised Forward rates from t he above ( Tonight's) closing figures on Comex, they would find:

the 1-month Forward Rate is approx 2.35%
the 3-month Forward Rate is approx 1.73%
the 6-month Forward Rate is approx 2.98%
the 12-month Forwrd Rate is approx 3.65%

The current LIBOR rates are:
1-month = 5.19%
3-month = 5.31%
6-month = 5.59%
12-mnth = 5.75%

Subtracting Forward Rates from LIBOR rates to get the Lease Rates:
1-month is 2.84%
3-month is 3.58%
6-month is 2.61%
12-mnth is 2.10%

BIG DEAL !!

PLEASE NOTE: The lease rate derives from the Forward Rate. The Forward Rate derives from the price of gold at a future date. So if the market thinks the POG is going to be no higher in the future than today, the Forward rate will be LOW. And as night follows day, if the Forward rate is LOW, then the LEASE rate will be HIGH. So when LEASE RATES ARE HIGH, IT IS SIMPLY THE MARKET'S WAY OF TELLING US THAT THE PRICE OF GOLD DOWN THE LINE IS EXPECTED TO BE ONLY A LITTLE HIGHER THAN TODAY'S SPOT.

Regards.............Dabchick


Date: Wed Jul 14 1999 18:42
Dabchick (kiwi .......lease rate calcs.) ID#258195:

There is only a minor difference between my calcs and kitco's on 6- and 12-month lease rates. The difference onb1-month rates is larger, but don't forget that when you calculate the 1-month lease rate, you have to multiply by 12 to annualise it. Any minor difference is therefore magnified 12-fold on the 1-month calc. Then, again, Kitco's lease rates give the Bid (as opposed to the Ask or Mid rate ) , so that is anothjer source of difference. In other words, I think its more a matter of simple arithmetic than market tightness.

Regards..........Dabchick

Goldspoon, thanks for the reference. I think you have indeed found the original source for that information. I suspect I only read it on a secondary posting somewhere.

Gandalf, I never believe all I read on the net, but as a one-time student of hobbits myself, I have found that one should always believe wizards like you. (Wherever you find them). :)

Hello Canuck: Since you asked several questions I will put them in quotes and then follow with my reply:

"The CB's are leasing out their gold at the current rate. Better to make a percent or 4 than have the physical gathering dust, yes?"

C, I have been suspect of gold leasing for a long time. It has always been hard for me to believe that it is done for money only. Why does a BB get a lower rate than if they borrowed from the government. Uptick, a dealer, says it is pure money motivation. Still hard for me to believe.

"Apparently, the leasee then can do whatever they desire, sell it, re-lease it, melt it down and make coins(as a poster mentioned earlier), toss it into the Pacific
Ocean, yes?"

Perhaps but I think there are different arrangements and different terms. With some deals the gold never leaves the bank. In other deals the truck pulls up and hauls the stuff away.

"The only obligation of the leasee is to return the gold plus X%(the value of the lease), whereby X is either gold or money depending on the details of the contract, at the end of the lease, yes?"

I think there are collateral obligations but don't know the details.

"Do I not have the right to know exactly how 'reserve' my CB has?"

I don't know. Why not write your CB and see what they say and let us know.

"Apparently, amounts of foreign currency is known, but gold holdings, be it physical, stored, leased, whatever seems to be a mystery. Why is that?"

I have no data or opinion on this. Perhaps, for those in the US, we could use the Freedom of Information Act to find out.

"Someone, a few months ago, posted that the USA has 8,000 tonnes of gold reserve, recently someone mentioned 2,000. Is this to imply 2,000 tonnes are stored and 6,000 leased.
I believe yesterday someone mentioned that none of the gold is presently held, Fort Knox is bone dry. Why are exact amounts not known??"

Ditto last answer.

"CB holdings, whether physical or paper,(one would
think physical?), stored versus leased would define CB 'overhang', would it not?"

Overhang seems to be a term that refers to the amount of extra gold available to come on to the market. "Extra" has never been defined that I know of. Perhaps someone can come to the rescue on the definition of overhang.

"If CB leasing info. was readily available we would understand the 'short' position, no?"

I agree.

Thanks for the etiquette lesson. I just hit the caps button because otherwise I would end up typing in small caps. Just trying to be effiecient with my keystrokes.

Thanks for your response #12,893. How simple, for much of the market has indeed already declined.

Of course. I was still caught up in focusing on the S&P and DOW. I forgot that a small percent of the S&P stock control it upward appearance. Frankly I am embarassed at missing something so basic but I learned a long time ago that one's learning rate is proportional to the exposure of one's ingnorance.

BTW, my view on Y2k is due to the fact that I feel that the Y2k correction paradigm is all wet. The focus is on internal remediation (which will look ok to insiders) rather than on external system to system testing like the banks are trying to due (to their credit). Being an old test engineer I am a bit biased. Of course, just being old makes me a bit biased. OK, I'll admit it. I am just biased. ;)

Hey GD, welcome to the roundtable. Nice to see you were not offended at the correction. We are a bit formal here and follow rules not often seen on other forums. I know of now other forum where posters are treated with such repsect.

So, tell us little of your self and about some of the things you are trying to learn. Looking forward to having you around.

Thanks for your post #12928 and for your kind acknowledgement.

I am not sure what is was about your post but I read it twice and came away feeling better. Sometimes sentiments are expressed in a way that have a hard to explain but beneficial effect on the reader.

The thing I have enjoyed about all these horseman coming around to haunt us at the same time is that they have forced me to get off my lazy duff and DO something rather than philosophize.

Without these threats I would not have been so motivated. Without this forum and I would not have grown so.

Leigh (9/5/99;

First re 12:53:43MDT - Msg ID:12850) -- Your comments about the bill board, family wealth and who will be left standing; were pleasingly read.

I have a thought about your boy and "Sound of Music". Since he has a lot of awareness of the Trapp family's flight to safety, you might be able to describe their need to take their money with them to an unknown future. First, maybe we can prevail on CoBraTwo to tell us what the situation was between the Austrian Schilling and the Swiss Franc when the Anschluss occurred. Then you may be able to apply that data to how the Trap's would have needed Gold to take their money out of an enemy country.

If that doesn't work, maybe the scenes in the latest Star Wars movie, where the Heros' need to barter they're way out of trouble because they don't have the local currency, could serve as a teaching vehicle. --- If that doesn't work, then maybe you can get Buttercup to come to his school and teach that class.

BTW your comment on her post was one of the best satires we've ever had here. Great writing! ---- P.

From Mr. Holtzman #12765:

------Put another way, how many people at a racetrack are attempting to buy a horse? If you want to know the going price of a physical horse, don't waste your attention on a racetrack.----------

Thanks Holtzman,
To develop this further: -------------If you ever want to "use" the fine qualities of a "physical horse", don't plan on gaining those qualities by owning a "horse farm"! True, the best avenue to gain exposure to the "profits" (and loses) in the "horse producing industry" would be from the ownership in shares of said farm. However, any viable industry, incorporated into today's fiat currency inspired markets, depends entirely upon those markets to channel profits and increased equity values back to stake holders.-------- Even if the financial markets function, is it valid to compare the real wealth of owning a horse with the increased value that comes from the business of
producing such an animal?

From horse stables to automobiles to gold mines, it's important to understand that the ownership of any industry is not the same as owning it's end product. ---------Every industry's established "worth" is not only "just a derivative" of the value of it's end product, but is also a "derivative" of the "efficiency" and "continuation" of the world financial system that creates the marketplace for that
product.---- Better said: Your ownership in a company may be real, but for others to value your ownership realistically, it requires a functioning efficient medium of exchange. The beginnings of the first waves of currency inflation allows that function to upprice real producing companies. However,
historically, the end breakdowns in fiat money systems along with the rules / laws of the land, have always destroyed the efficiency of any industry to provide a product, no matter how valuable that item may be. Gold mines, like any other service, must operate within the official money system until
that system is completely destroyed. That includes abiding by all laws and official declarations the governing society may bring forth.

Preserving wealth during such times provides that the more clear and clean the ownership, the more likely one may control those assets. Again, even if the financial markets function, is it valid to compare the real wealth of owning gold with the increased value that comes from the business of producing gold?

We walk the trail of common logic:

If you needed a new car, would you buy General Motors stock instead ? Of course not! Why? Because the average citizen has first hand practical experience in the use and need of their car. The notion of owning the industry as a proxy for the car is quickly discarded as ridiculous. Still, some analyst would have you believe that one should hold gold mines as a proxy for gold.

I believe this flawed investment logic has become the "default" norm of most "western investors". While everyone understands the attributes for owning a car, few today have practical experience in the use of real gold as a money asset in their personal lives. For that matter, the analysts that promote this "proxy concept" are in the same boat. Let's face it, none here have never had to view gold as the "only savings to survive as a representative of their wealth"! Nor have we used it as "money in trade" on a regular basis. So, how could you, your broker or anyone else refute the proxy concept?

Heard this pitch before? Perhaps in a different format?: ------" The price of light trucks are going sky high due to world debt problems. So put most of your money into Ford stock and as little as possible in real trucks. Then, because of the way their production is leveraged to the "physical product", their stock will rise 100 times over the price increase of the "truck product"! After that we can sell some of the stock and buy hundreds of the trucks for later use when the money goes bad and times get tough. It's a unique concept inherent only in the automobile industry that few average "physical truck buyers" can grasp or understand. I have clients that have made millions doing this the last time light trucks rose in price. Ford is the best of the bunch because it has all the reserves already "in place" to supply "physical trucks" to a needing world. As such we can presume that those reserves constitute a value that will never be lost during hard times. -------- Compelling? Isn't it?
Of course we could be talking about the gold industry also.

Yes, it's a financially viable concept. Gold stocks "should?" rise as their product soars in price and brings currency profits to their bottom line. Because it's happened before in other industries and has repeated this cycle recently, mines must go up in the next bull market in gold, right? Well, maybe not!

We can see the long road behind us:

Read #12471, 12542, 12660. In those we find my reference to "physical gold advocates", "fiat money advocates" and "investors somewhere in the middle". The "in the middle" thinker looks back and sees a gold market that has responded to a kind of business cycle. To them, from the early 70s
onward, gold moved up from typical supply and demand issues created by the ebb and flow of our inflationary fiat system. The next cycle should take gold up to $400, $700 or even perhaps $1,000. The dollar will remain the worlds premier currency and the US fed will again raise rates to cool
things off. We create yet another cycle. Gold stocks will again be the prime beneficiary as "sophisticated" money moves from the world equity and currency markets into the shelter of "reserves in the ground".

Now, I would like to point out that this gold cycle has only been around, in this present form sense the dollar began it's withdrawal from being a gold loan. That's not very long in this gold world, when one considers how far back it has been in use. For us to draw conclusions that this dollar / gold cycle is of a lasting, repeating nature is stretching precedent to the limit!

Understand this: For countless years, mines have sold their product at established world gold prices. They may sell where and to whom they want, but the price was always a function of government currency valuations. The free markets that direct gold into jewellery and such have never set it's price. Rather they have always functioned under the currency / money use as the value creator. One way or another, the government sanctioned established marketplaces of gold have
always been under control and in evolution as the world currency structures have changed.

During this time the establishment gold price has not always benefited mine profits. During the 50s and late 60s gold was largely unprofitable to mine. Yet, we find no evidence of mines selling gold outside the "official" marketplace price in an effort to circumvent it's perceived obvious low price? I submit that in the past and in the future, they will always subject themselves to the
"established official" gold price, come what may. Any breakdown in the present dollar financial system that results in the failure of the "official established" derivative gold price will find every mining concern selling their production into that market price regardless of profit. To bypass that channel, the mines would separate themselves from the fiat banking establishment that they depend on to function in this world. Even though the "street price" (thanks Mr. H.) of gold soars within the small dealer network, it will be viewed as somewhat "Black-market". Mine selling into that arena would invite laws with "immediate" and total retroactive taxation of those profits. Or worse,
production limits could be fixed upon all mines as a means to prevent the same gross profit margins. Perhaps in the same way as the Texas Railroad Comm. controlled all US oil profits. Further, such a breaking away from supporting the official gold market by withdrawing physical supply could bring on the total closure of what established gold markets that exist. To that extent, mines could find themselves selling all gold production to the official CBs for who knows what price.

Can't happen, illegal, you say? When it comes to gold, nations, governments and Central Bankers change the rules quite often. One has but to look into the laws of every nation to find that " emergency currency flow controls" always include gold! You see, it's never considered money or a reserve until a crisis strikes. Some examples of past illegal actions:

1797 Napoleonic Wars. Bank of England suspends gold payments.
1917 US prohibits gold exports.
1919 UK prohibits gold exports without official permission. UK now off Gold Standard
1919 US gold exports permitted again.
1925 UK Gold Standard Act Currency convertible but only in amounts of 400 oz. Export of gold permitted again
1931 September UK abandons Gold Standard.
1933 US convertibility suspended ($20.67/oz). Export, all transactions and holding of gold forbidden.
1934 US Presidential Proclamation makes dollar again convertible to gold ($35/oz)
1939 London gold market closed on outbreak of war.
1954 London gold market re-opens after World War 2
1968 London market closed at request of US government.
1968 London market re-opens 1 April and now fixing in US$ for first time.
1971 US$ convertibility to gold suspended.
1973 US proposes further devaluation to $42.22/fine oz.
1975 US abolishes restrictions on citizens buying, selling or owning gold (formerly needed Treasury licence).

The above may not seem like much now, but it wrecked havoc upon many investors. Of special note: Was the gold market was closed between 1939 till 1954?

Onward:

Over the last few years, we have seen how the gold market is failing to act out it's past precedent. Many investors write this off to government gold policies that must soon end. Be that as it may, the process continues without regard to "past gold cycle logic". I point out that the lack of new mine supply did not prevent the low real prices prevalent during much of the 50s and 60s. Will the shutting down of most world mines prevent a low "official gold price" today as many think? Not in the broad political scheme of things.

But what are they thinking as this process is worked?

Would a dealer "street price" in the thousands change things? Not if the only recourse is for private money to move into Euros! The crisis policy will be to maintain the official gold market with low priced mine supply and allow the physical dealer market to run with whatever private stocks that arrive. Remember, the present financial system has a need for new mined gold to flow into derivatives at a low price to support the paper market. The same paper market that keeps oil behind the dollar also holds the dollar together. As of today; To further pull existing "old gold" from portfolios by forcing the street price down now invites a run from the dollar. A high physical "street price" will at least keep the dollar in play when price inflation begins.
If the paper gold price rises from it's present level, will gold stocks follow? Probably! But what if that rise ends quickly as the gold market begins it's next "official" failure run?


We make camp and rest here:

Looking outward:

The next money breakdown will not be a typical inflation cycle. The dollar has reached the end of it's "currency inflation" logistics as it's local debt load now only expands as foreign dollar debt is devalued from par. Yes, there will be "super inflation", but it won't be part of a "perceived" next cycle that extends from the lows of the last go around.

The ECB view:

Because gold continues to be the respected "currency of nations" in each currency block, our physical gold must be withdrawn from honouring the long standing dollar based "derivatives gold market". In fits and starts, the entire gold industry as they know it will fall away as the dollar is destroyed through local US inflation. Because history has never witnessed the destruction of a fiat world reserve currency, many world industries and businesses that grew up within this US system will suffer as investors shift holdings. Any industry that finds it's value from a dollar derivative marketplace will be in disarray. Therefore, we must allow the Euro to float on it's own and thus guard the Eurozone from the shattering effects of this.

To conclude:
Consider how you hold your gold as "we watch this new gold market together.

Thanks for reading, FOA

My query about hedge prices 2 to 5 years down the road is related to understanding the economics of a decision by a mining company whether to start up a new mine or not. For example, Placer Dome recently announced that it was deferring development of Las Cristinas for up to 4 or 5 years for lack of current project economics. I was just curious to know what the current forward hedge prices are, had Placer Dome decided to sell forward its Las Cristinas production to project finance this mine.

http://currents.net/newstoday/99/09/07/news15.htmlThe Thai government is looking to issue an executive decree by month's end requiring companies to state whether or not they have acheived Y2K compliance. This is an opportunity for the company to say that all is not well (in which case customers may continue to do business with them at their own risk and discretion), and by doing so, after the announcement they will not be held liable to any civil lawsuits in the event of damages.

So, let's say that as a business you "announce" that everything is Y2K-Okay, and then something goes wrong. You are probably on the hook for lawsuits that would probably exceed any foregone business as a result of an "announcement" of noncompliance. What would you do? I'm expecting plenty of announcements of noncompliance, followed by further erosion of public confidence in the financial sector, even though the financial sector itself can be expected to hold to the line that they are themselves compliant. To say otherwise would mean instant failure. Agreed?

http://www.ieeeusa.org/FORUM/POLICY/99june09.html
Hey guys - just time for a quick post and then off to bed. Thanks for your thoughts today concerning y2k. I thought I would repost the above link to the IEEE letter to Congress regarding its views on y2k. This letter was submitted in favor of liability limits when Congress was debating the topic. For those not familiar with IEEE, they are the Institute of Electrical and Electronics Engineers. In other words, their members built and maintain the current system. Their view should be considered gospel when evaluating the y2k issue. I'll quote a few points from the letter;

"In addressing public policy issues we have no more expertise than the literate public. However, we do
possess expertise in the technical issues underlying the situation that should be considered as you
weigh the conflicting public policy goals in formulating appropriate Year 2000 Liability Legislation. In
particular, for your consideration we offer the following points pertaining to the technical realities of
Y2K.

1. PREVENTION OF ALL Y2K FAILURES WAS NEVER POSSIBLE: For many large and important
organizations, technical prevention of all Y2K failures has never been possible in any practical way for
these reasons:

1.1 "Y2K COMPLIANT" DOES NOT EQUAL "NO Y2K FAILURES." If an organization makes all of its
systems "Y2K compliant", it does not mean that that same organization will not experience Y2K
failures causing harm to itself and other organizations. In fact, efforts to become "Y2K compliant" in
one place could be the direct cause of such failures in others. If interconnected systems are made
compliant in different ways, they will be incompatible with each other. Many systems in government
and industry are mistakenly being treated as if they were independent and fixed in the most expedient
way for each of them. When this "Humpty Dumpty" is put back together again, it will not work as
expected without complete testing, which is unlikely (see COMPLEXITY KILLS below).

1.2 ALL PROBLEMS ARE NOT VISIBLE OR CONTROLLABLE. In the best case organizations can
only address those things they can see and those things they have control over. Given this reality,
many Y2K failures are inevitable because some technical problems will not be discernible prior to a
failure, and others, while discernible, may not be within an organizations� jurisdictional control to
correct. This is especially true in large complex organizations with large amounts of richly
interconnected software involved in long and complex information chains and in systems containing a
high degree of embedded devices or systems purchased in whole from external parties. (The
temporary lifting of certain copyright and reverse engineering restrictions for specific Y2K protection
efforts should also be considered as long as copyright holders are not unduly harmed.)

1.3 INCOMING DATA MAY BE BAD OR MISSING. To maintain their operations many organizations
require data imported from other organizations over which they have no control. Such data may have
unknowingly been corrupted, made incompatible by misguided compliance efforts or simply missing
due to the upstream organizations lawful business decisions.

1.4 COMPLEXITY KILLS. The internal complexity of large systems, the further complexity due to the
rich interconnections between systems, the diversity of the technical environments in type and vintage
of most large organizations and the need to make even small changes in most systems will
overwhelm the testing infrastructure that was never designed to test "everything at once." Hence,
much software will have to be put back into use without complete testing, a recipe, almost a
commandment, for widespread failures.

"4.1 Y2K IS A LONG TERM, NOT SHORT TERM, PROBLEM. Irrespective of the notion of Y2K being
about time, a point in time, or the fixation on the rollover event at midnight December 31, 1999, or even
the name 'Year 2000� itself, Y2K computer problems will be causing computer system malfunctions
and failures for years into the next decade. Y2K is much more about the dates that can span the
century boundary represented in data that must be processed by software than it is about any
calendar time or clock issues. Because of the vast amounts of these, the complex intertwining among
them and our less than complete understanding of the whole, it will take years for the infrastructure to
"calm down" after Y2K impacts themselves AND the impacts of the sometimes frantic and misguided
changes we have made to it. The current prevention phase is only the beginning."

I would suggest all with an interest in this issue take a look at the entire letter.

ET

This from a Y2K board: sales to PM dealers require ID and SS number?! Is this correct?


http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001M1u

"Now, say you do convert everything into coins, and do a LOT of
gardening, and Y2K turns out to be less than 9 or 10 so that our fascist
governments are still operating. I can just see requirements that all
sales back to dealers be tracked. You can buy anonymously, at least from
dealers where it's cash and carry. But in the past, in the U.S., at
least, sales back to dealers required ID. So we're left with the black
market." I just sold $3k of silver to a dealer. Had to show ID, SOSEC
#, the works - or no deal... -- andy (2000EOD@prodigy.net), September
05, 1999.

A couple of interesting ideas from Kitco...


Date: Sat Sep 04 1999 21:15
strat (Squirrel) ID#93241: My plan for dealing with confiscatory gold
tax will be to melt down everything I got into jewelry. MC Hammer won't
have nothing on me. Got gold chains?

Date: Sat Sep 04 1999 20:55
Squirrel (My 20:08's concern about Goldbugs having a confiscatory
windfall tax) ID#280214: A way around that would be opening up a Gold
mine - perhaps here in the Colorado Mountains. I could "produce" an
ounce per year by melting a Gold Maple Leaf, mixing it with base metal,
then grinding it into dust. Of course I would have to *work* through
summer heat and winter cold just to strain ten grains per week out of
sand and mud.

September 4, 1999

By BILL "MIDAS" MURPHY
www.lemetropolecafe.com

It is fascinating to me that much of what we have
covered at the Cafe over the past year is starting to
synchronize and boil over. So I thought I would put
some labor into this Labor Day weekend and examine what
is happening on the scandal front, as well as update
you on the peculiar nature of it all.

Much of the hubbub about the manipulation of the gold
market began early last fall. Then Long-Term Capital
Management was supposedly taken off the hook on a 300-
tonne "borrowed gold" short position by the financial
entities that bailed them out. Since I had heard as
early as May 1997 that LTCM might have this amount of
gold exposure, it was no surprise to me to hear so many
rumors floating around of this nature, and I did not
hesitate to publicly question the propriety of it all.

Our protests caught the attention of Long-Term Capital
Management and its attorney, James G. Rickards, who
sent us a letter, along with an affidavit from fund
principal Eric Rosenfeld. Rickards stated that Long-
Term Capital Management denied any involvement in the
manipulation of the gold market, and Rosenfeld said to
the Cafe, "None of LTCM, LTCP, nor their affiliates,
has ever entered into any transaction involving the
purchase or sale of gold, including without limitation,
spot, forwards, options, futures, loans, borrowings,
repurchases, coin or bullion, long or short, physical
or derivative, or in any other form whatsoever."

I responded to Rickards in a letter saying that the
Cafe never accused LTCM of manipulating the gold
market, nor did I ever say that that LTCM "traded"
gold. I strongly suggested that LTCM had "borrowed" 300
tonnes of gold and had gold exposure in a credit sense
with the bullion banks, and I asked him for a response.

Rickards never did respond to me, and the other day it
was announced that he has resigned from LTCM to join
another firm.

Then there is information we received from a very
sophisticated source that a blind trust for Hillary
Clinton "shorted" gold instruments just prior to the
Bank of England's announcement of its plan to sell
gold. Interestingly, it was reported yesterday that the
down payment for the Clintons' new home in Westchester
County, N.Y., came from her blind trust.

It was strongly suggested to me from a source that we
try to find out if Hillary Clinton has a blind trust at
Goldman Sachs. The Gold Anti-Trust Action Committee and
the Cafe now have allies looking into this matter. We
are trying to find out who is handling her blind trust
or any other accounts she might have and, once these
are identified, attempt to elicit a response about the
gold-shorting speculation.

Why would this be the H-bomb as far as we are
concerned? Simply put, I have set forth much commentary
linking the Clinton administration, the New York Fed,
Goldman Sachs, Long-Term Capital Management, the
British treasury, the Bank of England, and Prime
Minister Tony Blair. A revelation of this nature would
solidify the link. For example:

* Former Treasury Secretary Robert Rubin is a former
Goldman Sachs CEO.

* Former N.Y. Fed Governor Ed Corrigan is a senior
partner at Goldman Sachs.

* London-based senior partner Gavyn Davies is Goldman
Sach's international economist and has close ties to
Prime Minister Tony Blair. Davies' wife, Susan Nye, is
officer manager for the chancellor of the exchequer.

* Dr. Sushil Wadhwani, former director of equity
strategy at Goldman Sachs International (1991-95), sits
on the Bank of England's Monetary Policy Committee. The
committee's duties include determining the bank's
objectives and strategy.

* Jon Corzine, former Goldman Sachs CEO, has close ties
to John Meriwether, chairman of Long-Term Capital
Management.

* Former Fed Vice Chairman David Mullins was a partner
in Long-Term Capital Management, which, of course, was
bailed out in part by Goldman Sachs.

Exhibit 2 and further background information on the
significance of the Hillary Clinton gold shorting story
comes from this commentary about the Bank of England's
gold sale from the document I sent to Sen. Phil Gramm,
chairman of the Senate Banking Committee:

"Yet, the night before the BOE announcement (May 6,
1999), I feared duplicity and this is what I wrote in
my Midas du Metropole commentary entitled, `XAU surges
46 percent':

"We know `the squad' are all lining up, one more time,
to try to stifle a decent gold move to the upside.
Deutsche Bank, Chase, Swiss Bank, and Goldman Sachs
were all there selling gold during today's session and,
when they had to, even throwing the kitchen sink at the
bulls' attack. Deutsche Bank has been especially
aggressive and noticeable in its selling the past few
days. We got word late this afternoon that its bullion
desk is calling clients saying that the gold market is
stopping at $290. I don't think Midas followers will be
surprised when we tell you that big sellers late in the
day today and taking on all bids were `squad' honchos
Goldman Sachs and Deutsche Bank. The Battle for
Navarone is an important stand for them, for if $290 is
taken out to the upside, their longstanding bearish
position could begin to look a bit shaky."

The next morning I awoke to the Bank of England
announcement. Since then the price of gold has
collapsed more than $36 -- or almost 15 percent -- and
the sale has ignited a furor all over the world,
fostering talk of conspiracies, etc. Before I get into
the ramifications of the sale, I thought the following
utterances by some of England's most notable officials
might raise an eyebrow or two:

Wire service commentary July 14, 1999 (my comments in
parentheses): "Asked in Parliament if it was right to
sell off part of Britain's reserves, Prime Minister
Tony Blair replied, `The gold price has been falling
for two years, so in fact if it carried on falling and
we didn't sell we would lose money.'"

Blair then declined to say if he would meet with the
South African gold industry delegation, but said the
gold sale was justified, stating, "We did this on
technical advice from the Bank of England." (Haruko
Fakuda, CEO of the World Gold Council, was told that
the decision was a political one and made by the
British Treasury, not the bank.)

Blair went on to say, "It is only the Conservative
Party's utter obsession with the euro in some bizarre
way. Given that Argentina and Switzerland are also
selling gold, what it has to do with the euro I do not
know. It is only that which is making them raise this
issue. It was done, as I say, on technical advice. It
was carried through perfectly sensibly and we actually
got the best deal for the country."

How wrong can you get? The best deal the Bank of
England could have made would have been $30 to $40 more
per ounce by carrying out the sale as all the other
major countries have done for 20 years.

But the story now gets confounding. On Sunday, July 11,
the chancellor of the exchequer, Gordon Brown, said in
the London Times, "The proposal to sell the reserves
was put to ministers by officials and, say treasury
insiders, agreed to it with little discussion."

According to the London Times article, the chancellor
is said to have been surprised and mortified by the
reaction from Thabo Mbeki, the South African president,
who said the Bank of England's gold sales would have a
"potentially disastrous effect" on South Africa.

OK, so what gives here? Blair said it was a Bank of
England decision. The Bank of England says it was a
Treasury decision. The Treasury says it was only a
Treasury decision of sorts and agreed to with little
discussion.

Good grief. A decision that may have disastrous effects
on South Africa, a democracy the West is committed to,
was made with little discussion and no one will take
responsibility for it. Yet it is such an important
decision that Tony Blair will not reconsider it, even
though it appears he does not know who made the
decision in the first place.

Meanwhile, the mortified (but confused) chancellor of
the exchequer, Gordon Brown, just prior to the trip to
England by the African delegation, was all over the
wire services talking about the righteousness of his
decision on gold, while continuing to extol the virtues
of the proposed gold sales by the International
Monetary Fund. The headline on the Reuters dispatch
read: "U.K.'s Brown Sees Wide Support for IMF Gold
Sales."

But a Bloomberg audio report reveals that when the Bank
of England's Eddie George was asked whether the bank's
gold sale was 1) his decision, 2) whether he was
involved in it, or 3) whether he was consulted, his
response was that he was consulted, which is a
euphemism for being told. When asked who made the asset
allocation decisions on the "bank reserves," George
answered, "the government" -- that is, the politicians.

So what do we have here? The British now say their
decision to sell gold was planned for some time and
made the announcement, coincidentally, as the price of
gold was about to take off. They became the first
central bank in more than 20 years to make an
announcement of a gold sale in advance. They knew this
announcement would devastate the market from a
psychological perspective and send gold prices crashing
-- and, of course, it did. The price went straight down
more than $36 per ounce. This assured Britain the worst
price possible and cost the country hundreds of
millions of pounds. Now no one in the British
government will own up to making this mysterious
decision, which is devastating poor African countries,
among others.

Meanwhile, as my May 6 commentary indicated, somehow
the bullion dealers knew what was coming and told their
clients as much.

It does not take an Einstein to comprehend the
significance of determining if there is a financial
account of any kind someplace that shorted gold for
Hillary Clinton just prior to the Bank of England's
gold sale announcement. With the help of others, I am
trying to track down where her accounts are located,
and then we will start asking questions. It will be
interesting first to find out if Hillary Clinton has an
account at Goldman Sachs.

Now for the "scandale du jour." It revolves around GATA
protagonist Martin Armstrong and his firm, Princeton
Economics International. The latest from two wire
services:

"New York, Sept 2 (Bloomberg) -- Republic New York
Corp. said it suspended the head of its securities unit
after an investigation of a client's affiliate in
Japan. HSBC Holdings PLC said the probe may delay its
acquisition of Republic.

"The bank is under investigation by U.S. law
enforcement and regulatory authorities for inflating
the net asset value of an investment fund, the Wall
Street Journal reported. Republic said it is working
with U.S. and Japanese regulators on the probe.....

"Republic isn't the subject of its investigation, the
FSA said. The Japanese authorities are looking at
Crestvale International Ltd., an institutional
brokerage based in Hong Kong, with offices in London,
Tokyo, and New York, a person familiar with the matter
said. Princeton Economics International, a money
manager based in Princeton, N.J., owns Crestvale."

"New York, Sept 3 (Reuters) -- "Analysts and a Republic
shareholder told Reuters they thought the Republic unit
and the Princeton affiliates may have participated in
so-called 'tobashi' deals, in which Japanese
institutions hide losses through complex derivative
transactions. The probe is limited to Republic's
dealings with the Princeton affiliates and does not
extend to other client relationships, these sources
said.

"Analyst Gerard Cassidy of Tucker Anthony said, 'It
appears one of two things happened: Princeton told
Republic this is what (the investments) are worth and
Republic took it at face value, or Princeton, in
conjunction with Republic Securities, determined the
value, which was artificially inflated."

The Reuters story goes on to say, "The firm (Republic)
also hired Lee Hennessee, an adviser who helped clients
pick hedge funds, or unregulated investment funds for
wealthy investors that trade a variety of securities,
usually using borrowed money."

This begins to raise all sorts of issues on what we
have reported to you and one that we have not yet. We
understand that certain other bullion dealers have been
lending gold to Republic. That is very strange.

Republic is a bullion dealer. Why is it borrowing gold
from other bullion dealers? We have already reported to
you that one bullion dealer told us that he has turned
down at least one hedge fund that wanted to borrow gold
from his bank. (We are trying to find out if was
Armstrong.) All this is going on with the one-month
gold lease rate (borrowing rate) now skyrocketing to
4.2 percent, up from a normal 1 percent.

It is well known that Republic has done much of
Armstrong's silver and gold business on the Comex.
Sources told me Friday that Armstrong has not been seen
on the Comex lately and they had heard that his funds
were not doing very well. In addition we have reported
that sources tell us that four hedge funds (Soros,
Tiger, Moore Capital, and Martin Armstrong) are short
from 30 million to 50 million ounces of gold. The
number filtered back to us on Armstrong is that he is
short anywhere from 8 to 20 million ounces.

But how can this be? Armstrong has had correspondence
with the secretary of the Gold Anti-Trust Action
Committee, Chris Powell, denying he was short gold. I
am presenting excerpts from Armstrong's commentary. The
first two are to GATA in May 1999 and the next one was
sent to Armstrong's subscribers in June. The
investigation into his firm, Crestvale, began in May.
Note how his tone changes towards GATA from May to
June. The last piece is long, but well worth the read.

* * *

May 14, 1999

Dear Chris:

I understand your frustration that gold has been
perhaps the worst investment for the past 20 years. But
to argue that it is being manipulated due to large
short positions is not justified.

There is no interest in gold at this time and the
central banks are all sellers. After they sell their
gold, then we will see a bull market. Once those
supplies are gone, no one will be able to lean on that
supply and your bull market will begin.

I hate to tell you, but gold will drop to under $200
before it turns. I find it extremely one-sided how a
Buffet and company of tagalongs is not a manipulation
because they buy, while selling is a manipulation. The
very guys you argue are manipulating gold down were big
sellers of gold and buyers of silver during the Buffet
rally. GS or not, the economy simply does not support
your position. And I do not want to hear how I am short
or some nonsense to try to discredit my views, because
it is not true. PEI owns a 51 percent stake in a public
gold mine in Australia. That is my long-term view; it
does not change my short-term view.

You cannot make a case for gold manipulation when
central banks are willing sellers. They have
demonetized gold and that is a simple fact of life. If
you want a free market, then don't stand in the way of
this bear market. Let the central bankers sell
everything they have and then there will be no overhead
supply to worry about. You cannot argue manipulation
and take the position that these guys are not allowed
to sell what they have.

The banks know what is coming and if they sell ahead of
the central banks, so be it -- that's a free market.

MARTIN ARMSTRONG
Princeton Economics

* * *

Saturday, May 15, 1999

Dear Chris:

Your view of Long-Term Capital Management is slightly
distorted. The bailout was in fact for the financial
markets. The shareholders of LTCM were wiped out. The
banks were given the assets in return for an orderly
liquidation. The investors in LTCM did not receive a
bailout.

The IMF has its own agenda. The Republicans have
demanded access to the International Monetary Fund's
decision process and the IMF refuses. It has emerged as
its own authority. When the gold standard collapsed,
the IMF simply reinvented itself. I speak to many
people on Capitol Hill and they are not in bed with the
IMF. The debate behind closed doors has been how to
make the IMF at least accountable to someone. Its
policies imposed upon Third World nations are a
throwback to a fixed exchange rates system. They are
the ones who insisted upon fixed exchanges rates and
that they must hold at all costs -- a great policy, as
demonstrated by Korea and others.

I work in this field quite extensively. There is no
conspiracy. The problem is that the IMF and the Bank of
International Settlements along with the World Bank all
have their own agendas and they have been at odds with
the G7 nations on many issues. No government is in
charge of these guys and only now are some beginning to
understand that profound fact.

When the gold standard collapsed, nobody was there to
turn out the lights. If this were a true conspiracy,
then perhaps it would be better organized. As it is,
these institutions are like the Keystone Cops. They
know not what they do!

Gold will one day return to a bull market. Perhaps in
2000 or at the latest in 2002. The lack of a paper
currency (Euro) is still driving international capital
toward the dollar. This trend could last for a few more
years. The European politicians are trying to create a
currency that is not based upon economics at all. Hence
the swan dive since Jan. 1. I'd rather hold a dollar
than a euro right now.

By the way, William Jennings Bryan stood for inflation
-- not sound money. The great financial panics of the
last decade of the 19th century were largely caused by
the silver Democrats who took 72 cents worth of silver
and called it a dollar. People then began to hoard
gold, according to Gresham's Law. The U.S. Treasury
needed to be bailed out by J.P. Morgan, who lent it
$100 million in gold in order to make payments.
Otherwise, the United States would have been declared
bankrupt internationally -- and there was no IMF back
then.

Money is a difficult thing to define. It is, in its
purest form, whatever the majority believes it to be.
The Babylonians began with gold because it was abundant
in their region. The Greeks began with silver for the
same reason. The Romans had only bronze, as was the
case in Japan and China. The Japanese did not issue
gold coins until the 19th century in order to
facilitate trade with the West, just as Russian today
are adopting dollars on the street.

The Egyptians used both precious metals, by weight, and
wheat; they never minted coins. Only after the birth of
Imperial Rome, starting with Augustus, do we find gold
as a regular part of the monetary system in the west --
some 2,000 years ago. After the fall of Rome, gold
disappeared and the monetary system became the silver
penny of Europe. Gold began to reappear as money after
600 years during the reign of Henry III.

Those who like to claim that gold has been money for
6,000 years leave out that it too has not always
survived as money in the past. Perhaps one day gold
will re-emerge as the black market form of money if
government succeeds in moving to a pure electronic form
of cash. But given the history of gold, it could be in
our children's lifetime.

All the best. I leave for Euroland for two weeks
tonight.

MARTIN ARMSTRONG
Princeton Economics

* * *

Gold: Manipulation or Exaggeration?

By Martin A. Armstrong
Copyright 1999 / Princeton Economics International
June 10, 1999

A two-man army calling itself GATA has begun to
besiege the media attempting to gain a lot of press on
the platform that gold is being "manipulated" by a
cartel of investment banks. They constantly point to
what they call the huge "carry trade" in gold were
there is far more gold sold than exists. The tenets of
the commodity markets, be it cash or futures, is that
every position is offset by an equal and opposite
position. There cannot be more outstanding short
positions than long positions, yet the total number of
positions combined can far exceed the actual supply.
However, the same thing can happen in S&P 500 futures
or even U.S. 30-year bond futures. That is the nature
of the free markets. Those who own a commodity have the
right to sell it, lend it or hedge it to someone else
who is willing to take the other side, for whatever
reason, be it hedging a future use or betting on the
next bull market.

Above all, this single misconception has been man's
greatest downfall. For during almost every great
financial panic in history, government has launched
intrusive investigations seeking t�(@ h"��j�@�(`hn��HTTP/1.0 200 OK
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