Though not posted for my attention, I think this can be answered in quite a straightforward manner.
1. Oil is traded for gold now, and always has in one way or another. My estimate is that Arab oil is trading its output at a minimum of 1500 tons per year, and a probable 3000, top possible value is 4500 tons per year.
2. OPEC has a 45% market share globaly without Mexico.
3. The current situation allows the Arab oil to accumulate gold at 10% of production. Which is all that is needed. The rest is spent as it comes in, and the form of payment is irrelevant, since the funds are not intended for wealth accumulation beyond the above percentage.
4. Gold's purchasing power is well below its historical norm, and the return to an unencumbered market price for gold will require gold to go up to the $5000 mark.
5. Production volumes for gold can rise over time to fill the necessary liquidity for its role as money proper, but nowhere near the current price..

I think that America's bubble economy is deliberate and that it serves the enemies of American hegemony, whether it is the British, BIS, the Swiss, the Arabs, or the Japanese.

I think that carry-trades, gold & yen, are being used to inflate this bubble, and as such, POG is artificially low for now and is destined to rise.

I think that Alan Greenspan is a sucker. That he's been duped by other powers into letting this bubble happen.

I think it's all going to endly badly, with this bubble being popped dramatically.

I think Alan Greenspan knows all this and is helpless to do anything at this point but to keep it going as long as he can.

Hi Back- I see Number Six answered your question for you.
I never seemed to find time over the months to listen to the Coleman talks, but I will make some soon. I have many links to things in a similar vien but try not to distract from forum PM focus any more than can be helped. Will supply some if you so desire by email. Regards---YGM
Go Gata & Go Physical.....................................................

http://www.usagold.comIf stock market crashes big time and the POG skyrockets, will this eventually lead to the 2nd American Revolution?
Rent this video: "Kurt Vonnegut's Harrison Bergeron".
By-Line: "Welcome To The Future. It's A No-Brainer."
Produced and filmed in Ontario. I doubt an American studio would have produced this.

Good evening - How low do you think the 'Plunge protection team' will get the POG is this latest round of paper selling?
Obviously with option expiary dates upon us one does not have to be a 'Rocket Scientist' to figure the motive herewith.

Please ignore my link; it was a mistake.

Interesting minutia about that video-tape. Lable on there saying 17+, mature viewers only.

Point of watching tape (outside of being very insightful and very well produced movie): Perhaps POG can be controlled way beyond what all of us believe possible, no matter what the fundamentals. And all of everyone's calculations, insights and intelligence is meaningless when the Big Brothers are in complete control.

Maybe the Big Brothers suffer a sibling rivalry.

All these markets seem to ignore fundamentals at this point. The US stock market certainly isn't having anything to do with them. One of these days....

http://www.skolnicksreport.com/england.htmlI came across this recently, an alternative view of the BOE shenanigans... read this and then factor in the role of the Kuwait gold...

"Far too many people believe the common fairy tale that geniuses are in charge of financial affairs. History is riddled with the monumental blunders of the big money crowd.

If the price of gold goes up, it tends to discredit paper money. After all, some do consider gold the only real, independent money, separate and apart from Governments. The Bank of England has been part of a scheme to force down the price of gold. Up to about the summer of 1999, gold had been pushed down to just a touch over 250 dollars per ounce, a recent historical low. The best, most efficient Canadian mines have a cost of production at 285 dollars per ounce. So the Bank of England announced for September, 1999, another sale of gold supposedly from "their Reserves". This was joined with stories, not every one believed, that OTHER central banks were tired of having gold reserves and were and are likewise selling off and discarding their Treasures.

There was, however, a deep dark secret. The Bank of England does not really have that much "gold Reserves". They have used up their gold in two World Wars as well as numerous devaluation attacks on the British Pound Sterling which once was $4.80 for one British Pound. AND, all the while to the last minute falsely denying that the Pound was about to be devalued.

Some believe that the person using the name "Clinton" was ordered, by the secret societies that installed him as President,to start the war against Serbia which had not attacked any foreign country, least of all the U.S. A simple reason: The new Euro Dollar was declining against the so-called "U.S. Dollar". So the Europeans had a financial interest to get the U.S. into a financial disaster called Kosovo, to wreck the Dollar. When it is all said and done, WHO will have to pay for reconstructing the bombed out bridges, factories, and buildings in Serbia? You guessed it: the common ordinary U.S. taxpayer suckers. Not the Rockefellers, Mellons, Morgans, and other ruling families WHO PAY NO TAXES, hiding their fortunes through Foundations and corruption of the Internal Revenue Service.

So to try to force down the price of gold even lower than $250 per ounce, the Bank of England was selling gold it did not really have. Upon the downfall of the Soviets, the Dutch arranged to steal thousands of tons of Soviet gold with the help of criminals in Moscow, the newly rich open market "miracle" entrepeneurs, former Commissars. After all, there was a time when the Moscow government was the world's second largest gold producer. Maybe not longer true with the great decline in production in general since 1991.

In its simplest form, the Bank of England was selling gold borrowed from thieves in Amsterdam. NOTE: The Dutch have been a transit point for Vatican financial schemes. By the way, that nation which is forever fighting off the seas---the Netherlands being below sea level---has used strong-arm tactics to prevent ANY speculating against THEIR currency, the Guilder. Currency speculators know it is a death warrant to mess with the Guilder which remains stable in an unstable world.

Reputed currency gangster George Soros became reportedly aware that the Bank of England was playing a dirty, dangerous game with someone elses' stolen gold. To counter him, the central bank of Britain has reportedly instigated stories such as: Soros is a world-class gangster, which he probably is; Soros is using stolen insider secrets which he probably is; and to appeal to a growing number of Anti-Jew bigots, calling him, through other people's mouths, a "dirty,rotten Jew", thus defaming and slandering all Jews in general.

So Soros and other worldwide pirates joined with the Swiss--who never were sweet angels--to attack the Bank of England. There is a pertinent principle of commodity trading called DELIVERY. The commodity traders sometimes joke that the items you speculate in might someday be ordered to be DELIVERED, like to be dumped on your front lawn. The currency bandits reportedly have been ordering the Bank of England to DELIVER the gold they supposedly sold in auctioning off THEIR "Gold Reserves". That is where is the trouble started. So the price of gold began shooting up, for a number of reasons.

REASON NUMBER ONE: Could the Bank of England DELIVER stolen gold without unraveling the whole Dutch-Former Soviet Gold Robbery? Also, the Dutch through their bank octopus, Algemene Bank Nederland, ABN, have been buying up FOR GOLD, banks in 15 U.S. cities. For example, ABN bought up a long-known reputed money laundry for bribing judges called La Salle National Bank of Chicago, now the flagship in the U.S. for ABN. La Salle National Bank was one of only two out of 20,000 U.S. National Banks in 1964 that refused to disclose their 20 largest stockholders of record when demanded by the House Banking Committee under Chairman, Congressman Wright Patman of Texas. A populist, he caused a report of the national bank ownership to be published in 1964 the first and only time of such in U.S. history that National Banks were requred to list their major owners for a U.S. Government published Report.

REASON NUMBER TWO: It is little known that the U.S. has a contract arrangement with Saudi and Japan. THEIR vast ownership of U.S. Treasury bills, notes, and bonds, are subject to being paid, upon their demand, IN GOLD. No U.S. citizen is allowed to convert their U.S. bonds into gold upon demand. Further, the Persian Gulf oil producers have an arrangement that their sale of oil to the West is payable in so-called "U.S. Dollars", actually, Federal Reserve notes backed by nothing, not gold, not silver, just hot air promises. Upon demand, however, only the Saudis have the right to DEMAND payment in GOLD instead of "U.S. Dollars". So the world price of oil is pegged to the "U.S. Dollar". AND Saudi can get gold for THEIR oil.

Another secret, known to gold mining and marketing experts, is that the Federal Reserve has an unwritten policy of a trip-wire: $410 per ounce. For example, the Fed with the help of the monopoly press in the market crash of 1987, concealed for weeks and weeks that the Fed was lifting heaven and earth to keep gold from topping 500 following the Crash. Over the years, whenever gold even approached $410 per ounce, the Fed and the press-fakers started an attack on gold, such as: gold does not pay interest but lays dormant; gold is a barbaric metal from the past, no longer needed; gold is useless to own it; and similar fables suddenly circulated by the paper money crowd.

I find it interesting that over a period of years, I was the ONLY JOURNALIST to go to the annual meeting called the Chicago Gold Conference, gold experts from all over the world. The press-whores, fronting for the paper money cartel, never printed a single word of the all-day Chicago-based meeting.

Rumors are circulating, believed by savvy folks to have validity, that the Bank of England needs a rescue of 200 BILLION DOLLARS to bail out their blunders. If the Federal Reserve, circulating their Notes masquerading as "U.S. Dollars", has to send that many paper lifeboats to London, where will they get it? And will it sink the "U.S. Dollar"? And by having more so-called "U.S. Dollars", that is Federal Reserve Notes, printed? Of course, that inflation would simply cause gold to go even higher.

Do not be surprised, however, that the monopoly press says little, if anything, about the Bank of England or is it the BUNK OF ENGLAND, and the gold crisis. And no surprise if the press-liars start circulating stories about gold, that, after all, gold is no good to have.

Wags with gold teeth claim, that when gold is high in price, they have to hire a guard for their mouth."

Sherman Skolnick

http://biz.yahoo.com/rf/991101/c9.html Ashanti wins three-year reprieve on hedge book

LONDON, Nov 1 (Reuters) - Troubled Ghanaian mining company Ashanti Goldfields Co Ltd , subject of a takeover bid by
Lonmin Plc (quote from Yahoo! UK & Ireland: LMI.L), said on Monday it had a won a three-year reprieve from its gold hedging
counterparties.

Under the deal with 15 banks, Ashanti has won exemption from the obligation to post collateral against margin calls on hedging
contracts in exchange for issuing the counterparties with warrants which convert indirectly into Ashanti shares.


***

#6 most interesting

Warrants? Hmmm. Gold stocks would seem to be on someone's horizon.

www.kitco.comWe're on a roll here!

Date: Mon Nov 01 1999 04:38
Gambler (John - I don't know what I'd do for entertainment here at Kitco without your) ID#434132:
Copyright � 1999 Gambler/Kitco Inc. All rights reserved
"Court Jester" presence!

What's happening w/ gold. Could it be fund managers are taking a wait and see approach to re-entering long positions in the majors? Does it have
anything to do with complicated hedging strategies as exemplified by Barrick, Normandy and the likes? This period will be remembered as one of the
few times that gold WILL take the lead. As gold digests its recent gains and as the balance of producers continue to buy back their hedges, gold trend
higher w/ continued erratic surges and pullbacks. But gold will continue on its way to $400 by year end!

What of the recent strength in the stock market? Wow, absolutely no one wants to commit to an opinion as to where the DOW is headed. Any
sheeple will say, "Up," based past performance. BUT, as you know, I say the DOW has seen its high and has been in a bear market since its last high.

What on Earth would give anyone the impression that the DOW could go down from here especially after Greenspan's recent endorsement? I mean
only a fool would risk venturing out on a limb to proclaim the DOW has seen its highs, right? WRONG!

There are numerous reasons that show the future path of the DOW. But to tell you the truth, I'm getting a little tired here as I hate to type! So I will
attempt to provide just a few IMPORTANT reasons and they ALL have to do with OVERVALUATION ( duh ) Three ways to measure
overvaluation!:

1 ) . Book value
2 ) . Earnings
3 ) . Dividends

Have you been checking the charts lately? Have you seen anything worse in the 20th century? Most egregious is the NASDAQ technology weighted
index propelled by the "Saturday Night Internet Disco Fever." It's inflates like a bubble, looks like a bubble, acts like one and will burst like a bubble!
If you were to take all 4,815 stocks traded on the eschange dividing the total market cap by the total earnings, just to match the moderate P/E ratios of
5 years ago, the earnings of the NASDAQ companies will have to increase 5x!!!! OR the price of the companies have to fall as much as 80% to
adjust to earnings!

Now, as I have said, I do not think the Fed will allow the markets to fall 80%. They will attempt successfully to contain the damage to a mere 35-45%
after a prolonged bear market in equities. With the army of day traders assembled only equipped to making money on markets that move up will
"scramble in" to gold and silver plays. You see, gold and gold stocks have been wiped out already. Juniors are down as much as 98%. The bottom is
in, has been in for a long time already. Gold took its cue from the XAU bottoming last year! As the bear market in the equity markets continues its
course, gold will gain momentum on the upside, gold stocks, silver and silver stocks will follow. PM stocks will become the next mania! The John
Dickneys of the world will come crawling out from their holes to "scramble in" and then "scramble out" proclaining their brillance and testifying to their
arrogant stupidity. Yes, it will be a grand day to see!

No kidding, if you compare the Price/Dividend and Price/Book Value with any other period in the 20th century, you will be astounded at where we
are today. We have blown away the old records in pre-crash 1929, 1968, 1972 and October 1987!!! All leading to the most significant bear markets
this century.

There are so many more reasons!!!!! Look at what's happening in Japan and charts of the YEN and Nikkei Index. Where dou you think the dollar is
headed?

Continue to buy on dips! ie., when Dissy Dingbat ( the self-admitted idiot ) "scrambles out" you buy with both hands, when he "scrambles in" you take
big profits!

Good luck!

Gambler

http://www.kitcomm.com/comments/gold/1999q4/1999_11/991101.042956.nick@ceee.htmeom

Thanks Steve,

Interesting reading! Personally I think the news Willo is dreaming about will be y2k... at any rate we are in the end game over the next 8 weeks and I have the feeling it's going to be a wild ride :)

I am expecting the unexpected... and I think we will all be surprised... at what transpires...

http://drudgereport.comDick Morris and his (long-suffering) wife have just started up a website that allows visitors to "vote" and send e-mails to their Congressmen about various issues. Polling is now taking place on (1) vouchers for school choice; (2) sales of handguns to youths; (3) hate crime legislation; and (4) lawsuits of HMOs. This is a super idea and an easy way to let legislators know our feelings. The Drudge Report has an article about this interesting new website.

Good morning all!

I am an American citizen living in Japan, and I have followed the gold market for serveral years now......I have enjoyed the posts here at USA Gold recently, and from time to time I would like to join the discussion.

Oro, I have enjoyed many of your posts. Thank you!

You made the following statement regarding the oil/gold trade:

"My estimate is that Arab oil is trading its output at a minimum of 1500 tons per year, and a probable 3000, top possible value is 4500 tons per year."

I think that this is very important information, and for this reason I would like to try to understand how these figures were arrived at.

Would it be possible to share your sources for this information and how you arrived at the range of 1500/4500 tons per year?

Good luck!

THC

Wasn't that criminal. Everyone is ending a peaceful week-end, no clouds in the sky, the kids waiting to get 'trick or
treating' and wham, the POG gets pasted. The full hit was almost $10. A gold novice would wonder what happened. That incident last night confirms without any shadow of a doubt what is going on. As 'elevator guy' recented remarked, "...
when is the little guy going to know ..." I think the 'little guys' are starting to wonder and to put two and two together.

Can you begin to imagine the hysteria involving the BOE amongst the 'big boys'.

My prediction: I think the now blatant and obvious crooks
may have their way bringing the POG down thru to Nov. 12.
What is the 'desparate number', I think $270 is where the meat of the numbers lie. If the now 'blatant and obvious'
crooks get their way down to $270 by Nov. 12 we will see an
outburst after that. That then we be a turning point for Comex and the 'paper boys'. However, if they don't get it down in time, Comex and the 'paper boys' are dead anyway.

I believe it's a win-win scenario, I myself will buy big on the way down to $270. I imagine myself buying big Nov. 10/11
at $275-280.

www.gold-eagle.comrepost:

Short bull story
(Sierra) Nov 01, 02:14

Brahma bulls are special. I can attest from personal experience that they make good pets. Forty years ago we kids would climb all over the one we had, even hanging from the skin under his neck. His eyes were patient and loving.

But brahmas are hard to keep penned up when they get the travelin' urge. Today I was treated to a rare sample of this while standing in the woods on the lower ranch, which constitutes a section. I happened to be facing the flat ground 1000 feet below when a massive brahma bull burst into the open from my left, and there was no stopping him! I watched him run the entire mile length of the flat with a long, smooth stride. I knew he had jumped the north fence to get in there, and wanted to see how he handled the south fence(3 strand barbed wire). He cleared it without really breaking stride. Amazing.

The true gold bull may manifest in like manner, unexpectedly & unmistakably exploding into the view of all, & clearing all obstacles in a headlong rush across the countryside.

Cut this from another forum this a.m.....Looks like we may see more southerly action today!

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

Reuters reported early this AM that Ashanti has been given a 3 year reprieve on their hedging margin calls. Yes until 12-31-2002. In return the counterparties get options to buy Ashanti stock at $4.75. Which could equal 15% of the company.

ET: "I'm not convinced the economy as we know it today or even how we might perceive it with a different world money is all that certain of a prospect. Demand for the underlying
asset which powers this economy, oil, may suffer the same consequence as demand for the other main ingredient, information, if the latter loses much of its significance."

I agree. What do you foresee for various asset classes (particularly, of course, PMs) if the upcoming debacle turns south of (say) a "7"? Will "assets" become moot as we all scramble just to survive under martial law and general chaos?

WASHINGTON - US currency should include tracking devices that let the government tax private possession of dollar bills, a Federal Reserve official says.

The longer you hold currency without depositing it in a bank account, the less that cash will be worth, according to a proposal from
In other words, greenbacks will get automatic expiration dates.

"The magnetic strip could visibly record when a bill was last withdrawn from the banking system. A carry tax could be deducted from each bill upon deposit according to how long the bill was in circulation," Goodfriend wrote in a recent presentation to a Federal Reserve System conference in Woodstock, Vermont.

The 34-page paper argues a carry tax will discourage "hoarding" currency, deter black market and criminal activities, and boost economic stability during deflationary periods when interest rates hover near zero.

It says new technology finally makes such a scheme feasible. "Systems would have to be put in place at banks and automatic teller machines to read bills, assess the carry tax, and stamp the bills 'current,'" the report recommends.

Goodfriend said in an interview that banks might place a kind of visible "date issued" stamp on each note they distributed. "The thing could actually stamp the date when the bill comes out of the ATM," he said.

Congressional critics say they would oppose any such move.

"The whole idea is preposterous. The notion that we're going to tax somebody because they decide to be frugal and hold a couple of dollars is economic planning at its worst," said
"This idea that you can correct some of the evil they've already created with another tax is just ridiculous," Paul said. Other economists say a carry tax is not a wise plan.

"This is going beyond taxing banks for holding reserves. It's taxing the public for holding currency too long. That's even more wild an idea," says

Was that published on April 1st perchance :)

The scary thing is they are perfectly serious...

What they don't realise it is happening to the dollar now anyway... !

http://www.rich.frb.org/monetarypol/marvin.htmSaudi prince contemplating buying into Ashanti.

http://www.arabia.com/article/0,1690,2317,00.htmlSorry

MARKET REPORT(11/1/99): Gold got hammered in the early trading on
news that Ashanti worked out a deal with its lenders giving them three
years of margin-free exposure to the gold market. In return, Ashanti
gave its gold lending counterparties the option to purchase 15% of the
company at $4.75 per share. By this, the bullion banks swapped a secure
collateralized position for equity in the corporation and presumably
removed the need for a merger partner............In related news, three
European gold mining companies have sent a letter to the Bank of England
asking it to publicly state its activities in the gold and gold
derivatives' market. The letter follows a statement in the Financial
Times on Thursday by Robert de Crespigny, chairman of Australian mining
giant, Normandy Mines that recent softness in the gold price should be
attributed to Bank of England "market manipulation designed to protect
option exposures." The letter was signed by Peter Hambro, president of
Mines D'Or de Salsigne, Chris von Christierson, chairman of Rio Narcea
Gold Mines, and John Morris, chief executive of Gold Mines of Sardinia.
Peter Hambro is from the British Hambro banking family. "In the name of
transparency it is time for the Bank of England publicly to state what
it is and has been doing in gold and its derivatives," the letter said.
":If this is 'nothing' then the rumours will be silenced. If it is
'something', we have a right to know what and why...If stories like
these concerned the manipulation of share prices, football odds or the
outcome of a horse race there would be hell to pay," the letter
concluded.............Today's downside action was started in the
Australian market by New York based "fund sellling," according to
Reuters reports.....Also in this morning's London Reuters, the return to
the $300 level last week was apparently fueled by buy-backs by Cambior
-- another mining company in hedge book trouble..............That's it
for now, fellow goldmeisters. See you here tomorrow.

Please call 800-869-5115 (Ask for Mary Conway) if you have an
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Hi ORO

I'd like to address your response to my post. I'll go along with your contention that oil is
traded for gold, that OPEC has a 45% market share and that the Arabs could be accumulating gold
at 10% of production, which would mean 2500 tons. And I would hope they're smart enough to
accumulate physical gold and not paper.

If that is the case, where is all this gold coming from? There are only 127,000 tons of
physical gold out there. The CBs are on record as holders of around 27,000 tons. At least
50,000 tons are in the form of jewellery, art etc and the remaining 50,000 tons are held
privately, some likely by the Arabs but how much? Current annual mine output is around 2600 tons
and it is my understanding that most of it goes for jewellery and industrial processes, not to
mention gold wafers and coins. There are estimates of a current annual deficit of around 1000
tons, which has been made up for to a degree by Central Bank sales. (Those sales have never
exceeded 400 tons per year which makes the reaction to the Washington Agreement all the more
curious, though perception is often everything in this game.) That still leaves a shortfall of
600 tons. So I ask again, where is all the gold coming from? Really, I'd love to know.

If gold rose in value as you contend, there would be a massive dishoarding the like of which the
world has never seen. This flood of gold would knock the stuffing out of any large price gains
and who knows where the price would equalise.

As for rising production volumes, there is the law of diminishing returns to contend with. Who
in their right mind would commit the huge amount of investment that would be necessary to recover
what are currently marginal grades of ore with such a volatile history of the price of gold?

CG

Hey AEL - thanks for the response. Somebody the other day commented that the problem would likely manifest itself as a sudden decrease in the velocity of money. This seems the likely outcome to me also as it seems that basic interconnectivity of systems and the corresponding data integrity stand a good chance of being lost. Without the ability to complete the monetary side of transactions, most transactions will become impossible. This was my point concerning the A/FOA scenario or any other scenario which takes transactional data integrity for granted. If these people at IEEE are correct, and I have no reason to believe they are not, we are in for a host of problems trying to complete economic transactions. Tomcat and DD here have expressed similar sentiments.

It really looks to me like the entire system will need to be rebuilt. Most enterprise-type systems will likely be worthless as their complexity makes them impossible to adapt to the new reality. I would expect it to take years to rebuild the payments system but fortunately the basis of a new system is there with the decentralized internet. If this scenario plays out however, we all look to be quite poor for some time to come when compared to today's living standards. I guess in the back of my mind I've always considered this possibility as more than just remote. At any rate, the ability of governments and banks to deliver money of any kind to the economic system could become impaired to a great degree leaving the people to their own devices. This is where we could get into a 'What is money?' discussion, but perhaps for another thread.

I suspect the one asset that will be in great demand will be those abilities that can contribute to rebuilding the economic infrastructure. Provided we don't see some kind of tyrannical top-down 'solution' take hold, those with the skills and desire will be presented with the opportunity of a lifetime to 'get ahead'. I do suspect the economic pillars of today will not be the economic pillars of tomorrow. I know many that read here suspect gold and the other PM's to be the way to go but I'm not convinced that is the case except over the very long haul. Skills will be more important than gold over the short term.

I suspect we'll see a rapid 'decompression' phase in the economy of the world as we discover what works and what doesn't. If transactional ability can be maintained to any great degree we can avoid the worst aspects of the y2k problem. If not, then we'll have to start over as this world will end as we know it. All the doomer/polly rhetoric doesn't matter at this point as any efforts at this point toward fixing the situation are likely moot. It's baked in the cake, so to speak.

Polish up your skills, AEL, as they will likely come in handy soon! I suppose that is the reason I've felt this need to relearn lost programming skills. I sure hope I don't have to depend on my agricultural abilities!

ET

Robert de Criespigny did not attribute recent weakness in gold too "Bank of England" manipulation but "bank" manipulation. Sorry. If you post the report elsewhere, please be sure to pick up the change.

Is everybody thoroughly drained by now? To believe that the area just below $290 would not hold, this morning, was to believe that the whole bull market thesis for gold is erroneous. No matter how I put the evidence together, that simply is not a rational conclusion.

FOA- thanks for the welcoming words you expressed to an old antagonist the other day. I will remember your kindness.

http://www.columbia.edu/~ram15/LBE.htmJust a comment on the latest from the inflation front...

Last week the CPI came out at +.5%. That annualizes at 6.16%. Now, for some reason overall inflation numbers were all that mattered when oil was falling, but now, with oil prices recovering, the core rate is the only number Wall Street wants to hear. So, the core rate came in at a +.4% which still annualizes at 4.9%. (In February, I predicted we would see 5-6% inflation this year). By now, Nixon had already instituted wage and price controls. Yet, in the perverse psychology of today's markets, we declared 4.9% no inflation at all last week, and an oversold bond market used the news as a pretext to RALLY.

Then, on Thursday, the Alexis Herman Labor Dept. announced that the employment cost index rose .8% in the third quarter. Why, with that, the crowd couldn't dump their gold stocks fast enough to load up on financials and bonds.

Today, we have the highest Purchasing Manager's Prices Paid report in nearly 5 years, and the announcer on CNBC quickly dismissed it by saying that it had already been overshadowed by the "benign" Employment Cost Index.

Let me try to explain: America is now running a $24 Billion PER MONTH trade deficit BECAUSE THE DOLLAR IS TOO HIGH!!! This MUST inevitably result in either a lower dollar or a tighter monetary policy. There is NO OTHER WAY OUT!!! So far, it is clear from the weekly money supply numbers that the Fed has decided to let the dollar decline. A lower dollar will mean more exports for the US, but HIGHER IMPORT PRICES! INFLATION IS NOT OVER YET, FOLKS! Lately, a steady stream of prognosticators has declared that the inflation scare is now over. Yet, ask yourself this: if they never saw it coming in the first place, how come they are so smart in seeing it go?

The point is: it isn't over. Would that it were so easy. And don't buy all this nonsense about inflation at these levels being benign. All assets last year were priced for the deflation that was anticipated for this year. What we have been seeing since the bond market bottom of 1998 is a steady repricing to reflect the reflation that is taking place. Historically, the long bond has carried a premium over inflation of 300 basis points. That means 4% inflation plus 3% premium, and you have a 7% bond. We simply ain't there yet.

Stranger's note: for much greater insight into this and other gold related issues, check out Robert Mundell's site which is linked above. Sorry about all the shouting.

The purchases are on paper.
They also provide their own gold for lease.
The whole issue of the current gold market is exactly that of the market players over leveraging relative to gold supplies. They borrow from Peter to pay Paul the Arab Oil Sheik. They even borrow from Paul to pay Paul.

The gold papers held by Arab Oil are very much going to be lived up to. They are mostly backed by gold in the ground, and what is not so will be repaid at the expense of other gold account holders.

Many of the small CBs lending some 4500 out of the 6000 lent by CBs (Andy Smith numbers) will be settled in some currency form.

FOA indicates that the gold comes from private holders of large accounts that have moved the accounts from full allocation (account not on bank books) to unallocated (gold belongs to bank, but owner has right to withdraw) in order to earn interest.
Canuck Gold - the 2500 ton number is close to what I got from a similar calculation.
Note that things look different when gold is used as currency to cover the whole purchase - in which case the oil price goes to some 200 bbl per oz.

http://biz.yahoo.com/rf/991101/kz.htmlSURPRISE! After Friday's larger and longer addition to banking reserves ($6 bln 4-day repos), analysts expected any operation Monday to be an overnight RP around $2 billion to $3 billion. You can see from the "headline" that it was once again larger and longer than expected. If the world is awash with cash, then why does this all feel so dirty?
Gold is good soap!

Hi Cmax,
Newbie posting here.

Regarding the Richmond FRB idea to apply a carry tax to dollars held out of "circulation". Just as an ordinary Joe on the street, if this passed, I would:
1) look askance at any "cash" transaction (their fantasy)
2) find a store of value that would not be subject to the carry tax even for one minute. (the perhaps unintended backlash...gold/silver?)

Perhaps what they want you to be looking toward is -- digital money.

Welcome to the Forum!

Exactly. If the Arabs are taking 2500 tons of gold per year as payment for 10% of their oil,
this can only be paper gold. And if that is true then, to a degree, the gold being used to pay
them must be gold they've loaned out in the first place. If we can all see that this is a giant
shell game, then surely they can too. Which makes me question whether they really are demanding
gold as payment in the first place. At this point in the game, I'd be demanding payment in
physical gold. They would have to weigh up the likelihood of ever actually receiving physical
gold for the paper they held against the inevitable rise in the price of gold that such an action
would precipitate. I'd be looking at the potential increase in the value of the gold I already
held and figure that the more gold I held, the less would be available on the open market. And
the higher the price would go. So, why hasn't it happened?

http://biz.yahoo.com/rf/991101/bs.htmlbeginning with the part about the Japanese central bank losing its credibility and the concern that "the side effects would be too great." In these minutes from the Sept 21 Bank of Japan Policy Board meeting, they then talk about the expectations of "vicious inflation" from direct underwriting of Japanese government bonds, and that such action or even increased purchases of JGB would be "very problematic."

How long can America remain immune to these same concerns and ill-effects?

Speaking of inflation. The guest on CNBC this morning, a gentleman from Scudder, I believe, stated that he would advise investors to stay in the market and that the inflation numbers had not yet shown up in prices we pay for products. I had to smile. He DID say YET!

http://www.prorege.com/north/6674.htmlET - Great post. I, too, have been concerned that even my kindred knights and ladies on this forum my not have fully considered the potential reduction in economic and monetary velocity due to Y2k. Gary North has a good example of how Y2k could significantly reduce the velocity of oil procuction/delivery regardless of traditional finance/economics or the actions of gold. These types of stories abound all over the world and yes, here in the good old US or A too. If one doesn't believe the stories, we can go to the latest data for futher indication that Y2k could be a bigger problem than all but the most pessimestic currently predict. A globally computerized economy running on manual workaround, much of it on an emergency basis, is going to flow like unheated oil in winter-cold pipes. Slow, slower or not at all. Instead of velocity, we may be talking about viscosity. From a preparation standpoint, the question becomes, What's going to be important to me and my family if this senerio become fact?? Gold? Sure. But what else? That's the question. Best, DD

http://biz.yahoo.com/rf/991101/eu.htmlAs the Japanese government frets over the the yen's climb to 3-year highs against the dollar, they seem to be winning some allies within the BOJ, as two policy makers (Nakahara and Miki) are now talking of the "radical measures" that might involve the central bank buying more government debt on top of their past efforts with their zero-interest-rate policy. "In the event these become insufficient, flexibly purchasing government bonds of longer maturities could be considered," Nakahara said in a speech in Tokyo.

Oh yes No inflation YET! I've only noticed it in gasoline, heating oil, groceries, clothing, medical premiums, prescription drugs, building materials, public utilities, property taxes, vehicles and equipment. but nothing important yet. I can't wait till it hits everything else.

Commercial bank gold derivatives (notional amount of off balance sheet derivatives contracts 6/30/99 = $36b with maturity of <1yr. http://www.occ.treas.gov/ftp/deriv/dq299.pdf (see charts p. 16 & 26) with the 7 largest banks out of 435 holding approx 65%. This number is not large when compared with their other derivative holdings.
It seems likely that the major problem which these entities are faced with is the possible massive failure of the counterparties to these positions, requiring delivery. There could be no doubt as to the bailout of Ashanti in one form or another considering the players and what was at risk. And what we read in Reuters is unlikely the whole story as it relates to Ashanti or the market behind the scenes.
I am not enough of an economist to know what the effect of the rising gold price will do to the US economy, but I do know that the US financial situation as a creditor nation on the gold standard in the early 30's as modified thru the early 70's was radically different from its situation as the world's greatest debtor.
Isn't it possible that if Ashanti was too big to let go down, the US is too big to let go down? That is, even if the oil producers have claims backed in some way with gold, they ultimately lose if they press the claims by demanding payment. Check the threads on the site above and see what the Russian default did to bank balance sheets last fall and Greenspan's response appears to have been without short term alternatives.
Unless a creditor simply wants to wipe out the debtor, the debtor has a lot of alternatives prior to liquidation.

It seems that poor Ol'e Spot the Dog runs for cover everytime that he hears the Grandfather Clock strick BONG, BONG, BONG, BONG, BONG, BONG, BONG, BONG, BONG, BONG !!! Seems as if that is and some Sir Knight of the TableRound pointed out -- THE TIME for the "shorts" to start dumping on Spot. -- ONLY, yesterday they started early, DOWNUNDER!!
<;-(

Holloweenie Joke
<;-(

The dishoarding of gold is not very likely on the way up. The investment demand for gold follows the classical momentum pattern and does not see significant dishoarding untill the buying power is completely outside historical precedent. People spend gold savings when prices in terms of gold are low. We are far from that point.
In the 70s, there was no fast motion of gold dishoarding from the major private hoards in Asia. Even so, there was a massive dishoarding in the US after the Bunker Hunt fiasco. In classical momentum fashion, the dishoarding came well after the peak prices.
The experience of the Asian countries shows that in local currencies, asset prices fell 60 to 85% and gold doubled or trebled yet only 800 to 900 tons were let go. Most of that was from governments. The private sector saw gold's buying power in productive assets (private market value of businesses) as a ten fold increase in buying power. A peasant in the rice growing region of Indonesia, holding a few ounces could buy a grocery store from its indebted owner, who can't afford to restock his shelves.
Of course, we have not considered yet that so many years of production have been committed to settlement of an insolvent gold banking system. BIS and OCC reports indicate that about half of the obligations come due within 5 years, about a third in one year. Even if only 2/3 of the obligations are settled (the portion maturing over 1 year forward), then the demand for gold will be sufficient to absorb much of the western dishoarding.

As you indicate yourself, the miners will not commit to new production until they are convinced of the viability of the new gold prices and the new input prices. From that point 3-5 years will be needed to find and exploit new gold reserves. Current gold production costs are well above the stated numbers. The $270 mark is not a sustainable figure, since it includes the mining of high grade ores out of proportion to their part in design reserves. Hathaway provides a 140% number for production relative to design. This means that inflation adjusted prices need to rise by 75% to provide the necessary price that allows all the gold reserves considered in design of current mines to be produced. If this does not happen, many gold mines will close well before reserves are depleted. How could this provide the record demand?

How could the gold price fall in light of record demand for all years but 1998? If gold investment and Arab oil purchases were being diverted to paper, and these same investors were providing the bank reserves that are sold into the markets to supply the physical deficit, then you have the makings of a gold paper inflation boom and the subsequent and inevitable bank run and gold deflation. In a gold deflation, the price of gold goes up, the price of paper obligations to supply it goes down. Typically, the obligations trade to 20% of face, the gold trades at a premium to its former price.

THC - gold for oil estimates. The estimates are given in a previous post from July and a subsequent recap in September or August. The numbers are weak, but do give an idea of what is afoot. International numbers are published by BIS only once in three years. US numbers are put out quarterly and show a correlation of growth in off-the-books (OTC) derivatives by 1000 to 2000 tons in the periods of high oil prices (above 17-17.5 $/bbl). Typically in the second and third quarters. This has held for every year since 1994. Usually, the gold derivative positions fall significantly in the fall-winter, during which time POG normally does well. In part, this is attributable to gold derivatives coming due for delivery and some of the debt settlement driven demand being supplied by the physical market.

Remember this. The $ DM and Yen have never been considered money by the gold factions. They were allways though of as currencies - for spending, not holding on to.
The market prices are of no concern to the Oil based gold investor since they do not denominate his perception of its value. They are a denominator of his view of everything else. In that view, practically everything is overpriced, particularly financial assets, e.g. DOW/gold ratio.

Hello. Has the asset allocation model of your portfolio recommendation (BTSHTF) changed since last posting? Thanks.

A message to GATA from Captainfreddy on the TVX board, also an insight on market manipulation. Captainfreddy mentionned on a previous post that he used to be a fund manager in his working days.

What should GATA do now?
by: Captainfreddy1 10/31/1999 11:11 pm EST
Msg: 22953 of 22959
Judge Bork was quoted to me as saying that the legal system in the U.S. is good, but the legal system is in a shambles because the judges are bad. I would say they are worse than bad but follow orders on major cases from the worst elements. Roy Cohen said that he ordered the judge in the Rosenberg case, because he was waffling, to burn the damn communists. So what possibility does GATA have to win an antitrust action in such a worthless court system. On the contrary, GATA should fly to Saudi Arabia and tell them that just as the oil market is being repeatedly tanked in the last month by the denizens of Manhattan, so is the gold price. The Saudis must understand that the power of the Manhattan denizens is solely based on imaginary credit and the stock market euphoria, and in holding the commodities like oil and gold down. So GATA cannot win by telling the truth alone to the faithful, but must organize its own cartel with the oil and gold producers to smash the power of the denizens of Manhattan. A rise in the price of gold to l,000.00 will smash Manhattan, as a rise in the price of oil to 40.00, and get the real world back into balance, as it did in l973-l980. OPEC should join with South Africa and other producing countries of gold, and with the Saudi Princes controlling 800 billion in assets, most of which will decline in value when the world stock markets decline, it is better for OPEC to put their savings in gold than imaginary credit and inflated stocks. GATA should create a counter-conspiracy against Manhattan, and fight fire with fire. This is how you win!! To hell with antitrust that no one cares about except the victim! Let's fight to win.

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Market techniques of manipulation:
by: Captainfreddy1 11/1/1999 5:31 am EST
Msg: 22967 of 22974
In l987 five major firm crashed the New York stock market using the synthetic derivative called cash settlement. Let's say we want to move the market up, so we buy the futures in cash settlement to settle the Dow at ll500 on Jan. l, 2000 as previously predicted by Abby Cohen. We lay out the synthetic derivative called cash settlement in the tens of billions of dollars to settle at least at that level on that date. It is important to note that we settle for cash and we never have to sell any stock to clean up. Now, it becomes our object to get the market there on l-1-2000. First, we change the index to put Microsoft, Intel, etc. in place of Chevron, etc. because Microsoft is more likely to fly than stodgy Chevron. Then, we note that to push the market up you can hit it with buy orders in very short frameworks to get it up, and it usually takes less buying to get it up than you will eventually settle for cash at ll500. This is what happened in l987 except that they were shorting, and so you reverse the process. When they shorted they never had to cover by buying back the shorted stock because the synthetic derivative called cash settlement settled for cash. So they could drive the market down by selling stock that they had accumulated in advance in the plan which was much less than their cash settlement position, and by selling this they could drive it down, or use managed accounts to do the selling, and when they settled for cash, there was no self-correcting mechanism to drive the market back up. The amount of stock used to drive the market down in carefully staged attacks in short time frames, like last night's attack against gold at the open, is less usually than you can clean up on on your cash settlement. Now, if you wanted to sell gold, and get the most for your dollar, you would not hit the market all at once, or get the Bank of England to announce the sale of gold that would obviously depress the market, because that is not how you get the best price. So it seems obvious that the tanking of gold in the first minute of trading last night was a manipulation to drive the price down probably in this case to hold it down for the Ashanti settlement, which if Cambior is any guide is hugely in trouble, or to keep gold down for the expiration of the naked calls under 300.00 at a worthless level. By GATA informing everyone of this does not change the picture, and therefore the cartelization of gold, and the cooperation with OPEC, is necessary to offset the corruption of the Central Banks and their bosses in New York and London at the private houses. You have to remember they got out of the l987 crash by the skin of their teeth when the whole world tottered, and despite this there was no real investigation, and nothing short of a gold cartel could straighten out these Manhattan piranhas, and OPEC must be included. We do not want the system strained to the point of collapse, but we don't want these fellows running things anymore either. Then, the gold producers could negotiate from strength for a gradual rise in the price to equilibrium with OPEC at their side.

--------------------------------------------------------------------------------

http://www.columbia.edu/~ram15/LBE.htmFrom our new Nobel recipient for economics, Robert Mundell:

"It was the severing of the link to gold in 1971 and the movement to flexible exchange rates in 1973 that
removed the constraint on monetary expansion. The price level of what had become the mainstream of the world economy was
now in the hands of the Federal Reserve System, the greatest engine of inflation every created."

If you haven't read it yet, what are you waiting for?

http://biz.yahoo.com/rf/991101/tn.htmlFederal Reserve Bank of Chicago President Michael Moskow said today that the best news on inflation is probably past.
"The future news on inflation, however, might not be as good as it's been in recent years unless we can achieve a better balance between the demand and supply factors in our economy." He also said that farmers were finding it difficult to generate adequate cash flows due to low commodity prices, and warned bankers that strong capital levels could be diminished by excessive lending to farmers.

You know something is seriously amiss when our most vital necessity, food, can't find a price capable of sustaining its production. Let's all eat dirt soup! (Before the recovery of oil prices, this would have been COLD dirt soup...whew! we really dodged a bullet, there!)

FOA:
As part of the interesting analysis that followed directly on the heels of the Washington Agreement, it was pointed out that the Agreement was sprung intentionally on an unsuspecting gold industry out of impatience on the part of the BIS and the European Central Bankers with those who had broughtthe POG to its knees at $250. The explosion that followed was intended to have the effect of weakening the power of the sellers and allow gold to rise. Now we see that they are seemingly back in the saddle again; and the upward spike merely gave them a new platform from which to work their manipulations. There is now plenty of comment to the effect that the goal of the manipulation is to protect naked calls that will expire on November 12 but no conviction that we will then return to higher prices, even then.

On October 15, I posted a "CALL TO ARMS" in which I called for a discussion in technical terms of the market tools available to the short sellers to bring down the POG in the absense of available physical supplies. My suggestion was ignored completely. No mention of it was ever made by anyone. And now we see more of the irrational situation in which the POG falls incessantly while physical gold remains in strong hands with little or no movement of actual gold in significant quantity.

Is this situation now being condoned again by the European Central Bankers? Will they allow it to continue or are they merely allowing graceful expiration of the outstanding naked calls? Should we expect them to take another shot at bringing the paper short sellers to reality after November 12? Or will the constraints of reality take their course and eventually make the POG rise again without further bombshells from the ECB?

Also, does Another's predicted demise of the paper gold markets depend on widespread investor perception that markets are subject to rigged manipulations that exist only to provide income to the banks via the writing of naked options? If so, it might take a very long time for their failure. After all, with a modern financial system that depends on the "greater fool theory", PT Barnum's comment that "there is a fool born every minute" describes a situation that could last a long time. And that's without even taking into account that in today's world of population explosions, he might just as well say "there's one born every half-second".

Setting aside the FOA/Another scenario, with the obvious (to me) inflationary bias of which we're told there is "no threat", woven into the fabric of the modern (paper) gold market and all of the attendant travails then, one must conclude IMHO that the POG will eventually explode!

Patience is a virtue; possess it if you can.

http://www.soybean.com/10279log.htmHi all - Just a follow on note to my last post. Here's another example of potential problems in the supply of oil after 00. The oil industry expert provides facts that jive closely with other numbers I've seen as relates to Y2k problems in the oil industry. In a nutshell, she expects to see 30-60% reduction from current levels in oil/petrochemical supplies after 00. Try factoring something like that into an economic model. Remember, the oil shortages of 1971 were caused by a reduction in supply of 7%. Anyway, something to think about. Best, DD

However, I must put it to you, folks.Seems like all hell is likely to start oozing over the world, come 1/1/00.
I assess what I have done to ready myself and my small family for the possibility. Not nearly enough. A year ago,
I was so chained by the living from paycheck-to-paycheck syndrome, that, although I could see, and was willing to look at the possibilities of 'what could happen', there wasn't a da-n thing I could do about it.
Then, a minor miracle occured, and a tiny chunk of unexpected change fell into my lap. I believe I was on an adrenalin rush for about three months solid. I tried to keep my head, but, I am human. Got some stocking up done, maybe enough to see four of us through a month of eating in the darkness. And all around me, I saw no one believing. No one wanting to deal with it. I THought maybe I was a fool. And I got a little frivolous, spending on things non-essential to survival. Lord, I wish I'd been on-line then.
But, I am on-line now. And getting one hell of an eye-opening. In my determination to make my small chunk grow, or to at least have some real money, in case the 'whole thing blew', I was led to gold, to this site, and, of course, to many of the links that appeared, including the ones related to y2k. Boy, have I been doing some thinking.
My children are 18 and 20 years old. My son took a young wife this summer. She is also 20. They asked me then (about nine months ago, when we came upon our little windfall), if we should be preparing for the 'fall of civilization', and if so, should they even be considering college, etc.?
I counseled them that, the 'world' has been expecting the 'end' for many decades now. One cannot live ones' life expecting it to happen. One should do some preparation, of course, if it is in ones' ability to do so. But continue to live, begin your lives, I counseled.
We, as a small family, had many discussions. I fear I may have been remiss in not insisting that we wait a year or so to begin 'living' again. But, we've done what we've done, and, for the most part, it was the best we could do, given the circumstnaces of the time, and our own, all-too-human, capabilities.
Anyway, I'm rambling on, and I'm sorry. But, I've been contemplating my few gold coins, wondering....
If we don't get oil, next year, if the power goes down, will we be able to eat gold? If, at the end of the month of january, we still have beans and rice, but our neighbors are starting to starve, do we really want to sit with our bellies full, while the little ones next door cry out in hunger? What if, at that time, my gold coins won't have the ability to purchase relief, for there will be no relief to be bought? What if, in order to keep my family alive, we have to shoot the neighbors, to keep them from attacking us in hunger? Is that really what we want to do? What if FEMA and the National guard are unable to get supplies to us all? What if there are no supplies to be had? What good will my gold coins be, then?

My small family and I have talked about these possibilities. We have decided that, if it comes down to an 'Us or them' scenario, and it is our rice that is all that is left, we will share the last bowl together with our neighbors, and, if death be at the door, we will face it together.
As for myself, tomorrow I am off to the coin store, to sell my gold now, while I can. Then, I am off to the grocery store,
to buy as much rice as I can, so I will be able to help as many as I can, in case the 'worst' occurs. If the 'worst' does not occur, and the oil continues to flow next year, then I will have blown my families chance of a little monetary relief at this time when college beckons to three of us four. And not one of us makes more than minimum wage, plus 'tips'. But what kind of a chance am I taking? How will it be next year, if the oil no longer flows, the paychecks stop coming, the grocery stores are empty? Even if we are facing 'just' a depression from a bubble-pop, Will we be able to eat, while those around us, who trusted and/or depended on their government to continue to function, starve to death? Will I smugly tell myself that it is not my fault the 'sheeple' did not listen? Will I be grateful that I listened, will I be thankful to God for my own survival, or will I not be able to face the Lord, because I let others of His children perish, while I shovel another forkful into my own mouth?
I cannot say that I have not had similar thoughts just bieng an American. Even as members of the 'poverty-stricken', we have lived well, being of Americas' 'poor'. We have always had a roof, our bellies have always been full, my children have always been clothed and educated. I have often been dismayed by the conditions that much of the rest of the world has been living in. But what could I do, oceans away? What 'charitable' organizations were trustworthy, to whom could I have sent ten dollars a month, and known with certainty, that it would have fed someone who was hungry?
But I cannot reason away this situation. I have some knowledge of what we possibly (probably?) face, with or without y2k disaster. I have a little extra right now, that I can turn into some rice that might feed someone right next door, next year. And I can watch them eat, with my very own eyes.
Am I being foolish? Over-emotional? Or, am I looking at the situation in its' entirety, and seeing the need for insurance, not just for myself and my family, but for my very nieghbors. Those people next door. All the gold in the world may not be worth bull-dung, next year. I do not want to shoot my neighbors, under any circumstances. I will insure against that very real possibility, rather than for my own selfish desires to have an easier time of it. (BTW, even if I did not believe in God, I don't think I could live with myself eating, while others hungered. I don't think religion has a lot to do with this issue. I think it is a matter of conscience.)
As for our government, and all the lies they have fed us, well, they suck. I would fight them, if that was the most serious wrong that I felt I was looking at right now.
Somehow, I don't think one who is starving gives much thought to whether or not they are living in a free society.
And just how free are you going to be? Holed up in your cabin in the woods, praying you make it through the winter. Having buried the neighbor you just shot for getting into your corn-crib, will you then, have the gall, to ask the good Lord for help?
Not I, my friends. I will share my last bowl of rice, and perhaps die of hunger. Or, I will continue to live below the 'poverty' level, struggling to get my kids through college, while I swear at the ten tons of rice in my garage.
I keep hearing, 'figure out your own risk to reward factor, then act'. And so, I have, and I am. Thank you, and good luck to you all. I will continue to lurk, I am sure. At the least, this is all very fascinating. Maybe one of you could take some time to talk some 'sense' into me. If there are flaws in my thinking, please, piont them out to me. I would LOVE to be able to look to the future as one where my children stand a chance of living a comfortable, high quality life. One where their bellies are full, and they can pursue the rigors of intellectual and spiritual growth. Full bellies first, though. For ourselves AND our neighbors. And whoever else the Lord sends our way, and there might very well be many.

http://gold-eagle.comGoldfly: This was just posted on Gold-Eagle by Pericles. He was beginning a post about Japan's foreign reserves:

"A poster recently paraphrased Tennessee Ernie Ford's song of 'sixteen tons'...."

It sounds like Pericles has been reading USAGOLD and liked your song!

As many of you know, today was the first day of the "new and
improved" Dow Jones index. I was especially impressed by
today's market wrapup from TheStreet.com's new commentator,
Cletus Bumfoot.

Noo Dow Sputters on Day One as Nasdaq Creeps t'Reco'd
By Cletus Bumfoot

11/1/99 4:55 PM ET

SAN FRANCISCO -- Follerin' last week's robest gains, capped
by Friday's reco'd-settin' advance fo' th' Nasdaq Composite
Index, it was probably too much t'speck further gains today.
Thet proved t'be th' case today fo' blue-chip avahages, but
th' Nasdaq Comp squeezed out t'other noo high despite losin'
steam midday amid repo'ts of t'other trimenjus earthquake in
Taiwan, as enny fool kin plainly see.

Th' tech-cornspired index closed up 1.21 t'2967.64 af'er
tradin' as high as 2997.90. Th' noos fum Taiwan cuzd a
shudder as investo's recalled how a trimenjus quake last
month was a facko' in disappointin' third-quarter profits
fum companies sech as Dell (DELL:Nadaq) an' Intel
(INTC:Nasdaq).

Today's Market: Join th' discusshun on TSC Message Boards.
Th' earthquake is a "wild card," but as far as it bein' a
trimenjus problem fo' chipmakers, thass "not whut th' stocks
is tellyng us," said Billy Bob Harrin'ton, co-haid of block
tradin' PaineWebber. He noted th' perfo'mance of Micron
(MU:NYSE), up 1.7%, an' Analog Devices (ADI:NYSE), higher by
5.6%. Howevah, th' Philade'phia Exchange Semiconducko' Index
dipped 0.1% t'555.52 af'er tradin' as high as 566.58.
Although much of th' press attenshun centered on nooly
minted Dow components Intel, down 1.8%, an' Microsof'
(MSFT:Nasdaq), off 0.2%, feller tech bellwethers Sun
Microsystems (SUNW:Nasdaq), Cisco (CSCO:Nasdaq) an' MCah
Wo'ldCom (WCOM:Nasdaq) also restrained th' Comp. Th' Nasdaq
100 dipped 0.8%.

Although th' mos' trimenjus tech bellwethers were subdued,
th' tech proxy got a boost fum secondary plays sech as Wit
Capital (WITC:Nasdaq), up 27.4% on noos it will buy
Soun'View Technology fo' $320 million in stock. Shet mah
mouth!

Addishunally, Internet favo'ites were junerally higher,
sendin' TheStreet.com Internet Secko' index up 11.06, o'
1.5%, t'761.85.

Th' Dow Jones Indestrial Avahage closed at its intraday low,
down 81.35, o' 0.8%, t'10,648.51 af'er tradin' as high as
10,745.77.

South Car'linan Express (AXP:NYSE) an' Juneral Eleckric
(GE:NYSE) were th' mos' trimenjus negative influences on th'
Dow, while Procker & Gamble (PG:NYSE) was its mos' trimenjus
booster. South Car'linan Express fell 3.3% amid repo'ts
quesshunin' th' quality of its arnin's, while financials in
juneral retreated fum last week's stellar gains. Th'
Philade'phia Stock Exchange/KBW Bank Index fell 1.2%.

Th' S&P 500, meanwhile, dipped 8.81, o' 0.7%, t'1354.12
thanks largely t'weakness in financials, transpo'ts, an'
seleck trimenjus-cap tech names. T'other secko' in th' noos
was gold stocks, down as th' price of th' metal fell 2.9%
t'$291.70 an ounce. Th' Philade'phia Stock Exchange Gold &
Silvah Index shed 3.7%.

Th' bond market's perfo'mance in th' wake of th' Nashunal
Associashun of Purchasin' Management repo't he'ped pressure
blue-chip proxies. Th' price of th' 30-year Treasury bond
fell 11/32 t'99 7/32, its yield risin' t'6.18%. Howevah,
thet was off its wo'st levels of th' sesshun, retched on
wo'd thet th' NAPM repo't's prices-paid index rose t'69.4,
its highess level on account o' May 1995.

Gains in th' invento'y component of th' NAPM repo't -- t'its
highess level on account o' November 1988 -- suggess "a lot
of th' stren'th is Y2K-related an' c'd be tempo'ary,"
Harrin'ton said, cuss it all t' tarnation. "Th' market acks
purdy fine today. It's one of them in-between days, th'
market is kind of restin', digestin' some purdy trimenjus
gains."

While financials declined, it was a modess retreat "given
th' moves they've had," he said, fo'ecastin' th' BKX c'd hit
1000 by sprin'time. Th' Philly bank index closed today at
873.51.

"Yo' had some upside gaps thar so it's natural t'git some
pullback," he said, notin' th' "re-entry" point fo' most

names is probably 5% t'7% down fum last week's heights. Fo'
example, Chase Manhattan (CMB:NYSE), down 4.2% on repo'ts
its tradin' revenues were on overstated, "is probably a buy
on th' pullback. Shet mah mouth!"

All in all, today was a day of "stock-specific" tradin', he
said, citin' Tyco Internashunal (TYC:NYSE), down a further
10.8% on "continued skeppicism about its accountin'
prackices," as an example.

Lilliputian Uprisin'

Small-caps, meanwhile, corntinued their recent gains: Th'
Russell 2000 rose 3.18, o' 0.7%, t'431.82 an' th' South
Car'linan Stock Exchange Composite Index added 4.17, o'
0.5%, t'804.97.

"Remember, today is th' fust day of [menny] mutual funds'
noo [fiscal] year an' mebbe some of th' small-cap fans is
loadin' up on their favo'ite stocks," said Peter Right
fineidge, managin' direcko' of tradin' at Brean Murray
Foster Securities. "ah reckon it's as simple as thet. Some
folks is takin' a second look. Shet mah mouth! It's sumpin
thet don't surprise me, only thet it's taken so long
t'happen, as enny fool kin plainly see."

Despite th' group's recent gains an' today's outperfo'mance,
Right fineidge said it's too early t'call a "turnaroun'" in
small-caps.

"Thar's definitely a lot of focus on small-caps but this
hyar is a market of momentum an' small-caps doesn't haf it
yet," th' trader said, cuss it all t' tarnation. "ah's still

skeppical until ah see mo'e of a trend line."

In Noo Yawk Stock Exchange tradin', 838.9 million shares
were exchanged while advancers edged by declinin' stocks
1,537 t'1,522. In Nasdaq Stock Market ackshun 1.07 billion
shares traded while losers led 2,091 t'1,900. Noo 52-week
lows outpaced noo highs 86 t'70 on th' Trimenjus Board while
noo high led 189 t'97 in on over-the-counter tradin'.
Among other indices, th' Dow Jones Transpo'tashun Avahage
fell 82.48, o' 2.7%, t'2976.50 an' th' Dow Jones Utility
Avahage lost 1.41, o' 0.5%, t'305.20.

Date: Mon Nov 01 1999 02:30
Squirrel (call me paranoid, but as a sales tax collector (retail merchant) ID#280214:
Copyright � 1999 Squirrel/Kitco Inc. All rights reserved

I've a theory why that Federal Reserve Bank Sr. VP proposed the perishable currency ( or a
tax on it for how long it was out in circulation ) .

Since sales tax is supposed to be paid on every transaction, and private transactions (
between those who are not sales tax collectors ) are missed by the revenuers, then the longer
that currency stays in circulation outside of the system, the more likely it will be used in such
private transactions. They want to prevent that by taxing it if circulates for too long ( they
assume that it is being used in private transactions ) .

Let's figure someone like Captain_Kirk cashes his paycheck and likely spends all that cash in
two weeks. Most likely he will spend most of it at businesses that are required to collect and
report sales tax. Such businesses usually deposit their cash every day or so. Thus the normal
cycle of cashing a paycheck, spending the cash, and that cash being deposited all occurs
within 2 or 3 weeks. If somebody holds out that cash for longer than that, then they are doing
one of two things with it that the government does not want them to do. 1} hoarding, aka
saving it or 2} using it in under-the-table transactions. In the latter case, each person in the
chain may hold onto the cash for several days or a week or so. The longer it stays in such
circulation, the more transactions are likely missed by the revenuers. If they assume one
transaction every few weeks, and that 5% or so of sales tax is due on each of those
transactions, then I would not be surprised if they imposed a 5% PER MONTH TAX on that
cash ( with a 2 week grace period for "normal" "legitimate" circulation time ) .

The key for people using such perishable money is to NEVER re-deposit it and have the tax
collected. As long as it stays in private circulation it is good - as long as each person in the
chain has faith in it and his or her ability to pass it on to the next person at full face value. If at
some point someone slips up and deposits that cash, then the bank may discount it to nothing
if it was held out too long - maybe even beyond nothing - to where you deposit a $20 note
only to find that not only is it worth nothing but that you owe back taxes on it - maybe $10 or
more. The latter case makes it obvious to not bother turning the note in, but rather to pass it
on to the next private person. The cash goes underground and stays there.

I can envision our present Federal Reserve Notes becoming quite valuable in this
underground economy. I can also envision legal penalties for trafficking in them, just as I can
envision legal penalties for trafficking in Gold and Silver bullion or coin.

That was a wonderful post! I've been pondering many of those issues myself. You seem to have a tender heart toward your neighbors; perhaps you have grown to know and love them. In my neighborhood families move in and out constantly. Everyone seems to believe the story of "no disruptions" and I feel like a freak for preparing. I've given up trying to talk with anyone about Y2K. My feeling is that anyone who refuses to prepare has no claim on a person who has prepared. Y2K isn't like a tornado or other sudden natural disaster. We've all known about this for a long time now, and if someone refuses to prepare they deserve to suffer to some degree. The Bible teaches that a person who does not work shall not eat (I assume that refers to preparing also), and also that if a person does not meet the needs of his own family members he is worse than an unbeliever. I'm tired to death of people laying claim to other people's things -- that's socialism, and that's not what the Bible teaches.

Yet at the same time I could never let someone starve. If Y2K turns out to be that horrible, I hope I'll find the grace to be generous. But in my heart I'm afraid I'll be very resentful of other people's presumptuousness.

I'm starting to almost believe the "no disruptions" hype myself. Even some of the worst gloom and doomers are backing off from their earlier predictions. I'm actually embarrassed to look at my room full of preparations and realize how much money I've spent because of Y2K. Does anyone else feel the same?

Yes, they are back in the saddle, but only temporarily. The short people are working overtime to make three things happen, I believe. First, they are trying to strip the profits from the Dec. �99 gold call option holders (just nine more shopping days left, ladies and gentlemen). Second, they are trying to shake out all the weak hands. Lastly, they are trying to keep gold down until we get close enough to Y2K so that it can be made into a scapegoat. At that time, POG will be skyrocketing. On all three counts, they are getting closer to meeting their objectives.

However, this does not mean they have won and we have lost. Look for gold to make its monster move just when all seems hopeless, an oft-repeated theme and secret that Sir John Templeton and other famous contrarians have brought attention to in the past. Keep your gold (heck, buy more!) and wait. And remember,

"It is always darkest before the dawn."

Hey DD - thanks for the kind words. I wonder what the equivalent phrase would be to Another's 'Western' perspective when it comes to y2k? It does seem to be easy to fall into the trap of believing that change can only occur within defined limits which will have limited impact. I think you'll find yourself right back in business again here soon DD. Entrepreneurial talent will be at a premium.

ET

Dear Scrappy: I can't tell you the number of people I've witnessed who have gone and are going through the same mind numbing questons about Y2k that you are. I, too, went through the same thing, only 2 years ago. The only thing that got me through it was realizing that, in the end, I could only do my best to protect my family and loved ones. I've done that while becoming "the village idiot" to most of my friends. We've stocked up as best we can and even have, as money has permitted, stored some extra for others. I cancelled vacations, "unnecessary" expenses and became a eagle-eyed shopper, making every dollar count. In the process, even my family has resisted mightily. Until recently. They're beginning to see that some of the things I predicted are actually happening with potentially much more to follow. Additionally, they are beginning to see that we've done our best to prepare for the worst, and we now pray even more to be wrong. I can live or die with what comes with peace of mind. Scrappy, whatever you decide will be right if you follow your heart. You can trust it because it is the heart of a Lion. With Great Love and Respect, DD

thank you, for the wonderful compliment, but,I have come to respect you tremendously, coming to know you via your posts. But, actually, my neighbors drive me nuts! :} They are noisy, and there are way too many of them! The ones on the other side, cut down my favorite tree! And the ones across the street are mean to my dog!

However, I do not think I could let any of them starve, were it in my power to do otherwise.

Hey ET - Thanks for the kind words. It's good to know that I'll be needed, even if it's to find a better way transport grain without the use of gasoline. Let's get Tomcat back on line to back us up. Keep up the good work. Best, DD

(just had to ask :}Thank you, oh so much, for your encouraging words. You and Leigh have brought a light to my heart, which has been feeling rather heavy, of late.
I've not been feeling very 'lionish' lately, that's for sure. What if my kids don't get to college because of my foolishness? ARGH!
But, you are right, I must follow my heart. I could not face the offspring, nor my fellow humans, nor my God, if I didn't.
Examining the 'risk to reward' factor really stinks, eh?

Thanks again, to you and Leigh both. My heart is a better place to be, now.

Dear Scrappy: I laughed when I read about your neighbors! Mine aren't that bad, but I know they're thinking, "Well, if we get hungry or thirsty, we'll just go to Leigh's house and she'll help us." They're oblivious to the fact that RIGHT NOW there's tons of food at Sam's, in the commissary, and everywhere else. NOOOO....they'll just wait and then come with sad faces to my house! Then they'll tell everyone they know to come here too!

Whenever the price of Gold takes a fall--whether a few dimes or, especially, several dollars--how many of you feel like some group of strangers just spent the day telling you your girlfriend/wife (or boyfriend/husband) was ugly?

My general sense is that the typical Gold owner is a loyal and devoted partner, and any such "disparagement" as reflected in a falling price is met with anger, indignance, and frustration. I wonder, of the people who own stocks at $300/share, how many of them even blink when the stock price fluctuates by $10 in a day? They probably jump in and confidently buy the dips, don't they? Actually, lots of companies never let their stock reach those valuations...they'll do a stock split to keep the price in a nice "affordable" range so that Joe Sixpack will feel inclined to buy a round lot of 100, or some multiple. So, instead of one $300 share, the stock-split-equivalent would probably be 10 shares at $30 each.

OK, so now that we've got numbers that are more typical, how many investors with $30 shares (and ten times the quantity) even blink when price falls by one dollar? My guess is that they don't get angry, indignant, or frustrated. They calmly take it in stride, but if the price falls to $20 or to $15 per share they are often seen jumping in to take advantage of the buying opportunity on such a "screaming buy of a lifetime," to quote the popular vernacular of the Wall Street multitudes.

So let's look again at Gold in these terms. Let's say we had a coin-split of ten for one, so that our $300 one-ounce coin is now ten $30 tenth-ounce coins. On a day like this, the translation would be that the price per coin has fallen by a dollar. Our reaction is more likely than not dissimilar to the stock investor; we are angry, indignant, and frustrated. Our "girlfriend" has just been insulted--called fat and ugly by complete strangers that, I assure you, are no judge of beauty.

Unfortunately, because the loyal and devoted Gold owner is such a passionate and emotional person with a keen eye for truth and justice, such an affront as a falling Gold price seems to bring them to call into question their faith in everything from God, to mom, to apple pie, to Gold and money itself. "The world is surely coming unravelled," they think, "because how else could this most perfect of monetary assets ever fall in price by even so much as a dime?"

Fortunately, our "girlfriend" is NOT ugly, and the laws of nature are on our side--they can't be repealed by Wall Street insiders or by legislation. Nonetheless, I wonder how many of the typical Gold owners let their sesitivities get in the way, and stand on the sidelines frustrated as Gold takes its various dips in price, returning to the buying arena only when their "faith" has been validated by a higher price as derived by the futures market?

Just when I was prepared to offer a conclusion that most Gold buyers have failed to capitalize on the price dips with the same success as they have had buying on each price rally, it occurred to me that I was neglecting the bigger picture. Sure, that conclusion is probably true for the various $15 dollar price movements, but when you consider that in this entire neighborhood of $300 we are visiting 20-year lows, I'm happy to conclude instead that whatever course of action you might take during these little dips and rallies is small potatoes. This has been one huge price dip, and hopefully everyone has used it to their advantage, whether their entry point was $350 or $250 or various points in between. Congratulations are in order for your decision to run with a good crowd, apart from the herd stampeding toward the cliff.

By the way, in the comparison of ten shares of stock valued at $30 each versus ten tenth-ounce Gold coins at $30 each, its not very hard to imagine that stock price falling to $15 is it? But can you as easily imagine Gold falling to $150? Further, it's not impossible to imagine that company going bankrupt due to a wide variety of reasons. Gold on the other hand will never go bankrupt. And finally, aside from reliance on the "greater fool theory" for your stock profits, the fundamental motivation in stock ownership is that you become a part-owner of a miniscule percentage of the company, and you expect to share in that company's future profits commensurate with your degree of ownership. Obviously, you had some source of personal income in order to have capital with which to invest in that other company. Did they invest in you while you earned that money to begin with? What makes you think they can earn money better than you can? And finally, if you never even paused with your own earnings long enough to hold/convert them into real money (Gold), but instead kept those funds "in the game" by chasing after another company's profitability, at what point do you take some of your chips off the table? Or do you keep gaming until the roof falls in and your chips are lost, leaving you with only the debts you've accumulated, and the few real things that you've bought and paid for in full?

My Personal Gold Standard operations continue in full force. My daily efforts generate income with which I pay off my various expenses, and any remaining "chips" are cashed out each month for the safe, enduring wealth of real Gold, paid-in-full and owned-in-full. That, my friends, is one helluva pillar to keep the roof from falling in.

Well, this started off as a quick post to assure you that your girlfriend wasn't ugly, but I wandered--you know how it goes. I'll try not to stray so far next time.

Gold. Get you some. ---Aristotle

You sound very sincere and speak from your heart. We all would do well to have a friend like you. Remeber tho that no matter what crises mankind encounters, Free Enterprise will always return and flourish. For this to come to pass someone must retain "Some Measure of Wealth" to begin the process anew. So it doesn't necessarily mean you're selfish to have your Gold. It may do as much good later than as being Rice now. Buy a few $100.00's worth of Garden seeds in Vacuum sealed pouches instead. Just my thoughts of how your $$$ will go further and still feed your nieghbors in need.---YGM.

Glad I made you smile.That old resentment thing is rather tough, isn't it? I get mad at those who don't 'do for themselves' way too often.
Yes, I've already heard "I'll just come to your house if it happens" and it really angers me. Especially since I now feel I must get extra at the expense of my own in order to protect others from their own stupidity. Or is that MY stupidity? Ah, h-ll, I'll figure it out, one way or the other. I am just afraid my own selfishness will get in the way of doing what's 'right'. I tend to go too far the other way, when I am afraid of my own faults. Goofy me. Love, Scrappy/

Great idea!Thank you! But what about the first year?
Also, where does one get vaccuum sealed seeds?

Boy, you really hit the nail on the head in your last post! I'm ranting and raving now to all of you, but I know my heart will melt when I see anyone suffering. Yes, they're wrong, but I'll let the "Big Judge" deal with that. I know I don't want that "Big Judge" frowning at me one day!

http://www.y2knewswire.com/19991101P2.aspAnother unbelievable buying opportunity has appeared. If this persists I may just sell all my heavey equip., BUY Gold--- and wait til spring. Maybe a fellow would have enough profit to buy new Cats and Excavators. I'd sure like to have a coin collection like so many of you when these multi level manipulations meet Jan.1/00. I'll have no pity for those who procrastinate now to own physical gold, especially those who read at this site. This may be the last cheap shot at Gold.IMHO.------------------------------- Go Gata & Go Physical.

BTW-The FBI is following Clinton and the rest who 'WILL' make those who prepared for the event into the cause and the culprit. Check the News Wire link to read.--------------

All,Thanks, you guys, for being here! I'm feeling all mushy at the moment, and I want you all to know how much you've come to mean to me! The education, the self examination, and now, the emotional support and practical thoughts on how to deal with my own situation! Boy, do I hope we are all wrong about y2k! There really ARE human beings worth salvaging! :}

By the way, YGM, I did make note of your thoughts on 'Free enterprise always making a comeback. I am thinking it over. Who knows what will be valuzble in a year? And who knows what me and mine, and my neaighbors will need? Maybe gold will be it!

Hey Scrappy - I have found it interesting over the last couple of years how women tend to take the y2k issue much more seriously than men. I wonder if that is actually true or just some kind of weird observation on my part? Welcome to the forum and I hope you continue to participate.

As some here will testify, I am not a doom and gloomer concerning this y2k issue. I expect the basic infrastructure of the modern world to remain for the most part intact including electricity, telcoms, water delivery, sewer service, gas delivery, etc. Another issue that doesn't concern me as much as others is food. Sixty days from now the food that was harvested this summer will still be in the silos and the livestock will not all perish at once. Some of us may need to learn to cook however. This is not to say there won't be problems but I think most obstacles in these areas can be overcome rather quickly. The distribution process however could become royally screwed up leaving some without items they are accustomed to having. This could happen because of product shortages, inability to process transactions, civil unrest, government intervention in the marketplace, fuel shortages, and a host of other conceivable issues. Beats me how it will all shake out but I think for the most part the problem will primarily be economic in nature.

So where does that leave us? Poor, as far as I can tell. Been there, done that. Hopefully I've purchased enough stuff to see me through some hard times. Nevertheless, life goes on and opportunities will present themselves. After getting past the disappointment that my standard of living may take a huge hit through no fault of my own, I've come to the realization that it doesn't do any good to dwell on it. I'm making plans today to take advantage of the situation as best I can. What else can you do?

Like you, I've set aside plenty of basic food to help out those that don't prepare. I hope I never have to use it. But like any other insurance, I'll never regret or feel foolish for looking out for those that I love. I would feel very foolish if I hadn't prepared and then found I did need it.

At any rate, y2k should prove quite challenging and will likely be full of opportunities for those ready to take advantage. It isn't the end of the world. I have kids the same age as yours and I've told them that in the end, they will be the great beneficiaries of y2k. Our current economic system is unsustainable and will crash with or without the help of broken computers. The losers will be those that thought they could borrow their way to prosperity and those that attempted to do so at the expense of their children's future. Their children will be most grateful that their 'debt' to society was defaulted upon.

Keep your chin up and your eyes open for those opportunities that are sure to come. Good luck and best regards.

ET

Just print your way out of trouble and better yet give all the paper (15% of the Co.) to your corporate criminal friends. Right out in the open where we best can see!--or not see--

Ashanti and Cambior off the hook - the big 17 BB's didn't squeeze the mines! Of course not, they will own the mines, eventually - in the case of Ashanti they now hold (3yr!)warrants at the order of 15% at $ 4,75 - in case anybody is interested ASL was floated at $ 20 to the public, when the POG was probably only $80 higher! - So no margin calls. It became not only too political, but I also feel that margin calls have to be preserved to the unsuspecting
small guy, who will now invest with new vengeance into the DOT.COM's in the newfound wisdom that ample collateral like
125% motrtgaged homes and "maxxed" credit cards will be sufficient to keep the credit hounds at bay or get bailed out by the FED (you just have to claim systemic risk - but make sure thy understand you're the tip of the iceberg, not the TITANIC).

What a brave new world!

Reading only the chapters of AG's (fairy) tales, befitting the momentum (no, not only investors) wanna-be-lievers of everlasting eden of consumeris'm, earned by the new paradi(-se)gm of productivity advancement via info technology for all - while quite real - the Rotschilds of old had only the carrier pigeon (so did the peasants, who didn't-couldn't- care)to tell them about Waterloo. ... Well,
you've caught my drift - As Joe public digests the main stream media - the same is true. Our world is (virtually) the best ever, ecconomic expansion everlasting, wealth accumulating at 20% p.a. (guaranteed -see 401K), $ appreciating vs all other currencies (in the long haul anyway) and f(+@#%)orget saving for rainy days. In this new paradigm, rainy days are just for watering the front lawn, so we can even forget rain, because we have "the aquifier" of last resort - the printing press of the $, the A-(li)quivier of global hegemony.

After the US-$ won all the wars since WWII, a movement of secession and abolition is taking hold among the $-serfs (98% of global poulation)in order to free themselves of WTO,
globalisation, dollarisation and "free" trade to benefit the US to the detriment of the $-enslaved Banana Republics( see banana wars - United - brands - fruits - banks - ole' Chiquita)and other.

As the confederates succumbed to the federates, eventually, while bloody, quenching their desire to make a living out of serfs (slaves), there are now alternate powers forming to avoid total enslavement of a decrepit (IOU-fiat) paper Dollar Waterloo.

In 1971, Tricky Dick has repealed the $-convertibility to gold - In the meantime the # 1`creditor nation became the # 1 debtor nation - and what may be galling me is the manifestation of open manipulation of world markets, without a care for the rest of the world as documented in the last two years.

Thank you Mr.`AG, as we're sure you're a steadfast counsellor of real money and monetary reality, proven by your previous ambitious, self-advocated gold standard theories, to withstand any unproportional task to accelerate
furher monetary (-i.e. credit) expansion and your perpetual warnings of eventual bursting of bubbles (1996 DJII 6.000), we're now all aware, you'll protect us from harm.
Thank you again for your generosity - today - as we conceive
history will not be as generous to your blunders, which is a real shame, since you've been cut out to make the Nobel Price - at least for irrational exuberance, wether I agree or 'nother.

Sorry for venting CB2 -

@ MK - seen y'r Q. was eloquently & correctly answered by TC
TKU TC - just returned from long weekend
(All Saints - souls - no Hal((o))- (loween)'s

Great post Sir Aristotle!! It seems that whenever the tide ebbs low, you come upon the scene, torch in hand, and lay down a grid of logic that indisputably leaves one thinking "how did I get so wired about this last little dip?"

Alas Sir, I fear though most will not admit it (maybe even myself), that a goodly source of the prevalent fears may originate from that dasterdly "option premium decay."

No49

Hopeing II,

You stated at the end of your post "..The only hope for the POG to break free of the shackles of the manipulators will have to come from further actions emanating out of Europe...".

There is much truth to what you say. However, I would like to put this question to the entire Forum: Why could not action from Asia or the Middle East rally the POG? A premise of some of the positions on the Forum is that disdain for gold is to a great extent a North American phenomenon, while most of the rest of the world values gold - especially Asia and the Middle East. Thus, the question "Why hasn't the Asian official sector - e.g., the CB's of China, Taiwan or Japan - yet transferred large amounts of its $US-heavy official reserves to gold, if gold is so highly valued?". If gold is both valuable and artificially cheap, why didn't official Asia buy it hand over fist?

Reliance on Europe appears to be based on hoping for a further crimp in supply. However, a major boost in official Asian (or other official) demand also could do the trick, and in the long-run provides a sounder basis for the POG than merely diminished supply. Again, the question: "Why hasn't major official sector Asian demand yet materialized?".

That last one was a classic! (vintage CB 2)

and othersOkay, I've just shared a can of my y2k tuna with my three cats in a joyous and defiant act of rebellion against the 'way things are'. Man, what a mess 'they've' gotten us into!

ET, perhaps it is because there is, built into every woman, this never-going-away fear that her children will not eat, or will not get sufficient medical care, and will perish. Y2k is a very serious threat to any woman who has any kind of maternal instinct in her at all.
However, I've seen the instinct to 'defend' arise in many men, since this issue became a topic. I am not so sure that women take the threat of y2k more seriously than men.

All, thanks for the voices of reassurance and reason. Who knows what next year will bring? Even if it's only 'economic hardship, it should prove to be a challenging year.
Again, thanks for being here. Don't know what I'm going to do, come 1/1/00, if the electric and phone lines are down, and you all are not here for me. Now THAT's scary!

http://www.fords-mtm.com/catalog2.htmHere is a link for the place I bought my seeds. Service was very prompt. I am sure there are many others. Go to a search engine like www.yahoo.com and and type in "organic seeds".
Secondly, your thought process is very much in line with mine and my wife's. Although I have been blessed enough to store away a little physical, we have tried to plan and CONTINUE to add storage for helping others. Realizing that I cannot store enough for the whole neighborhood, I imagine that my physical AU will be used when the financial situation goes down the drain. I too do not think (and pray) that Y2K will be a big bang problem. I do feel that our AU will come in handy when the price of food on the store shelves goes through the roof because our worthless paper money finally catches up with us. When I read the articles on inflation in Germany during the WWII era, I see this same fate at our doorstep. We will be humbled as a people.
Thank you for so eloquently stating what is in your heart.

Another note, I cashed in %50 of my IRA, took the %10 penalty and bought physical at $311. I haven't slept so good in a LONG time. This really is a totally different mindset. I love not being in the rat race. Folks, don't get caught up in these short-term movements. A $20 swing only means something if I want to cash out from AU. WHY would I want to do that? Trade non-debt assets for debt ridden wood palp.

What are your thoughts on the Cambior and Ashanti bailouts?

Thank you!Great place to shop!

Though no complaints from me, and I'm sure I speak for the rest at the Table, that has to rank as one of the shortest sabbaticals on record!! Welcome back!!

No49

http://www.state.gov/www/global/human_rights/1998_hrp_report/ghana.htmlThx for the kind words Sir North of '49.

I believe that the Ashanti deal will eventually turn out to be positive for the POG. My reasons and conclusion may be quite erroneous, but here nevertheless is my theory.

In a previous employment, Ghana was one of my countries of specialization. Jerry Rawlings took power in a coup twice - once in 1979, and another time in 1981. In about 1992, the government took steps to democratize itself. This formed part and parcel of Ghana following the IMF's prescriptions to a "T", and generating some degree of success. As part of following the IMF, Ghana had to free up its economy. These changes reflected changes in Rawlings' political and economic philosophy and approach to government, whether genuine or imposed upon him. Originally, Rawlings was a follower of Castro, even to the point of creating Committees for the Defence of the Revolution ("CDR's") based on Castro's model, and forming close ties with Libya, which is led by another guttersnipe of a Castro-worshipper. Also, Rawlings generally was a follower of the indigenous Ghanaian left-wing Nkurahmist (sic) tradition, as opposed to the conservative Danquah-Busia tradition.

Anyway, for whatever reason, Rawlings changes his tune, and adopts liberal-democratic Western ideas - democracy and freer markets. Accra (Ghana's capital and premier city) even gets a modest stock exchange. I believe Ashanti Goldfields trades on that exchange (probably its main stock). Rawlings does what the IMF tells him to do, generally. Ghana/Rawlings becomes the IMF's and the West's African poster boy. Rawlings culturally appeals to the Nkurahmists', continuing to win their votes even as he pursues economic liberty. The leftists win only about 4% of the vote in the 1996 presidential elections. His main opposition was thus a conservative in the Danquah-Busia tradition. Somewhat like when Menem took the statist Peronists to the right, Rawlings' approach disoriented the Ghanaian left, which justifiably pleases most of the West and the IMF.

The trouble is this. Declining gold revenue hurts the Ghanaian experiment, and may discredit economic liberalization in Africa. Also, the generally conservative Great Alliance holds just over one-third of the seats in parliament. If Ashanti Goldfields crashes, and Rawlings looks bad, the right could attack him on nationalist grounds, on the basis of competence, while the left could attack him on a combination of nationalism and ideology. Also, the Ashanti chiefs continue to have influence in Ghana, and Rawlings (Scottish/Ewe) would like to keep them on side, and keep the Ashanti region's economy humming along. Thus, just as the POG had to rise to save South African democracy, so too Ashanti had to be saved to keep the "program" on track for the less developed parts of black Africa. Thus, it's not inconceivable the POG could be manipulated to save Ashanti until a longer term plan could be worked out. It appears that this plan is now in place, and is not dependent on a weak POG. Of course, if Rawlings had to nationalize Ashanti, he could backslide to leftist ideas. Also, it would be harder for the West and IMF to impose "sanctions" if such nationalization were backed by the democratic opposition. Thus, for various reasons, I could see market chicanery taking place to save Ashanti, until the current plan to save it was put in place. Now that the plan is in place, the POG can rise.

This is just a theory. Don't hold me to it. See the attached link for the human rights/social situation in Ghana.

http://biz.yahoo.com/prnews/991101/co_gold_fi_1.htmlFor those that believe in a diversification of assets.
St Helena Gold(NASDAQ:sgoly) closed up 29.41% today @4 1/8 reason:
Our friends at GOLD FIELDS(NASDAQ:GOLD),the company partly responsible for turning the price of Gold upward by buying 12 1/2 tonnes at the recent BOE auction, has offered 1 share of Goldfields stock for every one share of St Helena held.

IMHO Goldfields has the potential to increase in price 10 fold as the price of Gold rises. However,I personally agree with most on this forum, physical Gold in hand is a safer investment.This is not meant as financial advice only my humble opinion........beesting

You typed tonnes when you surely meant percent. Gold Fields acquired 12.5% of the gold offered (25 tonnes) at the Sept. 21 UK auction. In tonnage, this is 3-1/8 tonnes.

See Sir ORO's post today # 18048.
< A peasant in the rice growing region in Indonesia,holding a few ounces could buy a grocery store from its indebted owner, who can't afford to restock his shelves.>

This is very significant, it shows in the worst of times what a small nest egg of Gold can do.
Imagine if Gold does rise to $30,000 per ounce what a family such as yours could do with a small amount of Gold.
Buy a house in a different state or country.
Start a small business.
Relocate.
Downpayment on a farm or bigger business.
You think of something.
Isn't that what life is all about anyway,dreaming about the future......beesting

I always seem to mess up something when I post. Sshhheeeessshhhh!!!......beesting

Sir Canamani,
Your Ghaneian wrap was to the point. Without going into more politics or detail, we do know (probably not appreciate) of the immediate sacking of the (Ghanean) commissioner of mines, as he stated his preference re Ashanti to go back to Lhon-min (ro), there still is one political concern, above all and any UK-Empire (Gold-Coast; Gold Guinea)aspirations of the "Commonwealth"?
A Ghanean, Kofi Anan, a most able and educated "Gold Coast Brit", beating most Oxfordians in their own linguistic and blase' field, has made it to the top of the UN.
- Even the likes of BoE's pawns have second thoughts to sell such great a man "short"!

Best-CB2

C.M./TKU for your kind appreciation

One of these days I hope to meet you in Accra or better in Obuasi - Thanks for your input - CB2

Thx for your replies.

A sign of our shrinking planet: At one point a former co-worker's Canadian-based highlife group had the most popular song/biggest hit in Ghana.

There are two recommendations that I would make here:

1) Sell all shares of Ashanti Gold and drive the price into the pennies, just as they are doing with the POG...If there is no retail market for their stock, the bullion banks will lose money on this deal...and at the same time....

2) Buy all the physical gold you can get your hands on...this will evenually drive the price of gold up and force Ashanti into another problem as well as their sleezy Bullion Bank partners.

It's time that we, the investors, show these people that we are the power in this market, not them...I recommend that you avoid ANY MINING COMPANY THAT HAS A HEDGE GREATER THAN 5%...PULL YOUR MONEY OUT OF THEM AND INVEST IN NON-HEDGED COMPANIES AND PHYSICAL GOLD...MY RECOMMENDATION IS AGNICO EAGLE (AEM) AND HARMONY GOLD (HGMCY).

IT'S TIME TO STAND UP AND BE COUNTED!!!

It's 10:00. Where is FOA? He usually posts around this time.

thanks muchfor the thoughts. Yes, the can of tuna, eaten with the cats in a gesture of rebellion, (dam, I'm a wild thang), along with the words of wisdom and encouragement found here, have reworked my thinking, (again), on how much value a coin or two of gold might have in the future. Okay, I'm in. For the long haul, regardless of what happens. There's lots of trees to eat around here, anyway, if the going gets REAL tuff.

Trader Vic

I don't know the terms of those "options" which the "Ashanti Counterparties" got, but it opens up an new potential manipulation....

Let's say the price of gold rises and the price of Ashanti stock goes to $10/share...if I hold such an option on close to 15 % of the stock, I can be a short seller at any price above $4.50 and am covered on the downside by the fact that I can "buy" the shares at $4.50 any time.

This may keep Ashanti in business, but it is bad news for shareholders in the longer term (three years).

Poor old Solomon

I wanted to post the same message. However, we need one thing to successfully pull the Ashanti-Carry, or Goldman-Carry trade out: one among us needs to make friends with Greenspan in case we need for him to print a little money and bail us out.

Canuck Gold (11/01/99; 08:36:39MDT - Msg ID:18030)

The following words of Canuck Gold are an excellent Leitmotif for all Goldmeisters...

"If gold rose in value as you contend, there would be a massive dishoarding the like of which the
world has never seen. This flood of gold would knock the stuffing out of any large price gains
and who knows where the price would equalise."

He gives these numbers in support:

There are only 127,000 tons of
physical gold out there. The CBs are on record as holders of around 27,000 tons. At least
50,000 tons are in the form of jewellery, art etc and the remaining 50,000 tons are held
privately, some likely by the Arabs but how much? Current annual mine output is around 2600 tons

remember...we are (or hope to be) in a free market. There is a lot lot lot more gold in private hands than trades on any day or week on exchanges.

Let's play with the numbers: 127,000 tons comes out to about 3.8 Billion ounces...COMEX holds about 1 million physical ounces or about a quarter of a thousandth of the worlds gold.

3.8 billion could also approximate the number of people in the world who live enough above the poverty line to be part of a global economy, nourished by fiat money. Thus, on the average, there appears to be about 1 ounce of gold per economically relevant world citizen.

Let us picture the next 25 - 50 years...A globalizing humanity has suffered massive growing pains but has finally grown a bit wiser...distributed energy technologies, government acting locally under international treaty guidelines, primary currency is 95% digital and based mainly on gold backing. The rush is on to provide 3.8 billion people a quality of life "closer" to what was known in America at the turn of the century.

Another important number: Both the money supply and the GDP in America are about $7 billion, or in the range of $30,000 per person. By rough analogy, if 3.8 billion people were living close to the American dream today, the world would need a money supply and GDP of about $100 trillion. (You pessimists out there should not think in terms of today, but in terms of where people will want to go).

The very rawest definition of money supply is tied to the idea of liquidity. Any investment object which must be cashed-in before the "value" can be spent can be an asset but it is not part of the money supply.

With the almost inevitable trend back to a world money supply secured by massive gold backing, we face the "dire need" to "dis-hoard". As the "value" of gold rises, you get two reactions...some will sell their gold because they want to "spend" on something, or buy alternative investments...others will follow the "buy and hold" strategy so popular with US stocks and real estate (in the eyes of the common man). Considering that there is "only" an average of 1 once of gold per person, it is not hard to "buy and hold".

I would propose that the average reaction to a rise in prices of gold would be that the general public worldwide would become net buyers. I do not think that $30,000 is in the cards (unless there is massive USD inflation) but corrected for a constant dollar, I can see the price going to about $5,000-10,000 if gold is taken in as a "world money".

Poor old Solomon

Leigh, you asked if anyone else was embarrassed about their
y2k preparations.

My view is that anytime we doubt ourselves, we are using the perspective of others to define who we are and what we do. I have never ever seen a squirrel be embarrassed that the birds and bees see him gathering nuts and stocking it away in safe places of shelter. If you have seen reason to be concerned, follow your common sense.

Another example comes from the world of hockey. No NHL players used to wear helmets. And goalies never wore masks.
One day a player named Teddy Green was hit in the head with a hockey stick. Needless to say he fell to the ice with a sickening thud. From that moment, big strong image conscious players were slowly changed. Now it is hard to find players who do NOT wear protective helmets.

You are blessed to see your way to be prepared. Rest assured that you need not doubt what you see. If y2k is nothing, fine! But we can always know that we have a piece of irreplaceable insurance. The real challenge to all who have prepared will likely NOT be where our next meal comes from. No, in fact it will come from those who have not prepared, or those who viewed you and us as insidious hoarders. We need to take the argument away from them and say that they are insidious unpreparing leeches.

I always tell my kids about how Plymouth Plantation occupants succeeded, whereas those in Jamestown, Va. struggled. They had different views on how to succeed. In Plymouth, the idea was you worked....you keep what you worked for. In Jamestown, the idea was that all that was worked for by the community would be shared by all, whether you worked hard or not. You can guess the fallout. Things are no different today.

You and people like yourself help change the world by your actions. I say we should make those people doubt THEMSELVES.

Al

The settlers of Jamestown died in droves each winter from starvation until the colony discovered they could grow and export tobacco...back to England...for gold....which would allow them to buy food....and guns...and more settlers...

These are the seeds of our founding fathers!!!

I remember, I was there!!!

Poor old Solomon

Interesting that you should mention Nixon. Actually Nixon was continuing the US govt policy of a weak dollar which exported the actual cost of US military activities to other countries begun long before he was in office. In 1968, actions by Italy and Belgium were the final straw in the collapse of the Gold Pool and the London gold market closed briefly (it would be interesting to know how much physical gold it held at that time or any time since).
Curiously, OPEC tried at that time to tie in the price of oil to the dollar price of gold which would use the price of gold to preserve the value of their income. They failed at that time.
Nixon is often blamed/referred to for what happened during that period. My point is that the dollar weakness as a US policy goal was already in place. What were Nixon's alternatives or what would have the implications been had the US government done nothing at that time, considering that the US didn't have the gold to continue the system as it was. Those events set the euro back 30 years, among other things.
Ah well, just rambling. The US isn't the bad guy, it'h's (as Lewis Carroll would have shortened it) just been successful in its approach for a long time. Maybe times are a'changin'.

'...take delivery....in full public view....'"This gold manipulation has really gotten out of hand. I expected weakness today, but not such a miserable trashing like this. This is not a gold market but rather a gold derivative market.

I would encourage anyone with the means to somehow get long the Dec contract, take delivery and remove the gold from the COMEX warehouse. The only path towards transparency for the gold market can take place at COMEX delivery as this is the only market in full public view.

It now appears that the London and NY bullion markets are now so dysfunctional that any real trade in physical bullion is taking place off market in Hong Kong. I would guess that the Brits are on the verge of losing their bullion market and are in full panic mode. God knows what they might try next! Again the only means of getting any transparency as to where the real price of gold stands is for investors to take delivery of real gold in Dec and Feb through the COMEX. I'm sure sparks will fly should this come to pass."

The fresh new look of the Dow Jones Industrial Average (first day with its four new components, including Nasdaq's tech-giants Intel and Microsoft which both ended with losses) did little to inspire further gains on top of last week's rally, and the DOW ended off 81 points (-0.76%). The Nasdaq did mangage to eke out a close in positive territory (up 1.2 points (+0.04%)), which brought the composite index to a new high from Friday's best-ever finish. The Dow Jones Transportation Average fell 2.7%, the Dow Jones Utility Average fell 0.5%, and in the gold stock world, the Philadelphia Stock Exchange Gold & Silver Index dropped 3.7%. On NYSE trading, advancers and decliners had a photo finish, while new 52-week lows edged out new highs 86 to 70.

The U.S. credit market got off to a tough start in overseas trading as sympathetic losses were experienced on weakness in the European bond markets as European Central Bank President Wim Duisenberg indicated in a interview with a German newspaper that the ECB's tightening bias had "somewhat strengthened" ahead of their Thursday meeting. Treasuries hit their lows of the day on release of the National Association of Purchasing Management's October survey. Market participants were expecting the NAPM price index to fall, but instead they were surprised with an increase to 69.4 in October, up from 67.6 in September. The NAPM inventories index surging to 51.1 in October (up from 43.2 in September) was actually seen as a relief to bond traders who felt that this was reflecting the Y2K build-up that is likely to be met by an offsetting slowing early next year as those inventories are depleted. The 30-Year Bond ended down 8/32 in price, raising the yield to 6.182%.

In currencies, the dollar held its ground against the yen today, and when you consider the bashing the yen had to endure at the hands of Japanese officials, you've got to wonder why the dollar didn't actually do better. The following play-by-play of the pummelling was offered by Bridge News...
+
"Policy board member of the Bank of Japan (BOJ) Nobuyuki Nakahara said that the central bank should target 10% growth in Japan's monetary base in the first quarter of next year, although the impact of his remarks was weakened by the fact that he is known to be in a minority of 1 on the BOJ's 9-member policy board. Then, vice finance minister for international affairs Haruhiko Kuroda verbally attacked the yen for being too strong, while Liberal Democrat Party
Ichizo Ohara stated that BOJ could intervene to weaken its currency. Finally, Japanese administrative vice finance minister Nobuaki Usui said that government bonds would have to be used to make up the 1 trillion yen shortfall in tax revenues for fiscal 1999 announced by the Ministry of Finance overnight."
+
Fed Chairman Alan Greenspan has remarked in several recent speeches and testimony that the strong dollar and low price inflation might be more properly attributed to beneficial one-off factors (such as low oil prices and cheap imports following the Asian Contagion) than to any miraculous "new economic era." When you consider the dollar's residual role as an international reserve currency, you'll also get a sense that it has benefited from the concerted efforts of those intenational bodies married to the IMF system of settlement and also those with substantial holdings of U.S. bonds. From their view, it's in their best interest to keep that reserve currency strong, and the country of origin (the U.S.) benefits as a consequence.
+
Last Friday we walked you through the recent actions of the UK which at face-value seemed counter to their best interests, yet at the same time these actions kept the dollar strong versus gold, and also kept the gold market from seizing up. And now today we see a gang-tackle by Japanese officials on the runaway value of their own yen, seemingly stopping just short of termination with extreme prejudice. The IMF/dollar system is thus held together because, although there is a shortfall imbalance of American exports (and obviously no gold backing the dollar), there is at least this heroic struggle by Japan to ensure that worldwide dollar-holders will have access to reasonably-priced (in U.S. dollar terms) Japanese exports. And so it goes...but for how much longer can water be forced to run uphill? The dollar rose off the day's lowest intraday levels at 103.73 yen, but gained only 0.01 yen against its previous close, settling at �104.11 per dollar.

New York market makers last quoted spot gold prices at $289.50, down $8.70. Here's the Bridge closing report on the antics of the futures traders to help you see how the price was eased to these levels through gold's principle mechanism of price discovery...

NY Precious Metals Review: Dec gold down 2.9% on fund selling
By Darcy Keith, Bridge News
New York--Nov 1--COMEX Dec gold settled down $8.80, or 2.9%, at
$291.50 per ounce after hitting a low of $288.00, just a slither above
October's low of $287.60, hit on Oct 27. Spot gold took a tumble overnight
on Australian producer selling, setting the stage for the New York session
losses. News that Ashanti Goldfields has reached a deal with its hedging
counterparties undermined sentiment.

Gold's decline was mostly linked to technicals and fund selling, and
despite the big move in prices, trading volumes were said to be fairly
light.
[A handful of futures contract sellers squaring off against wary contract buyers. No surprise there!]

Dec gold initially opened the COMEX trading day down about $5 but
tumbled further throughout the first few hours of morning trading with the
aid of sell stops and low lease rates. Traders said selling overnight was
seen out of Asia, particularly from Hong Kong, and from US funds.
The stops were hit as near-term support in the $290-292 area was
broken, said David Meger, senior metals analyst with Alaron Trading. "The
market is looking towards $285-286 for stronger support now," he said.
One-month lease rates this morning were at about 0.87%, compared with
just over 1.00% late last week, suggesting ample supplies of the metal.
"There's a lot of gold around for the short term," a trader said.
"We're just seeing a continuation of the technical weakness that we
saw last week," said one source. "There's lots of talk about the lease
rates falling below 1%; it's pressuring the market."

Some market players said selling pressure materialized after news that
Ashanti Goldfields, the UK-listed Ghanaian mining group, has reached an
agreement with its gold hedging counterparties. The deal gives it a
long-term exemption from the obligation to post collateral against margin
calls on hedging contracts. In return, Ashanti will issue the
counterparties warrants that convert indirectly into Ashanti ordinary
shares of no par value.
The Ashanti agreement has suggested to some that, at least in the near
term, producer buybacks have probably ended.
"We're seeing some fund selling and general liquidation following the
Ashanti news," a dealer said. "Now that that problem has been resolved,
the threat of any short-covering by Ashanti or any of the other producers
has been taken away."
Jim Steel, analyst with Refco, said the Ashanti news has signaled a
hiatus in producer buybacks. "I'm not saying it has ended but it seems to
be temporarily over and done with," Steel said. "With the gold price under
$300, the need for a lot of it is mitigated."

Also in producer hedging news today, Canada's Cambior Inc. has reduced
its gold hedging position by 1.3 million ounces. The reduction, made with
a view to improving its aggregate hedging position, results from the
purchase of 1 million ounces of gold at an average price of about $300 per
ounce and from the closing out by counterparties of other positions totaling
300,000 ounces.
***
(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.

There was light action in the COMEX gold vaults today as193 ounces of gold were withdrawn from Registed stock at Republic National, leaving the total COMEX depository gold inventory at 874,200 ounces.

COMEX futures open interest stats released for last Friday's trading revealed that November contracts were unchanged at 14, December contracts were down 1,553 at 104,244 on volume of 25,470, and the total rose by 200 to 214,008 on volume of 31,117.

Our Fifth Horseman, Rising Oil, regained some footing today, surging late in the trading session as stop-loss orders to buy were triggered, which in turn triggered yet others. When the dust settled, the December crude price had closed up 76c to $22.51. FWN reports that trading had been choppy on thin volumes. One trader was quoted with words that gold buyers might find some comfort in... "Last week's selling opportunity turned into a good buying opportunity. Crude ran some stops and took off in the end."

Traders are now looking forward to Tuesday's 16:00 ET release of American Petroleum Institute data, and then for the confirmation by Wednesday's 09:00 ET release of US Department of Energy data, as they do every week, barring a holiday. From the crude inventory of 304,890 million barrels at week ended October 22, the forecast change for last week is a moderate rise of 1.5-2.0 million barrels.

And in our final scan of the landscape, it is as we look toward the setting sun that we see a lone runner break his last tackle, flying with winged feet across an open field all the way to golden goal posts beyond the horizon's edge. Fare thee well, Walter Payton. Nobody did it better.

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

Scrappy, you're right to be concerned about this Y2K thing. But, you are aware and preparing for it. It may be quite a change for us or...not. There is a great deal of pain and suffering in the world each and everyday. Fortunately, most of us only see it from a distance, on CNN. Will trouble come here too? Perhaps. If things get so bad in the USA that we are concerned about our neighbors kids having enough to eat, how bad will it be elsewhere? As a nation, what has happened to our faith? (No, not in our fellow man, in God?) Did you ever stop to think, that if you die tonight, you're just going to go sooner, to a place that you were going to go anyway? Or that when you reach your eternal rest, it won't matter when or how you got there? I don't mean to dismiss anyone's fears. Fear is a normal emotion that we were created with. The question should be: What do we fear? I can honestly say that I have seen death. It looked like there was absolutly no way around it. I knew that I was going out. What did I feel? Regret! Not fear, not at all, just regret! Regret at not having lived for anything much except my own enjoyment. I didn't do that bit where someone prays "God if you'll just get me out of this I'll be a good boy from now on." No, it was way, way, past that point. I was toast and I knew it. But, miraculously, I did survive that incident. And when death comes again, which we can all be certain it will, I don't want any regrets this time. The absolute stark naked truth is this: THE THING TO FEAR IS NOT DYING! The thing to fear is FAILING TO LIVE! Ask God for faith that will show you "how to live"! (Hint: The only things on this earth that will survive forever are peoples souls. And Gold can't buy them. Invest wisely.)

FOA, Thank you for the answer to my query. I have read it once, each of the last three days. And each time I read it, I see a calmness in the answer. It is very easy to worry about gold, y2k etc. It is easy to doubt the path we are on, for there is what seems to be "evidence" all around for us to "doubt" ourselves as Leigh has pointed out. Yes we are in for turmoil. Yes, we may have personal challenges that forward times will present. But no person has ever lost
out by preparing, and by seeing clearly. We may not get the gains that others are getting in the stock market. But I don't believe riches are the primary focus of what we search for. We just want the earthly tools such as gold to keep us from slavery. If we gain riches along the way, added bonus.

I never hear worry or emotion in your answers. I have a new question for you. What is important to you in life? I don't want to narrow the question. So forgive my leaving it so general. I just don't want to provide any parameters in your thinking.

Best to You,

Al

There is a probability that there was speculative Australian short selling of gold 24 hours ago in order to attempt to
force the price of Acacia Resources down so as to acquire
these shares at a lower price and thereby eventually acquire
Anglogold shares at an even better premium after the acquisition. Conclusion: the downdraft in gold price probably will not last long.

ax 11/01/99 23:10 est

http://www.thestreet.com/markets/marketfeatures/810186.htmlVery telling charts...interest rates leap at the end of September as "banks are determined to lock up funding early" when, as Wrightson Associates chief economist Lou Crandall says, banks counter the "risk of being left out when the musical-chairs game comes to an end on the part of sellers."

Again, the question: "Why hasn't major official sector Asian demand yet materialized?".

---------------------------------

Here's a stab at an answer...because gold in not money...and most of Asia is still recovering from a liquidity crisis.

If I am a wealthy holder of US dollars in Asia, I have plenty of people who want my money (meaning that I can buy interesting investments for pennies on the dollar).

Gold, in times of recovery and plenty, is less liquid than currency.

Poor old Solomon

Nice post. I think fear is the opposite of faith. Your words offer encouragement which we all need. With all of the uncertainties around us today we need to be hooked up with something bigger than our selves! Back to basics! Cheers

Thanks for the inputQuite honestly, the death thing doesn't scare me. What scares me is my own performance. Obviously, I have some esteem 'issues' :}

Seriously, tho, I was concerned that perhaps my priorities were a little off. I want my soul, and to help the souls of others, to 'progress' as much as possible, given the times and circumstances we share. I want to know that I did what I could to give 'light' to others, and to nourish it in myself, as well. Suffering and death are all part of the action, no doubt. How one 'should' live is relevant each to their own experiences and opportunities. I have come a long way. My 'point A' was set in a very 'challenging' position. No way I would have gotten this far without an intense faith in God. However, I still doubt, during times of trial. The doubt is not of God, but of my own intentions, my own hearts' motivation.
I am not truly worried about my soul, nor have I neglected to 'live', not by a long shot. I've lived a little too much, at times. ( :} ) I am only concerned that I not be too selfish in this time of possibly impending great need by the many. (Did that sentence make any sense at all?}
Anyway, I tend to feel things a little too intensely sometimes, and I'm sorry if I came accross a pitiful mess. :} I Thank you for your words. They do, along with the words of the others, help me to keep strong on the path I am on. Your sharing is invaluable, and I thank you. Good luck to you, Bonedaddy. P.s. I really love your handle. What does it come from?

Sorry, I'm tired.What it comes down to, what i mean to say, is that I want to be sure I am a help, not a drain, and not an island. That's all. I want for myself and my kids, but I also want for others, and not at the expense of others. Just need ed reassurance. I'm a wimp of a scrapper, actually. But I always end up okay. Thank God.

I agree with you.I have been buying gold,and some gold stocks.I dont know how good my stock choices are, maybe you have an opinion? I would like to know what you and others think. I may have to dump some!I have GOLDEN STAR RES. GOLD FIELDS LTD. GLAMIS GOLD, DeBeers. Thanks:

Strad Master (10/29/99; 12:54:43MDT - Msg ID:17827)

Mr. Master,
Thanks for the information about your Strad. I had heard some discussion between friends that sounded incorrect (they did not own one). Your experience is more believable. While I do not play, have owned one of, if not the oldest Stainers around. A real one in a world of fakes. Did not buy it as it was a private gift, papers and all. It doesn't have the sound of yours but for me it's was just as valuable from the spirit it was given in.
Good thing you did not sell yours as it certainly is like the rarest of gold coins. Such wealth is always in demand. Usually people imply that it is useless to own gold or art works during bad times. Yet history shows that even in the worst of it, wealth appears and investors bid for rare coins, art works and yes, old violins! Someone once said that "when dreams are lost, real life is our only dream". I think that to live life in reality is the most unattainable dream for most. My friend, your strads fine sounds are a wealth few can know
No need to send your concert as I have heard it as a songbird on the wind. You no doubt know your ageless strings have sounded many times and such beauty never leaves this earth. Thanks so much for the offer. FOA

Tonight seems to be "pour your heart out about y2k" night.

I comment on some words of DD:

"In the process, even my family has resisted mightily. Until recently. They're beginning to see that some of the things I predicted are actually happening with potentially much more to follow."
-----

Well my wife thinks I'm a fool too..... I think it is more that y2k has two sides (logical and emotional). Logical conviction that the facts point to a potentially severe problem can be maintained for many months...emotional conviction (fear) can only last for a little bit.

Here's a funny story for DD. (and others whos wives think they are fools).

At about the end of the heating season last year, I arrived home with two new wood burning stoves (a beautiful one to insert into our fireplace, and a blunderbus for the upstairs apartment). I had not consulted with my wife because stoves had been hard to find (y2k fears were worse then) and I took the chance to get them where I found a close out sale.

My wife, a city girl, who never sat around a campfire, or felt the warm friendship of a hot woodstove at a high mountain cabin, said "that won't be coming in the house I hope".

She was not happy with all the dust and inconvenience involved in the "project" of getting a firewall into the corner upstairs.

Then, the cold nights set in and our furnace was roaring again (uses heating oil). The delivery came when I was out but my wife was here.

I asked her, "did you see the truck?"
"No, how did he deliver oil without knocking on the door?" "There, is a little pipe on the side of the house...he just fills it. He comes by every month".
"How much does he bring?"
"Depends on how much we used, he just fills it...but this time it was almost empty before he came. In the middle of the winter, we need almost the whole tank for one month. I am hoping that we will really get a top off in December, because if it is hard to get oil for a month or two, we might not have heat."
"You mean, the tank only holds enough for a month?"
"A little longer if we conserve, but generally a month."
"Wow, what happens if it runs out, do we have enough firewood?"

Poor old wrenched-back wood chopping Solomon.

Canuck Gold (10/30/99; 22:41:40MDT - Msg ID:17946)
Reply to FOA's post #17669
Hi FOA. At last I have some time to flesh out my response. You wanted to know why I think there is not enough gold around for it to become a "viable alternative". I meant as payment for oil and I'm assuming you realised what I meant and we are talking about physical gold.
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Hello Canuck Gold,
I was able to follow all of your reasoning and assumed you have read most of the background writing here about this subject. Still, there is one area that is making your calculations suspect.

Here in this part:
------(In my initial post, I made reference to the intrinsic value of gold. I also believe there is an intrinsic value for oil and I would find it hard to believe that the values of gold and oil could diverge to allow the ratio-----

CG,
I consider the "intrinsic value of gold" to be found in it's "demand usage" as "wealth money". Something no one has been able to observe in modern times. Today, gold is worth far more than the value of one man's suit, as is often proclaimed. Mr. PH in LA offered a fine post about this
some time back.
Considering the modern advances in today's world along with it's massive population, one must grasp the enormous "unlimited" demand gold would have if it became a "background currency". At such a price there would more than enough gold wealth to settle trade of all kinds.
In like concept, people settle debts using the wealth contained in their stocks all the time. They just don't spend them as money. We do not find anyone using them to buy gasoline.
Like this:

""How much for the fillup? Ok $25, let's see here. I have one Microsoft share in my wallet and two IBMs. Shoot, I didn't bring any smallcaps or penny shares to make change. How about if we just use this dollar digital currency, all right?""

You see intrinsic value is found in demand and demand is a function of use, need and the retention these functions demand. In many third world countries today we can find people using their local currency as a sub currency of the dollar held in the background. It's a demand precedent
already in place that demonstrates how the demand for gold will be created.
So, please recalculate your position using gold in the many thousands. I think it does work.

Thanks for the reply,,,,,,your thoughts are an education for me FOA

PH in LA (11/1/99; 14:40:20MDT - Msg ID:18054)
Are they "Back in the Saddle Again"?

PH,
First, I didn't thank you for the compliment given me the other day because your support was too much. Truly, I'm not very tall (smile). Your reading and writing is more than enough. Thanks so much for all you do, my friend.

In the Saddle?
With 17 Bullion Banks being forced to fund standstill agreements from their own capital, you ask

-------"Now we see that they are seemingly back in the saddle again". ------

No, they are still on the ground. So too are many other deals that the public cannot see. Truly, the price of paper gold does indicate the structure it's built on. The dealers are now largely working a vacant market against themselves. I said all along that the marketplace could go way up or (as Another pointed out recently) way down in violent swings from paper plays. We will see $360 or $400 and perhaps $200 in between. It's all meaningless because the bullion that must eventually be used to fund the contracts is largely gone. They didn't offer new airstrip improvements in K land because gold was flowing so freely.
We are entering a completely new era in pricing gold, but first the old system must die. The XAU is evidence of this as it has returned all the way back to where this rally started. Strong equity values in the gold industry require a stable marketplace to price their product. The wisdom of sharp investors in the XAU is seeing a storm in the making. They will discount the business value of the mines as a result. Even the unhedged mines are sliding. Look at silver, it didn't even retain a small bit of this advance. Indeed, silver always tries to coat tail gold, but it can't ride this new beast today. Physical gold is the only way to retain wealth as this process proceeds. If long leverage
traders are lucky (and I hope they are) some event will break the system while it's on the next default spike. I did not think supplies would last for the small bullion trader, yet they still are available without a large premium? I would not count on that lasting much longer.
Anyone that isn't buying real gold and holding it until after this market fails, will be mentally whipped to death. It's that simple.
The ECB have cut the dollar gold marketplace off short. That did not mean they would jump in the middle of it and buy all of the LBMA paper gold so traders could be made whole! Why, pray tell would they do that? No, they will let the system cycle between "selling down paper and the
false price it represents" and "burning up each others capital with each new, more costly default"! Higher highs and lower lows, all occurring in an ever expanding crisis. Even watching as these market creators hold certain price levels as option expire to their advantage. That's how a paper contract market loses it's credibility until it completely fails. I suspect that reserve gold flows
between CB will be stopped as this gets more volatile.

Further:
Soon enough, we will look again at that chart I posted showing the dow, the dollar and gold. Soon enough, it too will begin to register the strains on the system. I think someone here posted that the dollar would rise with gold as Another (and I) once stated. No, those opportune days are
long gone, now. At best, the dollar will try to keep up with the Euro, but I doubt it.
So PH, what does one do when prices run wild? There is a whole theatre of players out there that will try to tame this beast. Let's watch the entertainment for a while.

We are on the road,,,,,,,,,,,,,,,,FOA

Thank you, yet again, this time,For the reminder of what the reality of living truly is.
If only one can learn to let it be.

FOA

The current costs of getting gold from the ground are around $200. Some better, some worse. The current costs of getting oil out of the ground are about $3 per barrel. Some better, some worse. Gold has an immense above ground reserve compared to yearly production (about 60 years at current demand), as well as significant below ground reserves. Oil has little (maybe 6 months at best) above ground reserves. How does this fit your analysis?

Poor old Solomon

How many hours does it take you to cut and split a cord of wood? How much does it cost to buy chord, and how much does your Chiropractor charge?

Forgot to mention that I've lost about 30 pounds since I learned to use a chain saw, started putting in a few garden beds, ....and the old back has its days, but were gettin along...

While I was doing some stocking up, I had the chance to get a palette of rice...100 x 20 lb bags...so, a ton. Total cost, $500. It would have been easier to lose $3000 on a "long contract" in today's market...its all hedging anyway...well the moral of the story is if you want your back to make it through 3 cords of wood, try carrying a ton of rice into the house for training.

Poor old Solomon

Don't you know,a person who splits his own wood is warmed twice? Possibly even more, if you consider the warmth generated by all who gather around the stove. And yet again, when ones wife is rubbing oil onto the aching muscles. :}

(P.S. A cord of wood, split and delivered, is going anywhere from $135. to $160. this year. Up from $100. last year, when I was buying mine for this year. Smart me, eh?
And I have my son to stack it for me. Good, strong boy, glad for the work-out. Happiness is a wood-stove in winter. Expensive heat, but quality heat. :} }

And there is that nice calm feeling you get when you spend a few minutes cutting some kindling from a quarter split.

I know, but after 10 cords, even with help, it gets old. I figured out that falling, bucking, spliting, stacking, and getting it next to the fireplace, comes to saving three dollars per hourr worked. And that's with having the tree to start with!

when the kindling takes,and the logs catch, and the flames begin to feed, and the warmth truly blankets the room.
And I'm going to go throw another log on, curl up, and dream the night away. Peaceful sleep to you all.
Thanks all, for the day of sharing hearts. I needed it, today.

That was $3.00 of Tillamook PUD electric heat saved, per hour worked. If the power's down that's different. Kinda like the difference between paper gold and street gold.

if the lights go out, and it grows coldin your home Jan. 1, you and your loved ones can come sit by my fire. I've got a Good strong boy, glad for the work-out. Did you figure in the costs of a gym? Or do you not exercise? :}

Good evening - My thoughts for this week is how low will Comex go?. . .$270's?

Kaplans thoughts on the day; . . .
SUMMARY: My current outlook has been raised to SLIGHTLY BULLISH for gold and its shares. Monday's (November 1) drop in the price of
gold has removed a substantial portion of its potential downside. Repeated attempts to move to the upside have failed in the face of formidable selling
pressure; gold, like any financial instrument, will inevitably move in the direction of least resistance. Commodities and currencies in general are showing signs of
exhaustion, with their traders' commitments clearly showing that they have become overextended. The one-month lease rate for gold is having trouble just staying
above 1%, after being at 10% just three weeks ago. As the stock and bond markets rally simultaneously, money will likely be leaving precious metals for more
traditional investments. Those gold analysts who were most bearish this summer are currently the most bullish, and quite vocally so. Although the fundamentals and
long-term picture are as bright as ever, the XAU is severely and systematically underperforming the yellow metal itself, especially on rally days, actually declining
slightly on Thursday even as December gold futures surged $6.20. Gold's volume is often higher on down days than on up days, which is usually a precursor to
lower prices. It would not be at all surprising to see gold eventually go below $280 and the XAU go below 60. The current rally in stocks and bonds might serve as
the kiss of death for gold's short-term performance as many investors will feel that they don't need a hedge against uncertainty. The strong performance of unhedged
mining shares is also a cause for concern; many of these shares are actually trading at higher prices than they were when gold was at $320. Before any strong rally in
gold, the unhedged producers are usually the weakest performers, as investor skepticism about the prospects for a gold rally scares share buyers away from the
uncertainty of always selling at the spot price. Put-call ratios have been heavily tilted toward the call side since gold bounced from its recent lows, indicating that
investors are too optimistic about gold's near-term prospects. One strongly negative factor is the number of analysts who now say that gold is a good investment "as
long as it remains above $285." If gold is a really good investment at $292, then it should be an even better investment at $282. If people are actually listening to
these analysts, then there will be a lot of sell stops just below $285 which could eventually trigger a final wave of stop-loss long liquidation. On the plus side,
commercials appear to be finally accumulating gold healthily on dips. Traders' commitments show commercials, primarily experienced multinational corporate
treasurers, going more and more heavily long the U.S. dollar against most major currencies; a rising dollar is usually negative for gold. Traders' commitments also
show commercials long very few commodities or currencies which usually correlate positively with gold, which is of course an intermediate-term negative for the
yellow metal. Bonds may recently have bottomed, and rising bonds are very bad for gold since a certain critical mass of money often switches back and forth
between fixed income securities and the yellow metal. Keep an eye on the JOC commodities index. If it breaks below its 200-day moving average then look out
below. On the other hand, if it can regain its 100-week moving average then gold should find support so long as the other bearish factors can reverse themselves in
time. On Friday, October 29, the "white" metals with the poorest traders' commitments finally showed clear signs of relative weakness ahead of their inevitable
collapse.

even if the lights don't go out,my other heat source is also electrcity-forced air, ceiling heat, that only seems to heat the top half of the room. (WHO came up with that idea anyway? Didn't they know that heat rises?} The wood stove is no cheaper that electric, but I
maintain that it is a QUALITY heat, heats everything, we can even open the window and have fesh air in the middle of winter, instead of keeping everything shut up like a drum, stale and still chilled, expensively. Besdies that, IF the electricity goes, we will also be able to cook.

Oh but think of the value of those ten cords of wood when the meter quits turning!! :)

noneThis message is blank except for this sentence.

In summary, we have an indispensable ingredient of modern life in a structural supply deficit that has been fifty years in the making, with no chance of real balance except at prices many times current price levels, which in turn are at an inflation adjusted 50 year low. That alone would represent a scenario that was bullish beyond extreme. In order to distill my message I have intentionally avoided reference to the things people normally discuss in the debate on silver, such as, inflation, currencies, war, the stock market, hedge funds, Y2K, world economic crises, etc. I've tried to stick to bedrock fundamentals, industrial production, consumption and inventories.

-----

An old article which is worth reading again today.

Poor old Solomon

http://www.gold-eagle.com/gold_digest_98/butler111498.html"In summary, we have an indispensable ingredient of modern life in a structural supply deficit that has been fifty years in the making, with no chance of real balance except at prices many times current price levels, which in turn are at an inflation adjusted 50 year low. That alone would represent a scenario that was bullish beyond extreme. In order to distill my message I have intentionally avoided reference to the things people normally discuss in the debate on silver, such as, inflation, currencies, war, the stock market, hedge funds, Y2K, world economic crises, etc. I've tried to stick to bedrock fundamentals, industrial production, consumption and inventories."

-------

I know this is a gold forum...but think there is a lot to be learned by looking at the "kid brother".

The above quote and link by Ted Butler show a very interesting problem....50 years ago, the above ground inventory of silver was about 10 billion ounces. Compare to a gold above ground inventory of about 3 billion. Then, with the onset of telecommunications, high tech warfare, and photographic chemistries, we entered an era when the usages of silver exceeded new mining to the tune of about 200 million ounces per year. Now we are down below 1 billion ounces (so less than 1/4 of the number of ounces of gold). Silver appears to suffer from the same leasing/forward selling problems that gold has...but it is a much thinner market in dollar terms.

As Canuck Gold warned, those 50,000 tons (1.5 billion ounces) of gold in private hands could respond by dis-hoarding. That means, at today's value of $300, there is close to 1/2 trillion dollars of privately dis-hoardable gold.

Butler estimates that the amount of silver inventory is about 1/3 of this private gold, and at 60x price ratio, 1/180 of the dollar value.

Since silver is a thinner market, there is not such a massive counterparty risk as in gold...but if the market is in worse shape than gold, it could be very interesting to be in....

Poor old Solomon

Scrappy

Those ceiling vents were probably installed in case you were to have air conditioning. Or else, you have an old house where it was easier to put in a drop ceiling.

Wouldn't it be nice if the gold markets would obey the laws of physics as well as your home heater?

Poor (c)old Solomon

Hi All - I have a theory. It's probably overly simplistic but, then, I'm a pretty simple guy. I think that our problems in this world are created by fear and that the solution to the problems is love. Sure, I know it sounds mushy, airy fairy and the like. But it really isn't. I think of love as more like a sense of inner peace and tranquility than the drama we see on day time TV or the movies. It's the faith to KNOW that everything will be fine without any proof. That's why we feel so much better figuring out how to share what we have as opposed to defend it to the death. I brings peace of mind. The win/lose crowd, the big boys, are probably scared to death right now. How would you like to be in AG's shoes. He's being sucked along in the boiling rapids putting on the good face all the while hearing the roar of the falls getting louder by the moment. The boat is so unstable and leaky that he may not even make the falls, being overturned by something unexpected and violent. For the big boys, lose of power, position and $$ looks like death. It's who they are and what they stand for. It's the same reason people jumped from buildings in 1929. They will jump again when they feel their identity being ripped from their very beings. And what of us. Us, the little guys around the world whom they have stolen from and, for the less fortunate, impoverished.

Would I share my food with the banker's kids in need? Would I share my water with the cut throat CEO who enriched himself at the expense of thousands of good employees? How about the great fraud and liar, Bill Clinton, who I can no longer watch or listen to for even one second? The answer is yes. I would share. But not for them. I would share for me. If I can't see the humanity in these terrified little people, I will lose a piece of my own humanity. I will lose a part of my peace. Once one knows this type of peace, I believe that maintaining it becomes the highest priority. This peace is created by faith, trust and yes, love. Whatever difficulties we shall experience in the coming months and years, we will do well to face them with open hearts and supreme courage of great faith. This doesn't mean living in the world as a victim. No. Of course we will stand our ground as necessary. But not out of fear. There, I've blown my cover. But I just know that the coming times are going to provide plenty of opportunity to scare the pants off of us. We have to have faith that everything is going to be OK. Because it is. Best, DD

My house was builtin the 70's. Concrete slab, (VERY COLD CONCRETE SLAB!), foundation. Would never consider puttting in air, as the house stays incredibly cool in the summer, as long as we block out the sun. Besides, it is far more important, for Scrappy, at least, to stay warm in the winter, than cool in the summer. Summers are for rivers, if it gets too hot. I still maintain that ceiling vents for heat are a silly, sillly thing. Thanks for cluing me in on the method to the madness, though. At least they were thinking about something.
BTW, the laws of physics ARE on the side of POG. Gold is just caught in a twilight zone, and as soon as the time-warp happens, we will all be rich, my kids will be off to college, and I'll be stuck with carrying in my own wood! (Unless I can get my neighbors to do it for me. They'll OWE me, see, because I'm gonna be feeding them next year! :}

http://www.gold-eagle.com/gold_digest_99/ascani110399.htmlAnd in the least, one need only to look back at the past three quarters of 1999 and the great changes that have, in fact, been occurring globally, to see just how important a paradigm shift in the gold market is at this time. It directly follows a shift in the crude oil market, which bottomed last December at $10 per barrel and soared to $25 in only nine months

DD

Your theory isn't new in this world.

I have heard told that all of our emotions and actions are rooted in two things...love and fear...actually, fear may be understood as misplaced and misunderstood love.

It is my personal philosophy that we are put here on this earth to learn through this.

One great law of life...when you start to love more...you start to fear more too...like the volume is turned up...

When your life seems fine and you "think" you have no fear...look...maybe you are forgetting to learn more about love. When love arises one should create...when fear arises one should observe.

Poor old Solomon

I am really gladthat I wimped out and shared my heart today, because I am getting portraits of real heart here. Love IS the answer, and that means Unconditional love. To give to those that have caused you hardship through their actions, because you know, deep down inside, that you can affect them for the better, far more than they have hurt you. Each one on their own path, according to their own abilities and knowledge.
I feel bad for AG, etal., I know they will be far worse off than the rest of 'us' when things get to flying. Even if they are eating and staying warm, how well could you live with the knowledge that you took part in a series of actions that brought incredible hardship down on the WORLD? That your abuse of power caused others to go hungry, shattered the dreams of thousands? No matter how egomaniacal these people are, they will have that truth brewing inside. This, in addition to losing everything you have worked for-unreal wealth, unreal power, and most important, total control. Their loss will be far greater. (And what if, maybe, one or more of them are really goodhearted people, who truly believed, mistakenly, of course, that they would be doing others good by imposing controls over their lives?} Just a few thoughts.
Great post, DD. Thank you! :}

What a good credo to live by,if one could manage to live by only one.

So, back to PMs. (you are trying really hard to get us back 'on task', eh?) Should I get silver, too? How long to hold it? Only if I can't afford more gold?

Dear Solomon - I couldn't help but notice that you sign off "Poor Old Solomom". My dad used to sign off "Poor Old Dad" but shortened to POD. My dad was a wise old dad who I had the pleasure to become best friends with after he got terminal cancer. In that way, the cancer was a great gift. Well Solomon, maybe you won't become POS, but I think you're probably as wise as POD. Of course you're right about fear and love. Anyone who know about fear and love is a long way from being "poor" or "old". More like rich and wise. Best, DD

Dear Scrappy - Looks like you've started a minor revolution of the heart here. Maybe that's what all the coming change is about. Thank you for the kind words. Now, we have to live them. Best, DD

I'm going to sleep.I'll read those links tomorrow, try to figure it out on my own. Today has seen a rise in the gold in my life, as I've been reminded that faith, love, humanity and the beauty of creation will endure through it all, whatever happens.

(How's THAT for airy fairy, DD?}

On to the other reality for Scrappy, the dream world, where I will love, and create, and where bravery will manifest itself for the pursuit of these high endeavors.

(man, am i tired....thud.)

Love to all, to all, a good night.

http://www.gold-eagle.com/research/butlerndx.htmlThe article link that I quoted from is one of many by Ted Butler. The link here is menu page....

He appears to have long ago recongnized the problem of leasing/forward selling which is like flash paper under the gold markets.

My thesis is basically that anyone who is investing in gold is 95% of the way in understanding how to make a silver play.

The relative value of silver vs. gold is partly determined by the fact that silver is about 12x more abundant in nature than gold...of course miners seek out the higher silver content. Over the long haul silver has tended to go between 1/15 to 1/100 of the gold value...today it is at about 1/60.

The post WWII era brought in a lot of new technology which requires the use of silver...the growing population and the modernization of that population has continued to put high requirements on silver.

I think that silver could go back to be about 1/20 of the price of gold so that it might perform even better than gold.

The other side of the story is that the silver market is much smaller (but since Warren Buffet, Bill Gates, and George Soros are all there, it will gain public interest when it turns). This means that the FED (or other big banks) can "afford" to manipulate it and that for now, if it falls, the total "burn by default" is less.

Poor old Solomon

Oh yes....the golden cusion beckons

Sweet dreams philosophers...tomorrow the banter will be taken up early by traders who discuss the options prices again.

Not so really poor and not so really old Solomon

Dear FOA - You're like the one who calms the angry waters on the voyage. I think that it's easy for people to forget the big picture and get caught in the drama of day-to-day heaving to and fro. You help everyone to remember to where we are sailing. Assuredly, another wise man at our table round. Thank you. Best, DD

First, the great post by Solomon that inspired my post (I've enjoyed your input to the forum)--
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Solomon Weaver (11/1/99; 22:38:07MDT - Msg ID:18122)
While I was doing some stocking up, I had the chance to get a palette of rice...100 x 20 lb bags...so, a ton. Total cost, $500. It would have been easier to lose $3000 on a "long contract" in today's market...its all hedging anyway...well the moral of the story is if you want your back to make it through 3 cords of wood, try carrying a ton of rice into the house for training.
Poor old Solomon
-------------
The mention of the small cost involved in stocking up on a relatively huge amount of real goods compared with the amount of money someone might spend on gold futures speculation made this an obvious line of questioning. Hopefully, the answer is equally obvious.

If you have a reasonable expectation that rice will be in need at some point in the future, why on Earth would you waste this knowledge AND your financial resources on simple accumulation of physical rice? Wouldn't you be much better served to forego the physical rice purchace, and instead leverage your money through rice futures? You'd surely make a killing from the skyrocketing price when when the rice shortages became manifest.

And wouldn't it be great if you could leverage your efforts on a futures contract for firewood? You'd surely make another killing when everyone else is clamouring for firewood that was never chopped. Clearly, those multitudes must be idiots. There they'll be, paying a premium to obtain these rarest of commodities, when you knew all along that the smart money should get in early on these cheap futures.

And there you'll be, buying a little vinegar and oil to make a nice dressing with which to eat some of your paper profits as a salad, and burning your remaining paper profits for heat.

I would hope that the moral of this story is so obvious that it is unnecessary for me to iterate, but I will anyway, for fear that I've communicated the lesson less clearly than was my hope. MORAL: You may find to your dismay that the cash profits derived on an underlying real asset are a dismal substitute for the real thing. What is true for rice and firewood is true for Gold, too.

Gold. Get you some. ---Aristotle

Side note for Dr. Indiana Jones: Hey buddy! Good to see you still on solid, north-of-49? ground where the ice doesn't grind and go bump in the night.

(I was known as "novice", but I have changed handles due to popularity of the ID on other sites.)

Sir FOA, you say there will be major inflation in the future. Will this be simular to the inflation experienced by , say Germany this century?
could you add an example of the day to day life to be expected during such an inflation?
In trying to understand this $30,000 oz figure, it may be of some use for myself and others to imagine what day to day life will be then. Gas being $5 a gallon??

Thanks for everything you are doing!
and thanks Mary Conway!

What an interesting evening of posts! It was a pleasure to get up this morning and read them. Scrappy, DD, and Solomon, I enjoyed reading your thoughts on Y2K and life in general. Aristotle, your last post was SO good and so true! Al, thank you for the reassurance. I'm not exactly sorry I'm preparing, but I've just learned to work in silence, like the "critters."

Willo the Warthog, are you going to start posting with us? Yesterday we were treated to one of your posts, and I was very impressed!

http://www.thisislondon.co.uk/dynamic/news/business_story.html?in_review_id=224183∈_review_text_id=174200The lending gap that brought grief to gold

by ANTHONY HILTON City Editor

The turmoil in the gold market is a classic City row. Nothing is visible on top but the most furious and bitter dispute rages just below the surface. Occasionally it becomes more visible, as when yesterday three European gold producers wrote to the Financial Times demanding a statement from the Bank of England on its attitude to gold and the
gold market. The Bank typically had nothing in detail to say but it nevertheless is just the latest sign that producers of the yellow metal have become seriously fed up with those who prefer simply to deal in it.

It does appear that the degree of speculation in the gold futures markets had reached quite astonishing levels. The dealing report of the London bullion market for September, for example, says: 'The average net daily clearing turnover in London rose by 2% in September to 37.1 million ounces (1154 tonnes), the highest level this year.' In isolation that figure may not mean much, but when you remember that annual new mine production of gold is about 2500 tonnes a year, it means that total production of all the world's mines is sufficient to keep the market supplied for only about two and a half days (yes, days) of trading in the whole year.

Alchemists tried to turn base metal into gold. Modern-day rocket scientists seem to have turned it back into paper, or perhaps just an electronic blip on a screen. But by any measure this is a vast amount of derivatives trading to be supported on such a small physical base.

Perhaps to get more supply, but more likely just to turn a profit, most of the world's gold producers have been bounced by the financial community into selling their gold production forward, many on a quite heroic scale - not just Ashanti, which is now in trouble, but right across the industry.

The counterparties to these deals are financial institutions - some like Chase, which has doubled its position in the gold derivatives market in the past 18 months, some like Goldman Sachs, and some like Long-Term Capital, the hedge fund we were led to believe has been looking for safe
investments since its debacle last year in Russia.

What caused the turmoil in the market, therefore, was not the decision by the central banks a few weeks ago to stop selling gold. Rather it was their decision to stop lending gold that caused the huge rise in price and, of course, has left a large number of those short of the metal with no
mechanism to deliver on their commitments.

It is also increasingly clear that this problem is not going to go away and runs a lot deeper than any of the authorities are prepared to admit in public. These shenanigans have devastated the gold producers. There are also several financial institutions rapidly coming to wish they had never heard of the metal.

Economystery

What has surprised me in the falling-out between members of the Bank of England's monetary policy committee is not that they should squabble about the use to be made of the Bank's resources but rather the fact that the Bank has well over 100 economists on its payroll for them to fight over.

With all the economists in financial houses, in pressure groups such as the CBI, in City boutiques, in organisations like the National Institute or the Institute for Fiscal Studies, and in the academic world, there is surely quite enough research already into the various aspects of Britain's economy. Particularly given the flakiness of the statistical data and surveys that provide the raw material from which this mountain of opinion is constructed.

Indeed, if the independent members of the MPC read even a tenth of what is routinely produced every month, it would so overwhelm them that they could not possibly harbour thoughts of adding still more bumf to the pile.

The one law of economics that seems to hold good whatever the circumstances is the law of diminishing returns. So if the Bank were to increase its complement of economists, the extra resource should not be expected to lead to a corresponding improvement in the quality of economic thinking. Indeed, one might even argue that if there were fewer economists feeding into the MPC it might make better decisions, and fewer of them.

� Associated Newspapers Ltd., 02 November 1999

Nov. 12, 1999
If I have understood even a single word on this forum it seems to me that next Friday should be a pivotal day for gold.

Last Wednesday we saw the expiration of Oct. British OTC gold options. (Please correct above, I am definitely not sure of that statement). As Sir Goldspoon pointed out, there were plenty of $290 calls and mysteriously gold tumbled down to $290 just before expiration leaving the calls either worthless or close to that value.

If I have deduced correctly, there are herds of $270, $280 and $280 Comex Dec. calls waiting anxiously for Nov. 12. I
am under the notion that the POG will slowly and methodically turn down to erase any "in the money' gains.
EVERYONE is aware as to how this downturn may take place.

I believe that with the worthless expiration of these calls
will cause enormous pain in the paper market. This I might conclude is the beginning of the 'demise of paper gold' as
illustrated by FOA.

After last Wednesday's 'co-incidental' dropping to $290 there was a 2 day surge back to the mid/upper $290's. Is it then safe to assume then that the POG will surge at Nov.12
at 2:30PM Eastern Time?

There have been plenty of comments recently regarding the Dec. Comex calls. Does anyone see the above playout?
(Goldspoon, Megatron, Black Blade, FOA, all)

Solomon Weaver (11/1/99; 22:21:10MDT - Msg ID:18120)
price of oil (energy) and gold.
FOA
------Gold has an immense above ground reserve compared to yearly production (about 60 years at current demand), as well as significant below ground reserves. Oil has little (maybe 6 months at best) above ground reserves. How does this fit your analysis? Poor old Solomon

Hello Solomon Weaver,
I enjoyed your item about the wood stove. (smile) Life is truly an on-going, longterm negotiated affair, no?

Please read all the items in the Usagold HOF, as in there is written your answer. When it comes to our worlds two modern economic reserves, gold and oil, the cost of production does not control their value. Nor do stockpiles have the major influence many traders interpret.

When the time is right, officials regulate the production of these items. The Texas Railroad Commission (TRC) and OPEC for oil and The London Gold Pool and ECB for gold, are examples. We will eventually see the regulation of gold production in the form of output limits and taxing schemes. This will become official policy because the only to truly control oil is by controlling it's real price in gold. A deep subject for another time.
You mention: "Gold has an immense above ground reserve compared to yearly production (about 60 years at current demand)". Tell me, in today's paper gold marketplace, how does one know the true current physical demand? With LBMA trading some 250,000 tonnes a year (yes, it's true. You read it correctly!), if only a bit of that demand became physical due to a breakdown in the marketplace, your 60 years figure is wrong.
Solomon, current wisdom of our gold needs is running far behind the curve. Traders and investors are trying to surf a tiny swell while ignoring the sunammi in the distance.

Give it some thought,,,,,,,,,,,,,,FOA

You just get better and better!

Hermit Club (11/2/99; 4:32:57MDT - Msg ID:18149)
Inflation?

Hello Hermit Club,
It would be a long post indeed. I ask you to first find a reference book (there are many) that chronicles the great German money inflation. Then observe the recent and current news items about many of our Asian economies that were wrecked from price inflation.
The recent US inflation of the 70s was almost nothing of the scale of the real thing. Just review all that happened then and increase it by a factor of 3+++. Gasoline at $5.00? That is only the first easy level. It's almost that much in Europe now and they are better for it.

Thanks FOA

Note: I'll be away for a number of days.

Isn't it odd how gold brings out the truth when subjected to indepth discussion? It's like a key piece of evidence in a mystery. It helps answer questions: What got distorted? Who is lying? Where did all of this "money" come from?
Thank you all for speaking your values. I don't believe anyone got mushy, or religious, just very frank.

First, many thanks for your regular early morning contributions, these certainly give us all plenty of meat to chew on throughout the day :) We are all learning a tremendous amount from you, and your out of the box thinking I'm sure is stimulating much thought and re-evaluation of matters here...

My question is to do with Silver. You have said several times that Silver would stall at the first fence, that it would not coat tail gold this time as it normally does when gold has a major run-up. Is this prediction set in stone do you think, or might there be in Silver too those wild swings that you predict will happen in the gold paper markets as they wither and die? I'm talking short term here, perhaps the next 8 weeks specifically, and then on into the new year. Thanks in advance.

P.S.

Canuck - your thinking mirrors mine precisely :) If I had the money I would be buying more gold at these anticipated prices...

there is somthing we or leving outof the mix URANIUN , price 10 dollers a pound, cost of production 15 dollers a pound.chick it out.

uranium is were it's it chick it out

Click here: UraniumStocks.com

Canuck,
If I understand you correctly, you are saying that paper goldies are driving the (paper) POG down
in order that the November 12 options will be worthless,
but that unfortunately for them, an unintended consequence of this will be that the paper gold market will be destroyed at the New York close on November 12, 1999.
So we will have to wait until the Asia-Pacific markets open on November, 15 (their time) to see gold break free Or are there any markets open between New-York closing on Friday and Sydney opening on Monday? The IVH

For what it's worth, I like the saying that goes, "It's better to have and not need it than to need it and not have". Someone elses wisdom, not my own. It does seem like everyone is looking at you when your at the store buying additional rations for disaster prevention. Leigh, I have the same attitude, working like the critters.
I advise that we "Be strong and courageous" for the emotions seem to be running high and it will take level headed thinking to get through what appears to be very rocky roads with many trying times. Sure do appreciate all of your posts, it's good to visit here and see the many perspectives considering all the madness in this place. Scrappy, I don't believe we will be able to save the masses, but I personally have a different take on this whole thing of responsibility for the world.
Good luck all!

I believe there will be much pain at the close on Nov. 12. There always is for those on the wrong side of the market when options expire.

You state that this pain will lead to the destruction of the paper gold market on the 12th. Why so?

Like you and many others on this forum, I also believe the paper market is doomed; the only question is when.

In this game, timing means everything. Here's something to consider: Aside from sheer might and the threat of force, governments need legitimacy in order to continue functioning. Without it, the people stop playing along, stop paying taxes, etc. And we can't have that!

The problem with the Nov. 12 date is it is too premature, I believe. "They" are trying to keep the wheels on the wagon right on through til the end of the year. On Jan. 1, it can all come tumbling down for all they care.

Again, just a feeling, not a technical analysis

Scrappy: thanks for the provocative posts. They moved me to write. I hereby
apologize to those who might think that this is too far off-topic, and
advise them to skip this post, which deals mostly with food and Y2K
survival.

"What if, in order to keep my family alive, we have to shoot the neighbors,
to keep them from attacking us in hunger? Is that really what we want to
do? What if FEMA and the National guard are unable to get supplies to us
all? What if there are no supplies to be had? What good will my gold coins
be, then? ... "We will share the last bowl together with our neighbors,
and, if death be at the door, we will face it together. As for myself,
tomorrow I am off to the coin store, to sell my gold now, while I can.
Then, I am off to the grocery store, to buy as much rice as I can, so I
will be able to help as many as I can, in case the 'worst' occurs."

.... Well, bless you. I don't know if I could be that magnanimous.
Unconditional love is something that even saints have trouble with, and I
am no saint (at least since I last checked). I am, however, laying in
supplies sufficient to at least partially support a few physically
immediate neighbors. There is a mixture of selfishness and altruism in
this, probably mostly selfishness. In a serious meltdown, I could not make
it entirely alone. I would need support from a few immediate neighbors,
just as they would need support from me. The place where the selfishness
and altruism parts start blurring is that in a serious meltdown, I would
not WANT to make it entirely alone. The lone survivor... what a dreadful
fate! So, selfishly (?), I will seek to save some others. But I doubt that
things will get that desperate.

Mass starvation in the U.S. is very unlikely in the near term. Remember
that the U.S. has enormous food reserves -- enough to last our population
many months, perhaps years, depending (e.g. depending on whether or not we
would be willing to eat whole soybeans and wheat instead of feeding it to
hogs). It would probably take a year or two for a full-bore famine to get
up a head of steam, even in a severe infrastructure breakdown. On the other
hand, processing and distribution problems could greatly narrow our
customary food options; quality food could become scarce and expensive; ANY
food could become expensive; frank malnutrition, or states of very
imperfect nutrition, could become common.

I remarked on "whether or not we would be willing to eat whole soybeans and
wheat instead of feeding it to hogs", but it is not as simple as that.
Whole soybeans and wheat (and etc. -- most animal feedstocks) are tough to
digest, and many humans adapt poorly to them. They are inefficient foods,
requiring a lot of cooking, a lot of chewing, and a strong GI tract,
especially if they are to the source of most calories. For many people, if
GI intolerance is not evident from the outset, it will be after a few weeks
or months of a diet built around these foods. Even assuming good tolerance,
these foods are often inadequate. For example, in developing countries a
common nutritional problem is that the (low-protein, low-fat) grain-based
gruels that are fed to children lack sufficient energy and nutrient density
to support growth, immunity and health.

So pile up the rice and beans, but also pile up high-quality proteins and
fats, such as canned meats and fish. These canned goods WILL last for
several years, in spite of the dating on the cans. Oil pack tuna is great
(forget the water pack): very palatable, high protein, resists freezing. I
am laying in 200 pounds of soy protein powder (which I use a lot of
ordinarily, anyway); in bulk it is under $1.50 per pound. Texturized veggie
(soy) protein, TVP, would be good, too; probably lasts forever with
reasonable packing. Brewer's yeast is a dynamite supplement, loaded with
protein, minerals, B-complex.

For shear energy value, density, digestability, and bang for the buck, go
for fats and oils. Gram for gram, fats have over twice as many calories as
proteins and carbs. Forget all the low-fat propaganda. In a food shortage
(or quality food shortage) situation, especially in cold weather, the
bottom line is calories (energy); protein comes next, then micronutrients.
Fats have great survival value and the body burns them happily even in the
absence of carbohydrate. The Inuit ("eskimo") go for months on seal blubber
and meat (etc.) with no carbohydrate at all; they stay warm, energetic,
strong and healthy. Fats have the highest satiety value of any
macronutrient, and practically anything to which they are added becomes
more palatable (often MUCH more... yum!). Fats are also the most digestable
of foods, and require no cooking or chewing. Their full energy value is
available to the body -- in sharp contrast to whole veggies and grains.
(These points about energy, cooking and digestability may look silly now,
in a context where rich food abounds, cheap, and everyone gets too many
calories; they would suddenly become pertinent in an infrastructure-hobbled
world with soaring prices and etc.) And apart from calories, vegetable oils
supply commonly undersupplied nutrients: polyunsaturated fatty acids.

You can pick up 5 gallon jugs of soybean oil (at Sam's or Gordon Food
Service or wherever) for about 15 bucks. Five gallons of oil or fat
supplies about 160,000 calories, which is about two months of a daily
calorie ration (circa 2700 cals) for an adult. TWO MONTHS worth of calories
for 15 bucks. You cannot beat that. Of course you need a bunch of other
food to mix it with -- I am not suggesting that you drink pure oil
(although you could, and it would sustain you, in extremis). But this oil
will greatly extend the other food, and it will do so at lower than bargain
prices. Soybean oil has a better balance of fatty acids than most other
veggie oils (it has a good proportion of the sparse omega-3 fatty acids).

Vegetable oil will go bad over time, but this can be slowed by adding
antioxidants (some non-esterified vitamin E, etc.) and especially by
keeping it cool. Coolness dramatically retards deterioration. If you live
in the north you could keep the jugs cold/frozen in an outdoor box of some
sort. Come early spring, you can move them to a shallow hole (2-3 feet)
which will keep it fairly cool thru the warm months.

Another option is bacon fat. This is of course a heavy, slow-digesting fat;
it "sticks to the ribs". You can order 5 gallon pails from Hormel for about
$25; one pail of this stuff, plus 100 lbs of grain and some protein, would
carry you thru most of a winter north of the Mason-Dixon -- or longer,
south of it. Since this is a largely saturated fat, it will last a lot
longer than the veggie oils. Hormel gives you your choice of pre-added
antioxidants: either BHT/BHA, or rosemary extract (which is antioxidant). I
would prefer both, but either is fine. Hormel says it is OK for 6 months; I
guestimate that, kept cool/cold, it should be fine for at least 5 years.
(Food company shelf-life estimates are more an exercise in ass-covering
than in providing real-world information.) I recall reading that a
container of 100-year-old ghee (clarified butter) was recently opened and
used in India: tasted fine, no rancidity. Ghee is not bacon fat, but they
have more compositional similarities than differences -- largely saturated
fat. Ghee would be good to store too, and it is delicious, but it is much
more expensive.

Regarding neighborhood food bank organizing and etc., see:
http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001Ed6
http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001eBy

Apart from food, and if you really want to save lives, attend to water
purification technology and basic meds -- antibiotics from the feed store,
oral rehydration solution materials, etc. Water-borne and other disease
would no doubt claim many more than starvation, though malnutrition would
certainly increase susceptibility to disease.

And hang on to a few of those gold coins! None of us know how this
thing is going to play out, and it just might be that you can take care of
many more people with those coins than with the food and other goods that
they buy at current dollar valuations.

Good luck with all!

PS: Leigh: I believe the "no disruptions" hype, too, about 1/3 of the time.
I long ago abandoned any pretentions I had about "knowing" with any degree
of certainty what is going to happen. All I know is that there is a very
substantial risk of very substantial disruptions, perhaps even (in sum)
catastrophic ones. I'm not embarrassed to look at my room full of
preparations and realize how much money I've spent -- since practically all
of it is stuff that I could have and would have used, anyway, and that I
WILL use over the next few years... tho 15 gallons of bacon fat may be a
tad more than my usual seasonal consumption... ;) And most of it is stuff
that will come in very handy in several scenarios more likely than a big
Y2K-related infrastructure meltdown (currency crisis, inflationary
depression, etc.). And all of it is stuff that would come in extremely
handy in non-Y2K meltdown scenarios -- like nuclear war which, though
unlikely, is much more likely today than it has been for many years. We are
living in fragile, vulnerable times. Are you embarrassed about the money
you spend on fire insurance? The great thing about Y2K/etc. insurance is
that you can literally eat it up (or wear it out, or etc.) at the end of
the term; i.e. it is effectively free, or nearly so.

PSS: Aristotle: rice futures instead of physical rice! Hahaha! That's
good. But I'll go with my favorite: August 2000 sneaker calls...

http://www.ki4u.comThanks for the encouragement, both of you. AEL, I'm in the sneaker future option pit with you, as you already know.

To whoever posted about potassium iodide recently: Thank you for the reminder. There are a number of nuclear power plants in my area. I found this wonderful, informative 20-page link on Kitco over the weekend. It's must reading for anyone unfamiliar with the subject.

MARKET REPORT(11/2/99): Gold was down slightly in the early going in
cautious trading............Some traders feel that the market will sell
off in the wake of the Ashanti and Cambior bailouts. Others say that
there's no reason for the market to go down further now that the matter
has been resolved at least in the short run..........According to a UK
press report published at Bridge News, Ashanti "has ruled out a merger
until the group has found stability and and resolved its financial
difficulties." We indicated as much in yesterday's report. The fact of
the matter is that Ashanti doesn't need a merger now that its been
bailed out. Ashanti issued its banking counterparties warrants amounting
to 15% of the company in return for a three year exemption from margin
calls. The deal has all the earmarkings of the sovereign nation bailouts
with which we have become uncomfortably familiar over the last several
years...................As it stands someone still holds those call
positions. Therefore, someone else is still at risk...........Gold
recovered from yesterday's sell-off starting in Asia. European trade was
also up -- almost $3. The uptick is attributed to short
covering................CPM Group has a different read on the Washington
Agreement as the prime mover in gold's strong upmove in October. Says
the New York advisory firm, "While many market observers attributed the
October price increase to a statement about limiting future gold sales
by the European Central Bank, the report points out that gold prices
already were rising dramatically before the announcement. The
announcement fueled the increase but did not cause it."......Since gold
began to move in increments we haven't seen for years after the
Washington announcement was made, we will have to respectfully disagree
with that assessment. We think the Washington Group announcement had
everything to do with the price move, although we do attribute Gold
Fields' purchase of 12.5% of the last Bank of England auction tranche as
a major contributing factor as well..................Thanks to FOA at
the Forum for finding this British link which follows up on the mining
companies' request mentioned here yesterday to the Bank of England for
an explanation of its activities in the gold derivatives' market -- a
request apparently the BOE has basically (and predictably) shrugged it
off.

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.

Thank you, everyonefor the input. Let it come, I'll be as ready as I can get.
As for being magnaminous, well, it's easy to talk, far harder to live what one believes. No one knows how they will perform when the moment of truth arrives. I am only human, trying to do the best I can when I have time to think about it.

My apologies to any that might have been annoyed that we were off subject.

AEL,Thanks for all the info. Bacon fat is an excellent idea. Tasty not by the spoonful, (yech!), but great to flavor potatoes and gravies, (and beans).

Arisotle, good job on incorporating the off-subject subject into the forum topic. Are you a teacher? When is your book going to come out? :}

TEST

I have invited this TVX Yahoo board poster to come here and post, but I don't think he has yet, unless he use another profile.

The Ashanti crisis reviewed.
by: Captainfreddy1 11/2/1999 4:28 am EST
Msg: 23061 of 23072
Coin demand for gold is was according to Gold Fields in l996 equal to 63 tonnes against 65 tonnes for dental, l82 tonnes for bar hoarding, and 2,807 tonnes for jewelry. I cite these figures to address the small significance that purchases of coins by members of the board would have on the overall gold price. The question, then, is should the resolution of the Ashanti and Cambior crises been bearish for gold, or at least to what extent, or was the gold market manipulated yesterday using that resolution as an excuse or smokescreen for pure manipulation of the market. The Cambior resolution involved l.3 million ounces in a daily gold market where about 35.7 million ounces turnover per day in London and 3.84 million ounces at the Comex in l997. If the Ashanti hedge book rose 100 million dollars in deficit for each l0.00 rise in the price of gold, then we assume they owed l0 million ounces of gold in derivative exposure. Now, turnover is not necessarily the same as exposure as we know from the bank debit turnover in New York City. From a report in my office the Fedwire had daily turnover of 841 billion per day in l994 against a 7 trillion GDP in the U.S., or annual turnover of 2l8.66 trillion Fedwire turnover against 7 trillion GDP. This same analysis can expand into the dollar turnover in the foreign exchange market of over two trillion per day (an estimate) at the present time. In l995 goods and services traded internationally amounted to around 7 trillion annually. So turnover and exposure are not the same thing. For example, the exposure to the dollar to hot money flowing out of the U.S. is about 4.4 trillion dollars at the end of last year calculating the 4.4 trillion from assets that can be converted immediately to foreign currency credits as government bonds, stocks, bank deposits, etc. Just compare that to the two trillion dollars in turnover that daily trades or multiplying that by 260 working days, gives you annual turnover of 520 trillion. So the ll.3 million ounce derivative exposure of Ashanti and Cambior must be related to the supply and demand in the overall market where Mr. VenerosO calculates the supply deficit at l,778 tonnes, or 63,l54,560 ounces using 2,200 pounds per tonne. But this is not all. If Mr. Venerosa's Central Bank lending figure is correct for l999 of 9,239 tonnes, then about 325 million ounces will have to be found to pay back the Central Bank. This is a massive short position that dwarfs the ll.3 million ounces.

Now, even though Ashanti has traded a warrant position for about l6% of their company for a standstill, this does not tell us what the counterparties must do to fulfil their obligations under the derivative agreement. It is possible that if naked calls were sold, that Ashanti could supply this gold as it comes due, and only had a margin crisis due to the rise in the gold price. Also, we are not told what is due now in these derivative contracts, or whether the counterparties had to buy gold on the market to pay off the obligation that was due, or whether the obligation was to them alone. So we cannot even determine short-term what effect this might have had on the market, and with the standstill, Ashanti may be able to supply with their production whatever gold may be needed. In other words, no one in the market knows what is going on, so how can anyone determine how bullish or bearish such an event is. Therefore, it seems that the tanking of the gold market yesterday had to do with either shorts trying to manipulate the market downward to cause a panic in which to exit with or without the cooperation of the Bank Of England, and other Central Banks, and most probably with them, or the Central Banks themselves were selling gold to bail out Chase Manhattan's short and derivative positions in the market, the Chase being the largest U.S. bank. I do not know how helpful this commentary is but I am trying to demonstrate that in the secretive world of gold trading, and Central Banking, those of us who look from outside in do not see very much, and must work off estimates of the very astute Frank VenerosO and whatever data is available to us which is not very much. In a market of such little transparancy, it is hard to get a handle on it, but when you add it all up as to what we can see, and look how gold tanked, it looks about as corrupt as can be. If someone wants to sell a large position, he does not start in the thin market in Asia, and sell in the first minute enough to tank the gold price l0.00, when the amount he sold could have very easily been handled later in London in incremental sales. Such one minute avalanche of sales, my friends, is how you manipulate markets and not how you unload a position. If anyone disagrees with these comments, and hypotheses, I would be most interested in hearing from them.

Whatever you are doing the next few days,Thanks for letting us know you will be gone. I look for your posts daily, and would have been disappointed and worried.

Barakah Bashad, teacher. (May the blessings be.)

Note: For some reason the report did not copy properly on the first try. I ommitted the discussion of the Ashanti call position in this second report because I am not sure who is actually at risk on the Ashanti call positions, though I think it is still Ashanti. I wanted to get more information today before making a statement in that regard. So please take those two sentences in the second report with a grain of salt. If it is Ashanti still at risk, they may need that merger partner after all if/when gold's goes over $325 again. From what I can gather, the calls would then expire worth a substantial premium that Ashanti would have to pay. As I say though, I am still in the process of gathering information, so if anyone has a comment or a handle on this, please post it to the Forum.
------------
MARKET REPORT(11/2/99): Gold was down slightly in the early going in cautious trading............Some traders feel that the market will sell off in the wake of the Ashanti and Cambior bailouts. Others say that there's no reason for the market to go down further now that the matter has been resolved at least in the short run..........According to a UK press report published at Bridge News, Ashanti "has ruled out a merger until the group has found stability and and resolved its financial difficulties." We indicated as much in yesterday's report. The fact of the matter is that Ashanti doesn't need a merger now that its been bailed out. Ashanti issued its banking counterparties warrants amounting to 15% of the company in return for a three year exemption from margin calls. The deal has all the earmarkings of the sovereign nation bailouts with which we have become uncomfortably familiar over the last several years........Gold recovered from yesterday's sell-off starting in Asia. European trade was also up -- almost $3. The uptick is attributed to short covering................CPM Group has a different read on the Washington Agreement as the prime mover in gold's strong upmove in October. Says the New York advisory firm, "While many market observers attributed the October price increase to a statement about limiting future gold sales by the European Central Bank, the report points out that gold prices already were rising dramatically before the announcement. The announcement fueled the increase but did not cause it."......Since gold began to move in increments we haven't seen for years after the Washington announcement was made, we will have to respectfully disagree with that assessment. We think the Washington Group announcement had everything to do with the price move, although we do attribute Gold Fields' purchase of 12.5% of the last Bank of England auction tranche as a major contributing factor as well..................Thanks to FOA at the USAGOLD Forum for finding this British link which follows up on the mining companies' request mentioned here yesterday that the Bank of England explain its activities in the gold derivatives' market -- a request apparently the BOE has basically (and predictably) shrugged it off. A quote from the highly recommended article: "Alchemists tried to turn base metal into gold. Modern-day rocket scientists seem to have turned it back into paper, or perhaps just an electronic blip on a screen. But by any measure this is a vast amount of derivatives trading to be supported on such a small physical base. Perhaps to get more supply, but more likely just to turn a profit, most of the world's gold producers have been bounced by the financial community into selling their gold production forward, many on a quite heroic scale - not just Ashanti, which is now in trouble, but right across the industry."..... That's it for today, my fellow goldmeisters. See you here tomorrow.

elevator guy (10/31/99; 22:30:14MDT - Msg ID:18002)
@FOA
I have been waiting for the price of gold to go through the roof,and while I am waiting, I had a thought. (First time for everything)

How about this scenario- The shorts continue to sell paper into the market, keeping the price low, and protecting the guilty.

The paper price of gold never, never, actually goes up much at all. It just meanders all over the chart, keeping the paper dream alive by teasing paper players with small turns up and down.

Meanwhile, the real physical price of gold increases, and then the Euro increases. (Most real big physical buying is "off line", and no one hears about the price details) The dollar is dumped for gold and Euros, and Americans never hear anything about it in the media. The dollar begins a massive devaluation, which for all practical purposes is not mentioned in the press. (We wouldn't want to upset the financial infrastructure, you know)

But at the gas pump, the effect is seen. When buying a gallon of milk, the effect is seen. Etc, etc. A change occurs in our economy, and our lifestyles, and no warning bell was sounded. No one told us when to run, and now we are left behind, in a world growing increasingly cold.

The shift in the political landscape happened while we were getting our world news through the media machine, and the earned value of our hands was stolen without a shot being fired.

Is it gonna happen like this? Will there be no one single day, or landmark event, to mark the change in the power structure of the world? Will the media machine think up some clever cause, to attribute the changes to? Will the coming changes have no telling thunder, and all US citizens merely adopt to their new gradualy deteriorating standard of life, just like people adapt to the cold by "bucking up", and wearing an outer coat?

Is this the view down the road ahead, FOA?

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001gbz"There are other reasons to stockpile more than "30-days worth of food" than just to ward off potential starvation. Bartering, emergency relief for neighbors, and staying out
of harms way while the supermarkets are in turmoil are a few...."

http://biz.yahoo.com/rf/991101/yu.htmlDoes anyone have any idea how seriously a single North Ameerican currency has been officially discussed to date?

George Soros, an international investor and financier, said on Monday he agrees with Canadian authorities that the Canadian currency should be maintained independent.
"I still think that Canada is a resource-based (economy), so exporters are important. Having the same, fixed exchange rate (with the United States) will create rigidity for Canada. So I think it's better for Canada to have a separate currency."

The discussion we're having here at The Tower is that we disagree with his reasoning. The explanation will follow...

Soros said, "Exchange rates are an adjustment mechanism. And if you don't use that, you have to then adjust wage levels, which is much harder. Unfortunately currency markets have a tendency to overshoot, so it's not a perfect adjustment, but it is actually useful adjustment."

The Tower prefers to see a currency as "market-neutral," a simple tool wth which to conduct commerce. It is up to the market itself to adjust as needed, it shouldn't be in the hands of governments to manipulate their will on the people and the economy through currency adjustments which ultimately lead to a debased savings account in your retirement years.

http://www.washingtonpost.com/wp-dyn/style/A3196-1999Oct31.html
....and he's telling us there is an endless supply of petroleum......

Go figure.

The petroleum part is about 3/4 of the way down.


Leigh, thanks for pointing-out that bit about 16 Tons yesterday. I guess my 15 minutes has *really* arrived now.

GF

http://biz.yahoo.com/rf/991102/iz.htmlIn an analysis of expectations for the Fed's participation in the banking system's reserve maintenance efforts, Carol Stone, economist at Nomura Securities International, said "(The Fed may do) nothing, maybe a very small repo. They've got a lot on the books ... and tomorrow's the last day of the (maintenance) period, so they may be able to skip."

The "Headline" above tells you what the Fed ended up doing. Mo' money!! (What else did you expect?)

but you can help me out. What day was it posted? Memory tells me it was in the neighborhood of October 2nd.

http://biz.yahoo.com/rf/991102/k5.htmlIMM currency futures mixed early in moderate trade

Traders have expectations for a European Central Bank rate hike on Thursday, November 4, and for a U.S. rate hike at the November 16 Federal Open Market Committee meeting.

http://biz.yahoo.com/rf/991102/l8.htmlFinance Minister Dominique Strauss-Kahn resigned on Tuesday amid charges that he received payments from a student insurance organization for "fictitious work as a lawyer" while in opposition from 1994 to 1996. FinMin Strauss-Kahn said, "If I am resigning, and I say this with conviction, it is not because I feel guilty in any way. I took this decision because I believe that morality and a sense of responsibility demand it."

In an unwritten code of honour, government ministers in France who come under investigation have traditionally resigned. A Finance Ministry source said he intended to return once he had cleared his name. Strauss-Kahn said he wanted a chance to explain "the reality of my work and the size of my fees and any technical irregularities which may have been committed."

Boy, that sure isn't like the American method of political behavior, is it?

"Today, gold is worth far more than the value of one man's suit, as is often proclaimed. Mr. PH in LA offered a fine post about this some time back." FOA (11/1/99; 22:04:23MDT - Msg ID:18117)


Canuck Gold :
The post FOA refers to above can be found in the archives at: (10/08/99; 10:51:08MDT - Msg ID:15857) "On The Street"

Part of the problem of a single currency is philosophical. In Canada we have no history of free markets just the illusion of them. Canada is a third world nation with 2 exceptional advantages 1. Geographic. We are next to the US. That means direct trade with #1. and 2. Most important, is our gov't ability to borrow money. I am convinced that with constraints to borrowing Canada could never have became a first world nation. How else could 30 mil. people rack up 600 bil. in debt? This is where all the 'free' medical comes from, not to mention 500 mil. per indian nation settlements.
This is certainly why they've sold off the gold reserves. This place is a glorified Romania, being protected by Mother 'Russia' and anyone who thinks different is nuts or workd for the gov't.

http://www.usagold.com/cpmforum/archives/6199910/default.html
Just poking fun at myself, now that I'm "being quoted" on other forums.

16 Tons is at the above link #15674

It ain't over till it's over!

It seems the U.R.L F.O.A posted in his Msg ID:18151 this morning is no longer available?
Did "This is London" pull the story? I read M.K's GOLD market report this morning and he thanked F.O.A for posting the link,by the time i had finished reading the rest of the forum "Top To Bottom" and got to said link it was gone!!

Did someone save the article thats able to repost it?
They must not of liked the tone of the Editor or was it the truth they didn't want the rest of the World to hear?
T.I.A :-)

How safe is a safe deposit box in a bank? how about in Jan 2000? Does anyone know what the status of safety deposit boxes was after the crash of 29 or during the bank holidays?
full of questions aren't I !

Dear Golden Truth: The article is gone now, as you said, but luckily FOA copied it (or most of it) right under the link. Look again.

I'm curious how the FOA scenario will play out. There will be a lot of manuevering before the expiration. What it will boil down to is the pain threshold for the various counter-parties. My personal belief is that the US or others operating in concert will covertly use off the book transactions to cover. $335 is too dangerous a line to cross. Too much pain and unknown variables.

Jake, as to the security of safety deposit boxes I would refer you to chapters 19 & 20 of "The ABC's of Gold Investing" See MK at the home page for a copy. The way I read the history of confiscation in '33, the banks sealed the deposit boxes until the gov't agents could search them for gold. MK or GC, please feel free to jump in here any time. Call me paranoid, but I don't put much faith in the "safety" of safety deposit boxes in a crisis. OC

Thanks OC, I've heard references to the sealing and confiscation of gold in safety deposit boxes before but can't seem to find any hard historical data about it.

I agree with you about them. If it's in the bank it's not really in your possesion.

Little side story: Some aquaintences do janitorial work for banks at night. One of them found an old St Gaudins on the floor of the safety deposit room & pawned it the next day for $200. Told her she should have called me first :)

This DJIA shuffle is starting to feel like a game of solitaire, where you keep shuffling knowing full well you'll get the same combination, yet hoping it comes up different. Then when the realization hits, you change the order to keep on playing. At least that's how my grandmother showed me to play! My grandmother should have worked for the Treasury.

Thankyou for providing the post location. I really bugged me that I couldn't cite the exact reference in my first post. I would have liked to have been able to give credit to you regarding the suit analogy. Sometimes memories play tricks because I had forgotten that the suit in question was one manufactured in Shakespeare's time. I was using it to point out that a good suit in London today costs at least twice as much as that same suit in LA, an anomaly that cannot last much longer.

That goes for cars, too, I might add. I just reviewed the post and note that you went on to say that today you think '"We are what we drive!" And an ounce of gold ought to be just about right'. I trust you meant a domestic car and not an import. And I hope you're talking about a used car and not a new one. You don't really believe that if an ounce of gold is worth US$30,000, you'll be able to buy a new car in LA with the proceeds, do you? If an ounce of gold is worth US$30,000, what would that be in euros or yen?

You may be right that the reality of a devaluing dollar will only very slowly percolate into America's consciousness but anyone who travels or buys anything from abroad will suffer substantial sticker shock. ( I took a trip to Scandinavia back in 1990 and was astounded at how much more expensive it was than England at that time, never mind Canada or the US. It was probably a precursor of things to come.) The fact that gas prices haven't doubled with the price of oil is probably more of a reflection of the profits the oil companies have been making at our expense rather than an expression of their generosity. You'll be looking at $200,000 BMWs and $100,000 Toyotas, though, in the not-too-distant future. If you're in the market for one, now's the time to buy.

CG

Since 96 prices in the NW US have risen substantially. I disagree with those who say inflation has not caused prices to rise YET! Twice a year I travel on business to Seattle from Vancouver. Parking in the downtown is avg. $13. US. a day. That's $21 CDN! I notice it because it's gone nuts from my point of view, but if your living in it your perception is of slow increase. Our inflation topped out on REAL STREET prices 2 years ago. It has now flipped to where it 's advantageous for US citizens to buy gas in Canada! The real number in the NW must surely be 10-12% per annum.

The latest figures released from Vickers indicate that, despite y2k, there is still net equity buying among insiders in corporate America. This is telling us that those who are in a position to know consider y2k a non-event.

I know this won't persuade every last survivalist in the Forum, but maybe it will help somebody.

First, please understand that I personally am highly opposed to paper or"concept" money (good label!) as practised today all around the world. Itmakes sense only for the bankers and government cliques who profit from itat everyone else's expense. However, to play devil's advocate briefly: . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Why couldn't "concept money," properly managed, work? Milton Friedman gothis Nobel, essentially for the equations proving "monetarism," that is,growing the money supply only enough to keep pace with economic growth,would work. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Of course monetary growth now, for various reasons has gotten completelyout of the hands of the previous controlling bodies, the "central banks." Control has lapsed to the world-wide quasi free financial markets. Itseems that central banks are now only the spoilers, injecting uncertaintyinto currency markets and causing wild and mostly unintended gyrationsinstead of stabilizing things. And it's scaring everyone, themselvesincluded.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .However, given modern IT (Information Technology) innovations such aselectronic funds transfer, hedge funds, derivatives, etc., why couldn't the'electronic hedge' work, merely based on the theory of large numbers. Forexample, almost no one suffocates because the oxygen atoms all decide tohang out in the upper right hand corner of the room. While it'stheoretically possible for this to happen, because there are so many oxygenatoms, the probability is EXTREMELY low. The reality (apparently no suchsuffocations) mirrors that extremely low probability.. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .If what I have been calling "the electronic hedge" escapes theuncertainties of national currencies, why couldn't derivatives, such aspaper or megabyte (electronic) money, e-gold, etc. be accepted and functionwell, exclusive of the underlying (gold for example)? Why couldn't they,in large enough numbers, prevent financial "suffocation.". . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .In an article appearing in The Economist, financial guru Peter Druckertantalizingly suggests the way: . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The tools for doing this work are fully developed, eg, EVA (economic valueanalysis), or cashflow forecast and cashflow management. Thefinancial-management needs of these businesses are predictable. Andworldwide they fall into a small number of categories, well-known to anyexperienced commercial banker. ...A final example of a potentialopportunity for new financial services: financial instruments that protecta business against catastrophic foreign-exchange losses by convertingcurrency risks into an ordinary cost of doing business, with an affordableand fixed premium, maybe no more than 3-5% of a firm's currency exposure.Again most of the knowledge for such an instrument--half insurance, halfinvestment--is largely available; the actuarial concepts to determineneeded sample size and risk mix; the knowledge of risk management; theeconomic knowledge and data to identify endangered currencies, and so on.The need is desperate--again, mostly among the world's huge numbers ofmiddle-sized businesses that suddenly find themselves exposed to a chaoticglobal economy. No business, except an exceptional very big one, canprotect itself against this risk by itself. Only aggregation, whichsubjects the risks to probability, could do so. ... Making catastrophiccurrency risk insurable might similarly make obsolete most of the foreign-exchange business of existing institutions, let alone their franticcurrency trading and speculation in derivatives. -Peter Drucker, DRUCKER ONFINANCIAL SERVICES, The ECONOMIST, Sep. 25th to October 1st, 1999, p. 28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Maybe this is what some have in mind when they talk about the "newparadigm," and the only fly in the ointment is politically manipulatednational currencies. So, can someone tell me why the electronic hedge "newparadigm," using in Drucker's words "aggregation" to subject "the risks toprobability," wouldn't work if it could transend national currencies insome way? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Regards, Journeyman

You just answered your own question in your first paragraph.
Central planning, Federal banks, ivory towers,,, any of this ring a bell?

Isn't electronic money what we are all headed for, like it or not? What conversion risk is there with just one currency? Peter Drucker is just a spokesman. The question is how does this avoid political manipulation. It doesn't. It simply begs the question of what is the new currency worth in relation to anything else.

Date: Tue Nov 02 1999 07:52
SlangKing (READ THIS ONE..The lending gap that brought grief to gold....London Evening Standard) ID#274240:
Copyright � 1999 SlangKing/Kitco Inc. All rights reserved
The lending gap that brought grief to gold

by ANTHONY HILTON City Editor
The turmoil in the gold market is a classic City row. Nothing is visible on top but the most furious and bitter dispute rages
just below the surface.

Occasionally it becomes more visible, as when yesterday three European gold producers wrote to the Financial Times
demanding a statement from the Bank of England on its attitude to gold and the gold market. The Bank typically had
nothing in detail to say but it nevertheless is just the latest sign that producers of the yellow metal have become seriously
fed up with those who prefer simply to deal in it.

It does appear that the degree of speculation in the gold futures markets had reached quite astonishing levels. The dealing
report of the London bullion market for September, for example, says: 'The average net daily clearing turnover in
London rose by 2% in September to 37.1 million ounces ( 1154 tonnes ) , the highest level this year.' In isolation that
figure may not mean much, but when you remember that annual new mine production of gold is about 2500 tonnes a
year, it means that total production of all the world's mines is sufficient to keep the market supplied for only about two
and a half days ( yes, days ) of trading in the whole year.

Alchemists tried to turn base metal into gold. Modern-day rocket scientists seem to have turned it back into paper, or
perhaps just an electronic blip on a screen. But by any measure this is a vast amount of derivatives trading to be
supported on such a small physical base.

Perhaps to get more supply, but more likely just to turn a profit, most of the world's gold producers have been bounced
by the financial community into selling their gold production forward, many on a quite heroic scale - not just Ashanti,
which is now in trouble, but right across the industry.

The counterparties to these deals are financial institutions - some like Chase, which has doubled its position in the gold
derivatives market in the past 18 months, some like Goldman Sachs, and some like Long-Term Capital, the hedge fund
we were led to believe has been looking for safe investments since its debacle last year in Russia.

What caused the turmoil in the market, therefore, was not the decision by the central banks a few weeks ago to stop
selling gold. Rather it was their decision to stop lending gold that caused the huge rise in price and, of course, has left a
large number of those short of the metal with no mechanism to deliver on their commitments.

It is also increasingly clear that this problem is not going to go away and runs a lot deeper than any of the authorities are
prepared to admit in public. These shenanigans have devastated the gold producers. There are also several financial
institutions rapidly coming to wish they had never heard of the metal.

http://www.thisislondon.co.uk/html/news.html
select Business Day--City Opinion

Number 6 (18157)

Glad you agree, Nov.12 WILL be interesting.

Invisible Hand (18161)
Roark (18163)
Megatron (18187)

Did not say Nov.12 will be the end of 'paper gold', "..should be pivotal...the notion....I believe..."

From 2:30pm to 4:30 eastern Nov.12 and of course re-opening of markets apres week-end.

I must wait for a response from Sir Goldspoon before I elaborate. I require confirmation of
a) what contract expired Wed. Oct. 27.
b) a response from an 'options' guru re: Comex Dec.
contracts.

Wide Awake Club (18183)

Can you expand, agree/disagree?

These deals are obviously the 'crack' of the financial markets. You have to get more and you will steal and lie to get it. Then your out of options and someone pulls your card ie the police, your dealer, or in our case the ECB's

The following is a repost from the 7:57 am post on Kitco the truth evidentally disturbed one of the editors as the story was pulled from all subsequent editions and their web sight.

SlangKing (READ THIS ONE..The lending gap that brought grief to gold....London Evening Standard) ID#274240:
Copyright � 1999 SlangKing/Kitco Inc. All rights reserved
The lending gap that brought grief to gold

by ANTHONY HILTON City Editor
The turmoil in the gold market is a classic City row. Nothing is visible on top but the most furious and bitter dispute rages just below the surface.

Occasionally it becomes more visible, as when yesterday three European gold producers wrote to the Financial Times demanding a statement from the Bank of England on its attitude to gold and the gold market. The Bank typically had nothing in detail to say but it nevertheless is just the latest sign that producers of the yellow metal have become seriously fed up with those who prefer simply to deal in it.

It does appear that the degree of speculation in the gold futures markets had reached quite astonishing levels. The dealing report of the London bullion market for September, for example, says: 'The average net daily clearing turnover in London rose by 2% in September to 37.1 million ounces ( 1154 tonnes ) , the highest level this year.' In isolation that figure may not mean much, but when you remember that annual new mine production of gold is about 2500 tonnes a year, it means that total production of all the world's mines is sufficient to keep the market supplied for only about two and a half days ( yes, days ) of trading in the whole year.

Alchemists tried to turn base metal into gold. Modern-day rocket scientists seem to have turned it back into paper, or perhaps just an electronic blip on a screen. But by any measure this is a vast amount of derivatives trading to be supported on such a small physical base.

Perhaps to get more supply, but more likely just to turn a profit, most of the world's gold producers have been bounced by the financial community into selling their gold production forward, many on a quite heroic scale - not just Ashanti, which is now in trouble, but right across the industry.

The counterparties to these deals are financial institutions - some like Chase, which has doubled its position in the gold derivatives market in the past 18 months, some like Goldman Sachs, and some like Long-Term Capital, the hedge fund we were led to believe has been looking for safe investments since its debacle last year in Russia.

What caused the turmoil in the market, therefore, was not the decision by the central banks a few weeks ago to stop selling gold. Rather it was their decision to stop lending gold that caused the huge rise in price and, of course, has left a large number of those short of the metal with no mechanism to deliver on their commitments.

It is also increasingly clear that this problem is not going to go away and runs a lot deeper than any of the authorities are prepared to admit in public. These shenanigans have devastated the gold producers. There are also several financial institutions rapidly coming to wish they had never heard of the metal.

http://www.thisislondon.co.uk/html/news.html
select Business Day--City Opinion

This all reminds me of the story about the frog in a pot of water that is slowly brought to a boil. No need to panic...the guvment will not betray us! No doubt our freedoms are all still intact....right?

This all reminds me of the story about the frog in a pot of water that is slowly brought to a boil. No need to panic...the guvment will not betray us! No doubt our freedoms are all still intact....right?

There is also a Taiwanese dish where you throw a live fish into boiling soup with a big piece of tofu in it. The fish goes nuts but instead of jumping out of the water he/she burrows into the nice,cool tofu center, where it proceeds to boil to death in a soothing fashion. Ahhh, nice soothing social democracy..

Cannuck Gold:
This whole topic is 100% fundamental to these discussions, yet no one really knows exactly how a monster currency shift like the one we expect will play out. I don't doubt that even FOA would hardly pretend to know all the answers.

However, when major changes like these do come, the details often get worked out in surprising ways. Consider for a moment a thought or two based on the experience of owning and shopping for sailboats over the last 10 years or so.

It seems that there was a boom in sailboat construction in the 1970s. Boats were made in all price ranges. Now, a sailboat is not exactly a planned-obcellence item like an automobile, for example. The sea gives no quarter. Anything intended to survive there must be built solidly. Very solidly! Just in case the weather turns bad and no port is near. So many of those boats made in the 70s are still around. And their value today still reflects, in part, their original price. This is partly because no boat ever built is ever likely to appreciate in value, given that maintenance is such a large factor in a harsh environment like the sea. (Almost everything breaks sooner or later, and often sooner.) But the basic hull and structure of the boat must be built to last. So many of these old boats have struck a fine balance between their old price based on their condition, etc. And they are still much more affordable than a brand-new boat, built with today's high cost of labor. Or even a 10-year-old boat that needs the same equiptment upgrades as the 1970 version.

As we all recall, the 70s was an era of high inflation. Prices varied greatly between the early 70s and the early 80s. And sure enough, those variations are still evident in the boats built back then. It is possible now to buy a well-preserved 35-foot sailboat built in say, 1975 for a fraction of the price of a similar boat built in 1985. Sure, condition is everything. Yet the basic original price is still seen reflected in today's value.

All this is by way of saying that the real-world market place is an imperfectly functioning, ponderous reality. At the same time, the value of gold and the dollar (both commodities of almost perfect liquidity) will correct almost instantly when their moment comes. The ordinary mentality that functions on the street, based as it so often is, on a lifetime of experience, will not react that fast. Before everything reaches equilibrium, there will be many unusual pricing anomalies and the new reality may seem a bit strange at times. You might very well be able to buy a new car with an ounce or two of gold for a while.

Or you may not!

But one thing's for sure: It will be far better to have some gold, than to be without any at all...

Goldspoon (17701)
Tanglewild (17761)
PH in LA (17770)
The Invisible Hand (17909)

The option expiry last Wed. Oct.27 was Australia, sorry about the British OTC confusion. Butler's response to the 'rigging' is interesting. In my post 18152 this am, I am
'using' this information as a possible play for Nov. 12.

Comments?

Thanks for links and info. re: options

how are things with you? with gold still near 20 year lows, the ongoing downward pressure that continues to be applied to this inherently small but pivotal commodity appears unrelenting.ho hum......................

have this right.USAGOLD is where the wisdom is, GOLD EAGLE is for technical analysis, KITCO is the 24-hour party place. What is e-gold? A way for the governments to keep track of us?

you don't think I'mslighting this all important group, GATA is the revolutionaries, Viva la GATA!

Thanks FOA, it will paint a better picture. Will do!

http://www.newaus.com.au/index.htmlScroll to - The Gold Standard-
This clown needs some come-uppance and you can do it w/ a letter to the editor at the bottom of the index page. This author "The Yellow Peril" needs a good old USA Gold 'education' on the Yellow Metal. Don't let this type of crap journalism go unanswered. This is pure anti gold, no-brained journalism at it's best/worst. This paper web/site prides itself on truth, so many will take a ridiculous article like this at face value. FIGHT BACK!!-----YGM.

------------------------------------------------------------------------




Former Oregon
Sheriff Warns Of Possible
Civil War
By Michael E. Cook

Coos County (Oregon) Sheriff, Retired

From Koos News 10-1-99

10-30-99
I have always said what I think and try not to offend too many people in the process. However, this week I am going to get right down to it. If you are easily offended, don't read on. This article will not please you at all. I am writing about what will happen in the future if the government tries to take away our rights and impose laws on "we the people" which are not constitutional. I know many out there fear this very thing as I do. Freedom is a constant battle in this old world of ours. I, like many of you, fought for freedom and our way of life and have many times put it all on the line for that freedom. I, like many of you, will be willing and able to do it again.
�
Now we can get to the point I am trying to make. Those that would take away our rights are using the violence in our schools and other places as a vehicle to promote their agendas. We have already lost our property rights to the endangered species act and other federal laws. Many of you are out of work and Coos County is depressed because of this. Our way of life and the quality of that life has suffered in Coos County. The violence, they tell us, is beyond control as long as you and I have the right to own firearms. We must give up our most important right which, by the way, gives us the ability to protect our other rights and to stop crime and violence in our streets. This is what they try to push down our throats every day.
�
My questions to those who would take that right are: What is an acceptable body count for taking that right? How many Americans are you willing to have killed on both sides of the issue to take that right? What's the value of that right to you? I will tell you this right now; if they try to take firearms from most of the gun owners I know, including me, it will be another civil war here in America. The last one had a high body count and this one will be even higher. There will be law enforcement officers, military personnel and civilians lost in this war. This is one fight I am not looking forward to and I know it will destroy America.
�
The rules of engagement are lost on the civilians - we don't have jet aircraft and smart bombs so we'll have to fight with whatever we can until they kill us. We will fight and we will do the best we can. However, I know the outcome and I'm ready for that also. I'm at peace with my God. The bottom line is we don't need to even have this fight. If the traitors in government and others would stop their treason, or get arrested and punished for it, this would not happen. You and I have let this happen by allowing our media and our government to push this on Americans. We can no longer allow that to happen if we want to avoid a war. That is the bottom line.
�
When Sarah Brady at Handgun Control Inc., can draw down a salary of $277,891.00 a year for her treasonous acts against the second amendment, without standing trial and getting that kind of wage, we will continue to be run over. HCI has an annual budget of $7,624,306. They spend this and more each year to take you rights. The president of the NRA doesn't get a salary. Does this tell you anything?
�
You can make life tough for HCI. Write and ask for a copy of form 990, which they are required by law to provide. The address is:
�
Handgun Control Inc. 1223 Eye Street, N.W., Room 1100 Washington, D.C. 20005
�
They have to pay staff to copy and send you all 13 pages of that report. You need to include an addressed, stamped envelope. We could make them so busy they won't have time to fight.
�
Keep you ear to the ground, your eyes open, and your powder dry. It is coming and it won't be fun.

Howdy Stranger - You mentioned that insiders are still buying their stock because they are in the know about Y2k being a non-event. I'm not so sure. My experience in corporate America is that the further executives are away from the actual work, the less they know. In many ways, the CEO knows the least about what is really going on in his/her organization. Still, they have to make assumptions about what's happening or pretend to know. Also, being the bringer of bad news is one good way to create a career limiting event in many corporate cultures. People avoid upseting their bosses even if it means not being completely candid. As we know from decades of data, software projects are on time until 30 days before the due date. Then, depending the size and scope of the project, they become either late or later or are cancelled all together. It's not unuasual for big software maintainance projects to be 6-12 months late after being on time only 30 days before the due date. Y2k is the most complex software maintainance project in history. There's actually no precident, no historical data to fall back on. We can only extrapolate that is will be later, with more bugs or even more likely to be cancelled in the month of December than any project in history. Cancellation is now called "Fix on Failure" and is already the strategy of tens of millions of companies worldwide. It will be interesting to see how many insiders are buying stock in December, the 30 days when the truth about Y2k status will become more common knowledge at the executive level. Also, there is one other interesting thing that has been noted in surveys of business people. The people with the most education, wealth and position are least likely to think Y2k will be serious. I've noted this in my circle of business associates. I believe that the more one has to lose in a Y2k meltdown, the more the mind filters out information the could upset the apple cart. It seems to be an unconscious defense responce to the unthinkable. I know. The smartest people should have the best idea of what's going to happen. I don't believe that, as a group, they do. Best, DD

what is one to do, I have spoken to the main nz bullion dealer, all the pms they have left are 1kg silver bars @nz335=us171, and THREE kruggerands, THATS IT!!!!!!!!!!!!!
further supply unknown.

http://www.pamp.ch/gold_comp/gg.htmlThanks Tim---

http://www.users.dircon.co.uk/~netking/finan.htmEver since my first days on the internet, I have made regular visits to Colin Seymour's site -- one of my favorites.

Herein, he comments about the lost Telegraph article FOA posted here earlier today and reproduces the article in full.

Thanks, Colin, and keep up the good work. MK

Thanks for the important insights on the Ashanti/Ghana situation. I for one did not know of Rawlings' sympathy for Fidel Castro -- a state of affairs that might perhaps raise the concern of my good friend from the Vienna Woods, CB2. The Rawlings lean worries me since I still feel the situation in Ghana remains ripe for nationalization of the Ashanti complex -- especially if the price resumes its climb. From what I can tell Ashanti isn't off the hook. Not yet. It is doubtful that Ashanti bought peace of mind with this maneuver but simply more time. If the market continues against them, this chapter will re-open.

On your question about the Japan and China and offical gold acquisitions, I'll throw this thought your way:

Given Oriental inscrutability, how do you the acquisitions you ask about are not being made? If you were a shrewd buyer in this environment, would you broadcast your interest for all the world to know?

Sir Canamami, please let me say that your presence here is greatly appreciated not just by me but by many others who recognize a powerful, thoughtful and well-considered contribution to this Table Round.

Lastly, these are important times for the British commonwealth, don't you think?

First, we have the Tories in Britain attempting to expunge its ranks of EMU sympathizers.

Second, we have Canada actually debating whether or not the Canadian dollar is worth keeping.

Third, the Australians will be voting on whether or not to become a Republic.

Any thoughts?

From Don_L. (Comex Guru/Gold-Eagle)

Brought this over to re-inforce previous thoughts, I hope no one minds.
----------------------------------------------------------
COMEX Gold Options Open Interest for Friday Oct 29, 1999 at a NEW RECORD HIGH
(Don_L.) Nov 02, 16:42

Comex total gold call open interest is now at a new record high.

CALL OPTIONS = 611,369 PUT OPTIONS = 182,657
Call volume on Friday was 38,655
Put volume on Friday was 2,162

Looks like the paper gold presses are working overtime now.
----------------------------------------------------------

These are my thoughts, please comment. In a post earlier today (18152), I mentioned the possibility of mayhem Nov.12.

I add the following thoughts;
a) gold rose dramatically from $255 to $330. There have been
serious 'introventions' to bring it back down.
b) with the exception of the May 6 BOE announcement and the
Sept. 26 European CB announcement gold traded day-to-day
within a slow, comfortable non-volatile range of maybe a
buck or two. Now gold has $10 ups and downs very often,
it's behaving like the Dow; volatile.
c) when, given the multitudes of financial/economic info.,
the Dow/Nasdaq/S&P and gold do break, which direction(s)
are they likely to go.
d) the POG, more so lately, has the uncanny knack of finding
a trading range EXACTLY where the 'big boys' want it.
e) the 'introventions' are now becoming so blatantly obvious
press/editorial coverage is beginning.
f) the call contracts that were well 'in the money' at the
end of Sept. are now receding in value. If 'manipulations
cause worthless expiry of these contracts, confidence of
the 'paper' market will diminish. I believe this is one
of the first legs of the FOA scenerio. The ensueing loss
of confidence of 'fiat' gold will begin to cause the
'spread' between paper and physical.
g) the Wed. Oct. 27 Australian expiry is possibly a
pre-amble to Comex Nov.12 expiry.
h) if the POG were to hold or rise by Nov.12, the call
contracts, from what I understand, will be worth a pile
of money and/or will be worth a pile of deliverable,
physical gold.

These thoughts are, again, speculative; I advise nothing.

I personally, am entertaining the thought of buying huge at
12 noon on the 12th, I vision a 'checkmark' shaped graph over the next couple weeks.

Please comment.

Mass Starvation>>>>>>> Mass starvation in the U.S. is very unlikely in the near term. Remember
that the U.S. has enormous food reserves -- enough to last our population
many months, perhaps years, depending (e.g. depending on whether or not we
would be willing to eat whole soybeans and wheat instead of feeding it to
Hogs). It would probably take a year or two for a full-bore famine to get
up a head of steam, even in a severe infrastructure breakdown. On the other
hand, processing and distribution problems could greatly narrow our
customary food options; quality food could become scarce and expensive; any
Food could become expensive; frankly malnutrition or states of very
imperfect nutrition, could become common. <<<<<<

AEL, are we going a little over board? I feel you are scaring people, who are not in the know, needlessly. Before we had computers, the land was tilled, crops were picked, food was shipped and people were fed, even in other countries. That was not ancient history. That was in recent memory and what is your scenario for a complete infrastructure breakdown? I feel you're discounting human ingenuity and co-operation, especially in a crisis situation. There are some things at which we are very good.

By the way, the last numbers I remember reading about our food supply reserves was we were down to 30 days. It use to be 90 days. Now, I'm sure with a little frugality and planning, we can stretch that to 3 or 4 months with ease, which would get us into a new growing season and extra production can be brought online. We'll be fine as long as we don't windup giving some away (political favors), but years? I disagree. Remember, we have a whole industry that produces food supplements (you know, vitamins).

Human natureHi, Scrappy.
My wife says that every time I say something nice it's always followed with a BUT.. Like Thumper, "if you don't have nothing good to says, don't say nothing at all". Well here is your BUT.. KNOW YOUR NEIGHBORS. If the Y2K scenario turns out as you expect, with which I don't agree, your food can also become a source of wealth. I suggest you also buy some ammo just in case you need to dissuade any of your neighbors from doing anything more than "coming to dinner". Unfortunately, human nature is what it is. Protect you and yours, first.

As far as Y2K goes, we have a greater potential for mass starvation if we have a drastic change in our weather. And that could be world wide.

http://www.kitco.com/gold.graph.html
Is the $7.20 dip a couple days ago the Ashanti announcement, the Kwaita gold 'dumping', both,
or neither?

I am watching the silver/gold spread...but I like the straight out silver play better...look at the silver chart...It made a really nice 2 week bottom along a major support line and should bounce to nice levels... Remember that January is silvers favorite month and more highs have been made in January than anyother month of the year!!! I'm looking for an imminent move (this week or next)....we will hope for the best...

Also, watch the dollar, looks like Europe may have a rate hike this week and that would do two things...push the dollar down and force AG to raise interest rates in Nov... If he didn't, the dollar would sink into the bottomless pit!!!

Gold will struggle to resume footing with 290 at support.

MK,

Thank you for your very kind and heartwarming post, but it is I who should be thanking you for maintaining this excellent and educational site, which is also a source of great camaraderie.

I believe it was FOA who made it clear to me that the closing of the gold window in 1971 was a massive default; an insight which is still altering my worldview, economic and otherwise.

I will provide a detailed response later in the week; I'm presently composing a cover letter which may assist me to escape from my "superior" - what is it Rush Limbaugh calls them --- femi-nazis? :-)

til' later.

2nd AmendmentIt's unfornate, but it's been said that the right to commit an act of violence is the ultimate act of freedom. I guess that means living with children going "off the wall" and killing other children.

YGM mentioned that the NYC water and sewer systems are not Y2K compliant but there is on other thing. I have a friend whose friend drives cab in NYC. Apparently at 4 am in the morning he sees black uniformed troops come out into the street to practice picking up bodies of anthrax victims. He's scared shitless...says it freaks him out. (but he hasn't moved yet)
To everyone else, I've been reading the forum for a few weeks and it's great. Thanks so much. And to Scrappy and leigh and others who have prepared....me too. I think that women do worry more about preparing if you generalize. I think it's because women are usually the one who are in charge of feeding and keeping family members healthy. It's part of the division of labor at this time.

DD (11/2/99; 18:30:38MDT - Msg ID:18213)
Stranger/Insider Stock Buying

..... Why was the "Dilbert" comic strip such a runaway success? Why did it resonate deeply and instantaneously with 10s of millions of office workers? How should we interpret Dilbert's boss' stock-buying habits?

Thanks, DD. I have a dial-up networking arrangement with a very large financial firm. Several Saturdays in the last year I have been shut out of the system while it was being tested for y2k compliance. A few months ago, the firm issued a public statement that they were as certain of their own y2k readiness as was reasonably possible.

Well, I should HOPE so. After all, any CEO who is found not to have used all due diligence in addressing y2k will certainly see his stock fall. But he will also lose his job and be in civil court probably for years to come. For this reason, I am inclined to think it facile to suggest that such people are apt to be careless or out of touch under such circumstances.

Another problem I have with y2k fever, is that it seems so alarmist. Some people will tell you that the "sheeple" are paying y2k insufficient heed. Then, almost in the next sentence, they will warn you that the greatest risk of all is the inevitable public alarm. I wonder, who is kidding whom? We all know who is overreacting, and it ain't the "sheeple".

Still, DD, I respect your views, and your well-written remarks. We all try to get through life as best we can. Now we find ourselves up against something truly unprecedented, and I fault no one for relying on his best judgement in this matter. After all, what else is there?

Thanks again for a well-reasoned argument.

2nd Amendmentthe word is unfortunate. Sorry about the spelling.

http://www.gold-eagle.com/gold_digest_98/butler111498.htmlTrader_vic (11/2/99; 20:08:42MDT - Msg ID:18222)
Silver move shows promise

---------------------

Hey Trader

Did you read any of the Ted Butler link above???

Unless things have changed, Silver is having the same problem related to leasing and forward sales....

Being a smaller market...I would expect it plays much smaller in the whole "carry trade game" and therefore draws a bit less attention at the FED than gold.

Here is the most shocking statistic: The number of silver ounces which have been sold short are more than 100% of the above ground stocks. That means that it is absolutely physically impossible to have someone step in with metal to sell enough to bail out shorts....i.e. settlements in a crisis will be made off the market and in cash not in metal.

In the case of gold, even with a massive short position of about 10,000 tons...this is still only about 10% of the worlds gold...thus...in a wierd world...if gold owners can be spooked into believing the value is collapsing, enough might be willing to sell.

IMHO the pure silver play is very interesting.

Poor old Solomon

The proportions did move out of the gold stocks into cash, and now back to the same allocation. If this was maintained through the peak in early October, you should be ahead in both dollars and physical gold holdings.
As a general rule, when the market pushes the allocation out of kilter with the recomendation, the portfolio should be rebalanced. Typically, I would suggest a rebalancing when a 10% departure from recomended levels has ocurred in any of the components, but for puts, which should be rebalanced by selling when in the money, and replaced when the underlying asset has made a move to 15% above the strike.
The key production cost figure I used as $320/oz to meet 1996 demand levels, should be updated. Below is a discussion of demand and supply issues that should give some background to the figures.
Right now, because of increased production required to meet current demand, I believe the appropriate production cost in an operating paper gold market environment would be at least $340, and should be updated to $360 for Q1 next year.
Without a paper gold market, there is no way to predict a price in anything near the ball park. A minimum of $1000-$1200 is likely a severe underestimate. Ultimately, miners will be using the lowest grades mapped out by exploration, this would bring costs up to the 10 - 15 fold level and possibly even 20 fold relative to today's gold price.
Demand has continued to grow, and it seems that there is an assured gold demand for coverage or replacement of existing obligations (the infamous gold short position) on the order of 3000 to 4000 tons per year on top of the industrial and direct investment demand for gold. The industrial portion, which includes jewelry will decline in oz terms, will be maintained in real $ terms. Investment demand, following momentum behavior - should rise to a much higher figure than the current portion supplied by the paper markets and physical markets. Using that figure as a minimum floor of 3500 tons (3/4 of reported annual increase in gold derivatives, from the BIS+500 physical), gold demand would go to 6500 tons (including a 3000 ton per year short covering requirement) and see a diminution of industrial demand that at least maintains $ levels. (One interesting twist is the growing poppularity of 10 kt gold jewelry instead of 14 kt. I still don't know what it means.) If looking at a doubling in price, industrial demand should halve to 1000 tons.
Demand at a price doubling (and closure of the paper gold markets) should come to at least 7500 tons.
On the supply side, initially, high grading will continue and perhaps intensify as hedged miners need to both cover hedges and make use of the "opportunity" before it evaporates. So one should expect one more year of operation at 140%, or perhaps even higher production. Lihir gold mines and other projects begun at $350-400 in the 94-96 periods, have just come on line or will be coming online within the next 3 years. These mines will need to raise money ASAP, for debt and hedge repayment. I think that an increase of 15% in production to 2900 -3000 tons is likely.
Further supply will come from scrap reclamation from old jewelry and some bad coin being dishoarded.
Dishoarding:
Judging from the precedent of the Asian crisis, a two and a half fold price increase caused people affected (Korea, Taiwan, Thailand, Phillipines, Indonesia, Malaysia), who hold about 20000 tons privately, dishoarded under 600 tons (calculated as Y/Y change in imports from WGC gold demand report Q2 99, Aug 99- obviously an overestimate of dishoarding, put at under 400 tons for the region), or 3% of their holdings. A doubling of the price would be expected to provide a global dishoarding of 3% of holdings at that point. This comes to 3000 tons (3% X 104000 tons held privately). Add to supply of 3000 tons, and we have a basic supply of 6000 tons, as a distinct overestimate.
So we still have a slight negative supply balance at double the price, without considering monetary demand, momentum based demand, and the fact that I believe supply is overestimated and demand underestimated. I think dishoarding will actually be significantly less than the figure used. In Indonesia, the local gold price rose 6 fold and 30 fold relative to stocks (the figure used in the previous post was mistaken-local price increases were not double, but far more). The gold price increase resulted in a 100 ton export and thus a less than 200 ton dishoarding from an estimated 5000 ton holding - no more than 4% but no less than 2%.
In any case, meeting the expected 4000 tonne net demand on a sustainable basis requires a return from the current and expected 140%-150% levels of operation vs. design to a level well below the 100%, as the remaining life of the mines is lower, and the production costs disproportionately higher for the remaining reserves. Increasing the production to more than double current sustainable production, is only possible if prices rise to the point of making the mining of the lowest grade ores profitable. Most gold companies do not have sufficient data to even determine what grades are available below the cutoff dictated by the $400 price of the mid 90s. On a best guess bassis, I would estimate this as a reversion to 85% of design production with a 1.1 ratio of ultimate supply growth to gold production cost increase ratios. So the price must rise 90% for eventual production to double. Since high grading would eventually cease, then a further 1.75 fold increase in production costs would be expected down the line. Thus, a double of supply from mines would require a 3.5 fold rise in production costs, and therefore price. This would bring us quickly to the $1000-$1200 range (real $).
Later, new exploration would bring into eventual production new mines, this would take 3 years in a rush, and would raise exploration costs to double or triple their current values.
If the paper markets continue to function under duress, sopping 75% of demand as they do now (quite frankly impossible), then to maintain current production levels would mean elimination of high grading practice, and replacement of reserves (now lagging by more than 60% for over 2 years) on this basis, the production cost would still rise to over $450 (real $). The increase would be gentle and take 2-3 years as long as demand is steady, and devoid of short covering spikes (again unlikely).
The common figure of $270 was enough to cover less than 75% of production, to maintain the 25% of production that is above this figure further into the future would mean a cost of $320, which is above 95% of production including high grading practices.
Straight lining to $450 over a 3 year period from the early 99 figure of $320 we would have a $363 for next year.
In the event of the paper market closing, the figures change completely and a $1000 to $1200 figure within the next 2 years is probably an underestimate, since the wildcard of dishoarding has too little data to provide certainty. Straightlining this figure is useless, since the breakdown of the paper market would be an overnight event and would likely take down some of the gold production with it into legal limbo and windfall taxation, and the momentum driven demand would be overwhelming, though I have no clue how far it would go.
A little note on the relationship of supply to production costs. I like to get a feel for magnitudes using a factor of production increase to costs increase (both in % terms). For current mines this is close to 1, but above 1 initially, and below 1 as significant new production comes online.
Since gold production costs rise with production volumes (demand) and historical depletion of mines, there is strong likelyhood that the flattening out of increases in gold tonnage as grades go down from the 6-11 g/t in current profitable underground mining operations to the 4-6 g/t range, there will not be a significant increase in production but with a rise in costs to process this lower grade ore so that supply grows more slowly than production costs (at a factor of 0.9) and the magnitude of added production recedes to a factor of 0.5 relative to cost growth. Surface ores that are mineable today at 1.5 g/t add considerable tonnage to potential production, by a factor of 1.1 to price as grades go down to 0.7 g/t. (double production costs). As more demand is met, 0.3 g/t grades are approached, doubling production costs again but providing only a 50% increase in potential production. Thus production to cost ratios are 0.75
To reiterate, if the pattern of SE Asia holds, then the rise of prices 5 fold and the rise of prices 2 fold do not cause greatly different rates of dishoarding. The normal rates of spending out of investment profits is about 3-5% (Fed estimates). Applying this figure, one has 1.5% to 2.5% dishoarding for a double in prices, and 2.4% to 4% in the case of a 5 fold price rise. This is consistent with the experience of Indonesia and SE Asia.
One item not considered yet, is real increases in input costs, particularly in heavy equipment and energy, on the one hand and labor on the other. Though labor costs would lag because of heavy unemployment in the sector, capital goods and energy have started to rise and are likely to continue doing so. For now, I leave this one open.

An intermediate between the paper market closure and its continued operation as it is now is imaginable, though it requires the markets to act unnaturally. With direction and firm control from CBs, their willingness to print money (offer free currency settled calls) and cooperation among producers and bullion bankers, the system can be allowed to slowly whither over the next 5-8 years as prices rise to the point of reducing industrial demand while allowing for increased supply to cover the existing short positions as well as a slower momentum demand. To do this, so much has to be coordinated, that it would be a (very) long shot. It would be open to abuse, because the knowledge of future direction would put the market into either defesive position (as it is in now, digging its own grave) or aggressive buying to reduce future costs of covering current shorts. In this case, expect no significant dishoarding. Price targets can not be projected because the grades necessary to provide this kind of demand without dishoarding cushioning supply deficits is way too low to have any reports on it at all, in the 0.1 to 0.2 g/ton surface, and 1-2 g/ton underground range. Costs would likely grow to 10-15 fold current levels by the time the halfway point of the short covering is met.
Even if a significant portion of gold loans are defaulted, there would still be too much of a demand to avoid this kind of price increase.

Davidson and Reese-Mogg predict that the growth of the internet and transition to independent intellectual/information service providers from current corporate structures will make necessary an anonymous and government free trade settlement system. This system would have to be based on gold. To provide liquidity to this kind of system, gold production must rise well beyond current industrial and investment demand. It can't do so without the rise of price into the 10-15 fold area. Even if silver and the PGMs are thrown in, there would still be no way to avoid this kind of production cost increase in gold.

On the road to $30k, $40k? who knows?

Ari - read your 'Golden Emotions' post from yesterday this evening. Good words. Often one needs to step back and think/re-think things alittle to put them back into perspective. [The 'worlds' news and events can make one feel uncomfortable about a conservative position one has taken in life.] Your reflections are wise. Thank you for sharing your sitting room. It's always nice to share thoughts will, what seems like, an old friend. I too have taken a 'dollar cost averaging' approach to gold and let's face it, the more dips, the low the avearge cost of ones' holdings.

ORO

Just noticing that the great final paragraph deserves to come to the top...

---

Davidson and Reese-Mogg predict that the growth of the internet and transition to independent intellectual/information service providers from current corporate structures will make necessary an anonymous and government free trade settlement system. This system would have to be based on gold. To provide liquidity to this kind of system, gold production must rise well beyond current industrial and investment demand. It can't do so without the rise of price into the 10-15 fold area. Even if silver and the PGMs are thrown in, there would still be no way to avoid this kind of production cost increase in gold.


----

Short translation....if gold were to reemerge to serve a global "monetary function", significant amounts would need to be freed up to put into circulation (you make a good case that the production cannot ramp up fast enough).

Question: to what extent do you believe that the dis-hoarding in Asia was not profit taking but rather forced sales of gold to cover margin calls and other debt payments?

Poor old Solomon

Clipped from Y2k Newswire
ARE YOU PREPARED TO BE WRONG ABOUT Y2K?
Y2K Newswire is prepared to be wrong about Y2K. In fact, we are praying we're wrong about it.

Are you ready to be wrong about Y2K? This was mentioned in an e-mail to Dr. Gary North, and it makes sense: if the people who prepared for Y2K end up being incorrect, they have extra food and water. No harm done.

But if the people who didn't prepare for Y2K are wrong, they're rolling the dice on their personal finances (and, certainly, their personal safety)

Clearly, those who refuse to prepare are putting all their eggs in one basket: the "Y2K is no big deal" basket.

------YGM.

***Put the precautions in the basket first then cover them up w/ a quilt of "Satisfaction, Peace of Mind and Hope."

*Satisfaction - That you did something to prepare for this coming uncertainty-----

*Peace of mind - That you will be able to sustain your family if need be-----

*Hope - That you will never need to uncover the basket-----

Test

DD (11/2/99; 18:30:38MDT - Msg ID:18213)
Stranger/Insider Stock Buying

Hey DD

I have spent an average of 1-2 hours per night for the last 18 months on the internet reading the y2k things....why?....because the whole story is at once so compelling and so wierd...the more one digs, the more the opions differ. There is also an incredible resistance to believe it...even after thousands of documents.

99% of the population has only had y2k like a sound bite....

With corporate brass it might be closer to 2-3% who really understand it...

The insiders who sold out, did it quietly, and moved out of town...

Also, most managers believe that their company could go up in a down market....

Poor old Solomon

this whole 'stocking up' thing,Is quite a touchy subject for many. I would like to state, that I am not expecting anything at y2k. I have thoughts about what COULD happen, and they run the gamut.
Personally, the worlds' economic outlook, as discussed here, is just as real and likely a cause for concern, in my world.
From what I have read, people were low on food in the 30's. They went without things like glasses, medical care, and ate a lot of biscuits and gravy.
From what I have been reading here, it sure seems like we are all in for some rough economic times. Food would be a good thing to have plenty of.
Just a thought. If 'they' are un-winding the paper gold markets and the over-valued stock markets, and if in the process, hope to 'flush out' as much gold as possible, and if this is going to take several years, and if 'they' really are able to control the POG as well as they seem to be able to do, how much gold fo you think they'd get out of very hungry Americans, who are not used to 'doing without', AT ALL? (And who have who knows how amny gold trinkets accumulated over the years?) I know, from the ORO post, that there wasn't a lot flushed out via increased prices in other countries. What if they tried to do it via hunger, thus expediting their 'unwinding' agenda, and getting lots of gold to put into the new monetary system?
(No, I'm not feeling paranoid tonight, I just have a good imagination)

Could you elaborate on your child killer thought? Do you think only the govt should have the guns?

http://www.newaus.com.au/econ140gold.htmlFrom an article purporting to understand why the price of gold has fallen.

"In other words gold has lost about 95 per cent of it's real value in twenty years. So much for gold being a store of value in an inflationary world. Why has this happened? Because every mining company on earth has employed teams of industrial chemists to lower the cost of production. Old mines have been reworked and heaps of gold mine spoil reprocessed using more productive methods. At the same time the steady decline in price has encouraged long term holders to sell. Nobody but a madman would hold on to something which is so obviously going down in value."

----

First the author uses the nominal dollar price as a measurement of real value, when the whole idea of an inflation hedge is to compare relative values.

Then, although it is true that mining technology has improved, he neglects to point out that only the highest grade deposits can be mined for a profit.

Then he thinks that "selling" is being done by long term holders...but isn't most of the selling being done by people who have borrowed gold...call it "virtual dis-hoarding".

Poor guy, got three things wrong in one paragraph...but it is good coffee table news.

Poor old Solomon

---------------

We'll start with an interesting look at one of our "Five Horsemen" of the dollar's apocalypse. With less than two months remaining in the year, Y2K is sure to assert itself on the national psyche. Yet despite the approach of the Y2K "proving ground," its seems a bit ironic that the Boulder County Y2K Community Preparedness group intends to disband by mid-November, as reported by the Rocky Mountain News. Kathy Garcia, the group's executive director, said they will run out of money by November 15, but also that the volunteers with the community preparedness group also want to move out of the public spotlight. Ms. Garcia said, "We don't want to be targets for people's anger if there are problems. We don't want to be accused -- even though we've been teaching preparedness for months -- of inciting people into panic buying." Certainly not a radical group, most of their requests for assistance have come from churches and senior centers, and their focus has been planning and offering advice on stocking up with the right kinds of nonperishable food items, storing water, filling necessary medications, etc. Importantly, the Boulder County group is encouraging homeowners to acquire their supplies early (such as now) in order to lessen any complications of panic buying in late December. Some volunteers have been feeling spent after months of speaking to dwindling audiences, and Y2K watchdogs from around the country complained of a reluctance by local governments to encourage preparedness. Karen Kos, a volunteer with the Boulder County Group said, "To some degree, everyone is experiencing some burnout because the message from the federal government, the media and everywhere else is: 'Don't worry, there are no problems.'"

And on the topic of computer glitches, here's a small scale nightmare scenario that is currently playing out in Humboldt County California according to the Eureka, CA [Hey, didn't they get that name from an early gold discovery?] Times-Standard news. It seems that a computer glitch caused about 150 Social Security recipients to get smaller-than-usual checks. Here's the good news. Get this...
Ernie Messerly, assistant district manager for the Social Security Administration's Eureka office, said, "The agency is working feverishly ... to get the checks reissued just as soon as they can." He wasn't sure how soon that might be, and officials at the Eureka office also weren't sure who the 150 people are -- that office doesn't have a list of people who are enrolled in the county-run services program. He said the local office won't be reimbursing the recipients. The check-issuing agency will have that list. The county Social Services Department will send letters to the affected people, and if necessary, they would be able to show those letters to landlords or other creditors. The county Social Services Director could not reached for comment. Humboldt Bank officials didn't know how many of their customers will be affected, but their electronic services representative said the bank is working on it. The bank's systems coordinator said if a customer needs the money and can verify the regular payment amount, the bank would agree to advance the funds in the grand spirit of rallying around the problem. TownCrier's bottom line: Can you imagine if such a scene played out on a larger scale? What an endless paper chase, aggrevated by additional downed systems. You can't set a brick upon a brick unless the first brick is there.

Moving on to the financial markets, the DOW seems to still be convalescing on this second day since its face lift. It lost nearly 200 points from its midday highs to end with a daily loss of 67 points (-0.63%) on brisk NYSE trade that exceeded 900 million shares (OTC trade was near 1.25 billion). Advancers beat decliners 1,652 to 1,348, while new 52-week lows beat new highs 82 to 69 on the Big Board.

Nasdaq Composite Index reached another all time high, and though investors were determined to see this index close above the psychological 3000 threshold, their best efforts today could only keep it there through mid-day. An afternoon sell off brought it back to settle at 2981.63, up nearly 14 points (+0.47%).

In bonds, traders attributed the half-point gain of the 30-Yr Bond (now at 6.136%) to short covering and also to a collective sigh of relief that Fed Chairman Alan Greenspan stuck to his topic of mortgage financing in his speech today, and gave no market warnings or hints as to FOMC leanings. On that note, Wall Street investment bank J.P. Morgan said they've revised their expectations that they had forecast just a few days ago in a poll conducted by Reuters. They now expect the key fed funds rate to be raised to 6.0% by the end of the first half of 2000, up an extra 0.25% over the figure they provided for last Friday's poll. The Fed's current target rate for Fed funds is 5.25%. In explaining the extra quarter-point in their new forecast, J.P. Morgan economist James O'Sullivan said, "Global growth is accelerating and that has implications for commodity prices. Yesterday's NAPM (survey) shows no sign of any slowing in fourth quarter."

GOLD

"Calling Sherlock Holmes, calling Sherlock Holmes...report to duty at once, please." In gold today we have The Case of the Vanishing News. An article entitled "The lending gap that brought grief to gold" by Anthony Hilton, City Editor, briefly appeared and then was summarily pulled from today's News & City section of the "London Evening Standard Online--This is London." The rumor mill suggests that the story was "too hot to handle" in regard to the lengths at which it laid out matter-of-factly for Main Street readers the same info that is regularly discussed here at the Forum. For instance, this except is from a copy of the article taken before it was stripped from their website edition of today's news:
--------------
"It does appear that the degree of speculation in the gold futures markets had reached quite astonishing levels. The dealing report of the London bullion market for September, for example, says: 'The average net daily clearing turnover in London rose by 2% in September to 37.1 million ounces ( 1154 tonnes ) , the highest level this year.' In isolation that figure may not mean much, but when you remember that annual new mine production of gold is about 2500 tonnes a year, it means that total production of all the world's mines is sufficient to keep the market supplied for only about two and a half days ( yes, days ) of trading in the whole year.

Alchemists tried to turn base metal into gold. Modern-day rocket scientists seem to have turned it back into paper, or perhaps just an electronic blip on a screen. But by any measure this is a vast amount of derivatives trading to be supported on such a small physical base.
...
What caused the turmoil in the market, therefore, was not the decision by the central banks a few weeks ago to stop selling gold. Rather it was their decision to stop lending gold that caused the huge rise in price and, of course, has left a large number of those short of the metal with no mechanism to deliver on their commitments.

It is also increasingly clear that this problem is not going to go away and runs a lot deeper than any of the authorities are prepared to admit in public. These shenanigans have devastated the gold producers. There are also several financial institutions rapidly coming to wish they had never heard of the metal."
__________________________

You can easily see for yourself that there is nothing there that is news to visitors to this Forum, and is a good example of the mass media's disingenuous efforts to bring the news to the people. They only bring the news that favors the agenda of the owner...driven by the profits from advertising, which in turn is fueled by the maintenance of a bubble currency propping up a bubble stock market and bubble economy.

And keep in mind that City Editor Anthony Hilton is no fly-by-night flake reporter. In an earlier October 14th opinion piece entitled "The gold gambit that brought on a nightmare," Mr. Hilton writes: "Ask central bankers these days what they are there for and they will say it is to avoid systemic risk...It is all the more ironic, therefore, that these same central bankers seem to have created a major systemic problem with their action two weeks ago...[TownCrier's note: this is the Washington Agreement--see http://www.usagold.com/NewGoldMarket.html ]...What the bankers failed to appreciate was that after years of decline a whole industry had built up with speculators selling gold they did not own in order to profit from further declines. So when the price reversed overnight, huge numbers of people were caught short. The result was a surge in price that has caused such instability that some long-established mines have been effectively forced out of business....Nevertheless, it seems likely that some firms are in a dreadful mess. The central bankers have unwittingly set off their greatest nightmare. The abrupt reversal in the price of gold poses, if not a systemic risk, something uncomfortably close to it for a lot of firms."

That full article, we're happy to report, is still online in the London Evening Standard archives. The Evening Standard did have some additional gold news to offer, and was likely the inspiration for Mr. Hilton's well-voiced opinion. You may recall that some aggrieved miners (Peter Hambro of Mines d'Or de Salsigne, Chris von Christierson of Rio Narcea Gold Mines and John Morris of Gold Mines of Sardinia) yesterday utilized the letters page of the Financial Times to squeeze a response from the Bank of England on marketwide rumors and allegations that there have been "official efforts to affect the price in order to rescue the follies of one group or another." Not surprisingly, a Bank spokesman brushed aside the allegations, saying, "The Bank is doing nothing unusual or out of the ordinary in its gold leasing operations." In further support of that position, the spokesman cited the fact that the Bank of England is a signatory to the Washington Agreement which capped disposals and "expressly ruled out the expansion of gold leasing," as reported by the Evening Standard. The Bank spokesman also added that the Bank did not deal in the gold futures and options market. So there you have it. Some fluff news for the masses, and some suppressed opinion that should reach the masses that are not already visitors to USAGOLD.com. My hat is off to all of our knowledgable knights and ladies!

In other gold news, the prominent gold market consultants CPM Group (no relation to Centennial Precious Metals) released their 1999 Gold Survey today. Reuters reports that CPM Group sees gold in a strong uptrend after a significant shift in sentiment that has recently occurred. CPM cites early evidence that pre-dates even the September 26 Washington Agreement that the tide had indeed turned. They write in their Gold Survey that this most recent price weakness which brought gold bullion below $290 this week may be "viewed as an opportunity for fresh long buying, as well as for some shorts to unwind some of their positions. In other words, it would be expected to be short-lived. Prices are ultimately expected to stablize around the $315-$320 level, before heading higher." At a seminar presenting the report, CPM research director Jeffrey Christian said,
"Technically based players will continue to be the opportunists they always have been. But going forward the opportunities are more likely to be on the long side than the short side...They will still short the market but their shorts will probably be shorter term and smaller than they have been."
+
Though not specifically reported by Reuters, The Tower has heard through the grapevine that the report verifies that many options traders are losing their jobs on Wall Street over this gold trading debacle now unfolding. As interesting as the Ashanti and Cambior developments have been under the media glare, the real event is that the carry trade and options/derivatives game will be closed down by upper management due to the new realization for their potential to unlease such sudden and destructive forces.

We received a question a few days ago in regard to the European Central Bank and their gold reserves, asking how a report could show their gold reserves as unchanged if in fact they are marking the reserves to market value. You see, it's all about timing. Today's news is a chance to revisit the topic that we answered when the question was originally posed. The ECB issues a weekly financial statement, but only revalues their gold reserves once per quarter. If, as would be expected, they don't deplete (or add to, for that matter) their gold inventory, there will be many reports issued within each quarter proclaiming that their gold assets have remained unchanged. For example, here's a brief report provided by Bridge News...
Frankfurt--Nov 2--Net foreign currency assets registered by the European
Central Bank System fell 100 million euros to 236.5 billion euros on Oct 29,
compared with last week's 236.6 billion euros. Total gold assets were unchanged
at 114.988 billion euros on Oct 29, the ECB said today in its weekly financial
statement.

Spot price on gold was last quoted in New York up $1.00 to $290.50, and we'll now look in on the derivative price drivers to see why...

NY Precious Metals Review: Dec gold up 90c, after Mon selloff
By Melanie Lovatt, Bridge News
New York--Nov 2--COMEX Dec gold futures settled up 90 cents at $292.40
per ounce after an inside day's trading. Gold managed to edge higher on a
limited amount of short-covering after Monday's $8.80, 2.9%, slip.
Traders said that the gold market remained quiet after Monday's
action, with one noting that it "appeared to be settling back into a
range" after the shakeout.

Lease rates continued to say low, with 1-month quoted at around 0.85%,
compared to Monday's 0.75% and down on last week's levels of 0.90-1.5%.
"The markets are stabilizing here and it's very quiet," said Lennie
Kaplan, chief bullion dealer at LFG Bullion Services.
He said that today's CPM Group report on gold was "not good for the
market" because it shows "production is rising faster than demand." CPM
said that total new supply of gold will reach 105.6 million ounces this
year, which is up 1.1% from 104.4 million ounces last year.
A larger 2.5% increase to 108.2 million ounces is expected for 2000,
with fabrication demand dropping 2.7% this year before recovering in 2000.

[Hey there, Mr. Kaplan...before you get too depressed on the topic of physical production versus physical supply, just take a long second look at the report above in which Anthony Hilton reviews the MOUNTAIN of paper supply that dwarfs the physical market. The Tower thinks the world could easy accomodate those additional, pesky ounces from expanded production. ;-) ]
***
(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.

Over at the COMEX gold depositories, the Eligible stocks received a much-needed injection of 40,730 ounces, bring the Eligible inventory up to 131,025 ounces, while the Registered inventory stands at 783,905 ounces.

Open interest on COMEX gold futures in the near months fell yesterday, with 12 of the previous 14 open November contracts being settled, leaving two. Delivery intentions were announced on one of these Nov contracts this morning. YAWN. As we've said before, November is an off-month for gold futures, and all the action is on December futures, where 100,747 remained in open interest after 3,497 were settled in yesterday's trading action of approximately 35,000 postions changing hands.

We started with one Horseman, we'll end with another. Early estimates of OPEC compliance with their self-imposed production cuts indicate that production has increased by 300,000 bpd in October, over the September level of 26.3-million bpd. Bridge News was told by "a source familiar with the data released by Geneva-based oil research firm PetroLogistics" that Iraq accounted for up to 110,000 bpd of the production increase, Nigeria produced an extra 100,000 bpd, and the remaining 90,000 bpd rise spread among the other 9 OPEC countries. Surprisingly, the crude futures traders took this news much better than they took the news last month of September's extra 60,000 bpd. December crude fell only 12c in price to $22.39. However, December crude nearly regained today's loss in early overnight Access trade when American Petroleum Institute data was released to show a 1.376 million barrel rise in crude stockpiles, in line with expectations. This data was coupled with surprisingly sharp declines of 3.790 million barrels of gasoline inventory and 1.923 million in distillate inventories.

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

Good afternoon all.
Had a letter from my futures broker today (One of the biggest in Australasia with strong USA connections) saying that all margins would be hiked up by 50% in the period December 17th through to January 7th.
Looks like they're preparing for a few storms (or a meltdown) huh? . . . "The wise man built his house upon the rock"('ears to hear?')

My old man and grandpappy used to tell me that during the Great Depression that they didn't have much. They lived on a farm/ranch and got by, but needed everything to sell for what little cash they could get. There is an old family tale that was reflected in a song by "DR. Hook" that I believe was called the "Soup Stone". It always resonated with me since I used to see a large rounded stone hanging from a tether in my Grandmothers kitchen. When my father and his siblings were children, my grandmother would put the "soup stone" or a "Flavor Bone" into a pot of soup with a few spices, potatoes, a few greens (verdugadas), and maybe some meat scraps. The stone or bone was placed into the pot of soup for the childrens sake, to pretend that there was some magical effect that would transform the soup into a flavorful concoction. Since this would sometimes be the only meal of the day, and sometimes the same day after day, the "Soup Stone" became sort of a family heirloom of sorts. I don't know what ever become of the "Soup Stone" or the "Flaver Bone" that hung on the wall, but I know that times were obviously tough. I wonder how people would fare in todays world after having life so good for so long? If Y2K or any disaster were to be nearly as tough, I wonder how many would tough it out. This song will always be in my collection because it is a reminder of the type of people who were my forebearers. Their struggle through hard times, and the lives that they lived show me that people will do whatever is necessary to survive. I would only suggest that one should prepare for any possible scenario whether it be a natural disaster or economic calamity. Just a thought provoked by your last post. Take Care.

The gold holdings of a margin squeezed indebted city dweller would be hidden outside the reach of the creditors. It is more likely to have been set up with the country cousin.
The only ones liquidiating for reasons of indebted were a slim minority of official holders and some altruistic mothers in Korea giving away the obviously failed golden turtle good luck charms.

Scrappy (11/2/99; 21:33:06MDT - Msg ID:18236)
Seems to me,
---
If 'they' are un-winding the paper gold markets and the over-valued stock markets, and if in the process, hope to 'flush out' as much gold as possible, and if this is going to take several years,
---
Hey Scrappy

Have you considered this scenario? Y2K panic causes major financial shifts (large volatility in many markets) and real computer glitches cause serious default...the result a worldwide collective margin call...hundreds of thousands of emergency meetings (like the ones around Ashanti) lasting months on months, as asset values plummet. People hate the dollar, but since it remains the common denominator of default, it is not given the freedom to devalue. Gold, being almost the only asset which all counterparties understand, is brought out into the open, changing hands over and over to settle disputes...in a dramatically defated system...the POG in dollars is also falling.

Poor old Solomon

ORO (11/2/99; 21:58:03MDT - Msg ID:18242)
Wise old Solomon Weaver
The gold holdings of a margin squeezed indebted city dweller would be hidden outside the reach of the creditors. It is more likely to have been set up with the country cousin.
The only ones liquidiating for reasons of indebted were a slim minority of official holders and some altruistic mothers in Korea giving away the obviously failed golden turtle good luck charms.

----

ORO - you are certainly much wiser...but will you consider a counter concept...?

Massive borrowing in dollars to finance thousands of speculative real estate and manufacturing businesses, followed by short selling attacks on local currency cause serious cash flow problems as debt repayment becomes rapidly higher in local currency.

As tens of thousands of people who had jobs on those construction sites and in those new businesses (many of whom may have also borrowed to buy a car or an apartment) lose jobs, and the bank holidays cause problems for all...those who hold gold trinkets sell them off to pay monthly expences.

Poor old Solomon

"We must beware of committing the fatally common fallacy of assuming that all we see is all there is to see."
--�Warren�Leadbeater

"I do not feel obliged to believe that the same God who has endowed us with sense, reason, and intellect has intended us to forego their use."
--�Galileo�Galilei

"It raineth on the just and on the unjust, likewise shineth the sun."
--�Anonymous

"It did not rain when Noah built his Ark."
--�Loesje

"Being right too soon is socially unacceptable."
--�Robert�A.�Heinlein

"No one can make you feel inferior without your consent."
--�Eleanor�Roosevelt

"You can waste a whole lifetime trying to be what you think is expected of you but you'll never be free"
--�Chris�Rea

And the creed for the knights and ladies of the Round Table when facing the simple and weary world:
"The function of genius is not to give new answers, but to pose new questions --which time and mediocrity can solve."
--�Hugh�Trevor-Roper

"Gold. Get you some."
-- Aristotle

There have been quite a lot of posts recently regarding Y2K and the concern that many of you have regarding the continuing supply of the necessities of life. There are those who are not taking anything for granted and are preparing for the worst case scenario and there are those who think there has been a lot of scaremongering and are not planning to do much at all. Having been involved with quite a number of Y2K projects, either directly or indirectly through my computer consulting business, I thought I'd give my 2 cents worth.

All the major financial institutions and clearing houses, insurance companies and utilities here in Ontario, Canada are compliant. There is virtually no possibility of a power outage (other than the usual occasional ones - we had a 10 minute one yesterday) because virtually all power here is generated from water, natural gas or nuclear generators (with the occasional oil and coal generator thrown in) and those resource suppliers are compliant. Banks will be able to supply cash and local operations will be normal though I wouldn't say that for international banking to some countries, or even to smaller banks in the US. Rail transportation systems, including the subway and rapid transit system, are compliant. In fact I would go so far as to say that I know of no major institution here in Canada (except government and who cares anyway) that is not compliant.

However, I would be concerned about small and middle sized companies. Most will be compliant but there are others who don't have the budget to fix the problems and plan to work around them when they occur. So I'm not saying we shouldn't be concerned but I am saying that the problems that do occur will very likely be very localised. We've taken delivery of a bush cord of wood (though I always do before winter anyway, this year I got it in the Spring so it would be nice and dry), we'll stock up on a few more non-perishable groceries than usual, I got an extra propane tank for the barbeque (I needed one anyway) and we'll probably have a bit more cash on hand than usual. And that's probably as much as we'll do. Those who go to greater lengths I'm sure will sleep better at night for it, and the extra supplies will get used up eventually.

Don't worry too much, though, because it's really not as bad as some would have you think. A lot of them just want to sell you stuff that you don't need and will never use.

CG

The imposition of starvation would cause some to sell their gold. But it would be done sparingly - you don't let go of the only good thing going for you. City dwellers in SE Asia have little of it, but also little debt (debt is for rich folks). They also have something else, committed extended famillies to help them out and provide a place to live in the country.

Aristotle (11/2/99; 2:02:33MDT - Msg ID:18148)
A semi-rhetorical line of questioning to all

Hey Aristotle, already got the oil and vinegar and some nice dry red wine as well. The rice is for the neighbors...we get to have the basmati version at $12 per bag (semi numismatic rice).

I inquired about getting a firewood futures market going but balked at the idea of cutting 1.5 million cords to serve as storehouse for the exchange. Might be easier to try and corner the market on woodstoves anyway.

Poor old Solomon

>THE ANT AND THE GRASSHOPPER
>>
>> >> > > > ORIGINAL VERSION
>> >> > > > -----------------------------
>> >> > > > The ant works hard in the withering heat all summer long,
>> building his
>> >> > > > house and laying up supplies for the winter. The grasshopper
>> thinks he's
>> >> > > > a fool and laughs and dances and plays the summer away.
>> >> > > >
>> >> > > > Come winter, the ant is warm and well fed. The grasshopper has
>> no food or
>> >> > > > shelter so he dies out in the cold.
>>
>> >> > > > -----------------------------------------------
>> >> > > > MODERN AMERICAN VERSION
>> >> > > > -----------------------------------------------
>> >> > > > The ant works hard in the withering heat all summer long,
>> building his house and laying up supplies for the winter. The
>grasshopper
>> thinks he's a fool and laughs and dances and plays the summer away.
>> >> > > >
>> >> > > > Come winter, the shivering grasshopper calls a press
>conference
>> and demands to know why the ant should be allowed to be warm and
>> well fed while others are cold and starving. CBS, NBC and ABC show up
>to
>> provide pictures of the shivering grasshopper next to video of the ant
>> in his comfortable home with a table filled with food.
>> >> > > >
>> America is stunned by the sharp contrast. How can it be that,
>> in a country of such wealth, this poor grasshopper is allowed to
>> suffer so? A representative of the NAGB (The national association of
>> green
>> bugs) shows up on Nightline and charges the ant with green bias, and
>> makes the case that the grasshopper is the victim of 30 million years
>of
>> greenism.
>> >> > > >
>> >> > > > Kermit the Frog appears on Oprah with the grasshopper, and
>> everybody cries when he sings "It's not easy being green." Bill and
>> Hillary Clinton make a special guest appearance on the CBS
>> Evening News to tell a concerned Dan Rather that they will
>> do everything they can for the grasshopper who has
>> been denied the prosperity he deserves by those who benefited
>> unfairly during the Reagan summers. Richard Gephardt exclaims in an
>> interview with Peter Jennings that the ant has gotten rich
>> off the back of the grasshopper, and calls for an immediate tax
>> hike on the ant to make him pay his "fair share." Finally, the EEOC
>> drafts the "Economic Equity and Anti-Greenism Act," retroactive to the
>> beginning of the summer.
>> >> > > > The ant is fined for failing to hire a proportionate number of
>> green bugs and, having nothing left to pay his retroactive taxes, his
>home
>> is confiscated by the government. Hillary gets her old law firm to
>> represent the grasshopper in a defamation suit against the ant, and the
>> case is tried before a panel of federal hearing officers that Bill
>> appointed from a list of single-parent welfare moms who can only hear
>> cases on Thursday's between 1:30 and 3:00 PM. The ant loses
>> the case.
>> >> > > > The story ends as we see the grasshopper finishing up the last
>> bits of the ant's food while the government house he's in, which just
>> happens to be the ant's old house, crumbles around him since he doesn't
>> know how to maintain it. The ant has disappeared in the snow. And on
>the
>> TV, which the grasshopper bought by selling most of the ant's food,
>they
>> are showing Bill Clinton standing before a wildly applauding group of
>> Democrats announcing that a new era of "fairness" has dawned
>> in America.

Well done! Brilliant allegory!

AND: Nominated for HOF "On The Lightside"

Your words back in June were the source of my greatest sense of achievement at the Round Table, but now you manage to pull the rug out from under my one shining moment with your recent post. ;-) Let me explain. You said--
------
canamami (11/2/99; 20:09:24MDT - Msg ID:18223)
"MK,
Thank you for your very kind and heartwarming post, but it is I who should be thanking you for maintaining this excellent and educational site, which is also a source of great camaraderie.
I believe it was FOA who made it clear to me that the closing of the gold window in 1971 was a massive default; an insight which is still altering my worldview, economic and otherwise."
------

I had at one time labored over a series of posts that contained these two excerpts:
Upon the 1971 declaration by the United States that redemption of dollars for Gold would be terminated, the entities in receipt of dollars for balance of trade settlements had no difficulty recognizing this as an outright default on payment contracts. The scramble was on to make sense of this new payment system in which the dollar was no longer a THING of value (a small amount of Gold), but was now reduced to a CONCEPT of value; an undefined unit with which the world would denominate the amount of value in contracts for goods and services. The problem ever since has been in coming to terms with the meaning of value for this shifting and undefined unit, and its vulnerability for mismanagement and abuse.
AND:
An overhang of dollars was developing overseas, and while at first the foreigners were reassured that the Gold guarantee of the dollar was solid, as ever more dollars piled up, ever more of them cashed in the dollars for Gold. General de Gaulle summed up the sentiment, saying that America had "an exorbitant privilege" in ownership of the key-currency. By that he meant that the dollars America was able to issue via simple printing carried the same value in trade as the dollars that had to be earned by other nations through meaningful productivity. It quickly became clear that too many claims had been issued on the limited Gold, and President Nixon was prompted to close the Gold exchange window in the face of a certain run on the Treasury. [...snipped out text...] It would seem that America found an efficient means to issue claims on the country in exchange for something that goes up in smoke. Would OPEC own America lock, stock, and barrel? What would OPEC do with all of that cash? And would there be any end to it? How are the poorer countries that must EARN their dollars, as General de Gaulle indicated, going to fund their own oil needs? Banks are the answer. Buy banks, fill banks, and recycle the petrodollars. Oh, and let's not forget Gold. Straight from two ministers of finance, "We would rather keep the oil than have the paper money."

You see, my greatest satisfaction, and feeling of "Mission accomplished" came from your following post--

canamami (6/25/99; 8:06:42MDT - Msg ID:8047)
"...Aristotle. De Gaulle's line about foreigners needing to earn their dollars sums everything up nicely. Also, categorizing Nixon's decision to stop converting dollars to gold in 1971 as a breach of contract also encapsulates everything. Part III particularly was a "shift in the curve" in my economic understanding of the role of gold."

Canamami, ol' friend, if it were ANY other faded memory than this particular one, I'd just let it slide. But when someone tells you that you've helped them to turn an important corner, well, that's what it's all about, isn't it? Other than my own simple enjoyment of participation, your singular comment about the "shift in the curve" was a response unlooked for which raised my early sense of satisfaction to a new level of accomplishment. Truly a kingly gift! I hope you see this had nothing to do with my ego. I was simply preserving a good feeling.

Gold. The gift of Kings. (Can anyone imagine kings swapping fiat currencies? Nope.) ---Aristotle

By the way, has everyone seen the movie "Three Kings" yet? It ranks right up there. Lots of Gold throughout, and a good message is sent by those characters that have the Gold when it was needed to save the day.

Did you write that. Robin say's she got it a while back on a Libertarian newsletter. Speeking for myself, if somthing is posted without any source acknowledgemw]ent, I assume the poster created it.

I just finished my cover letters, flipped back to the Forum, saw your post and I realized I had failed to attribute the gold window 1971 default to our exchange.

100,000 thanks - it was a true "shift in the curve", about which I hope to post later.

Just to ensure that my meaning isn't mistaken, I'm not at all trying to lay my claim on any credit. I'll be the first to say that FOA has earned a Universe of my greatest admiration and respect. I've had to build a new wing on my cranium to house the extra brain-matter I've acquired by reading his wealth of posts.

FOA, you da man! And thanks for the compliment. It's my pleasure to help people in their search for truth and honesty, and Gold is found at the heart of it all.

Gold. Earn you some. ---Aristotle

Aristotle, great words of quoted wisdom from yesteryear in your post #18245 my friend.

"... to follow a path all of ones life without actually finding out where it leads, such is the behaviour of the multitude. Multitudes, mutitudes in the valley of decesion..."

Hi All - As I mentioned in my last post, I believe December will be an interesting month for the computer connected world. People on the inside will know a lot more about the real status of Y2k. The usual media black out will remain in effect so as not to panic the sheeple. But the insiders will begin to do the things that will point to what they really think. I'll look for clues even though "no one can know for sure". I must admit to wanting to get Y2k behind us no matter what it may turn out to be. After over two years up to my neck in this thing, bring down the ball. Best, DD

Peter AsherNo, I did not pen that fable--just passed it on. Sorry, did not know the protocol. I wish I was as clever as the author. I'll watch myself in the future. Got it as an Email from my sister. Not trying to plagiarize, just thought it was funny and apripos.

Peter Asher apropos (gotta reread these things)

http://www.newsmax.com/commentmax/articles/Greg_Hobbs.shtmlAnother reason to own Gold.

http://www.sennholz.com/current.htmlI hope you don't mind that I forwarded it to GATA with another one I found thru a post at Gold Eagle (above)
Among his many accredits and positions Sennholz is an advisor to the Central Fund of Canada. CEF-TSE.
Both articles are worthy of any follower of FOA thoughts.--Regards:YGM.

Thanks To "Jack" at GEGood Find!!!!

First off, thanks to all for this forum. I've been a believer in true value for forever and got lucky in 79-80 for the wrong reasons. The hall of fame archives are absolutely astounding. Thank you especially Aristotle, FOA and Holtzman. You've put substance to my intuive sense and helped me to decide to take steps I've been hesitating to take for 14 months for lack of a credible underpining.

With all the fundamental dynamics that are not part of the media social construction of our common reality, it's often hard to tell the "wacko's" from those who have an independent and cogent bead on reality. The historical refernces add enoumous credibility to the woven fabric of your stories. Thank you for doing the homework and your willingness to share it.

I've been concerned with the stock market bubble based on gvt generated currency, individual debt, and internet wishful thinking. I also believe that the internet is creating a new economic model with lots of dislocations, decreased costs, increased efficiency and productivity. I don't think the world is going to end but I do think we may well be in for quite a rollercoaster ride.

Now to my question. Would someone please run through a concrete example of how/why a company like Barrick or Newmont is at risk with the kind of physical gold they hold in inventory? Please assume virtually total ignorance of hedge accounts, derivatives etc. I'm a fairly quick study but at this point pretty uneducated in these matters.
Thanks in advance for the education.
EZVX

(Please pardon the typo's, I'm dyslexic and without a spell checker in this little message box things get messy)

Last May, we put much hope in the Bilderberg meeting which was held in Portugal.
I think it was at this Table that someone said that a new Bilderberg meeting is starting tomorrow, November 04, 1999.

http://www.y2k-links.com/garynorth/6674.htmThis is from the Yourdon site copied on Scary Gary's site:
" Power_Grid - A Disaster Is Looming in Saudi Arabia, Says American Working on the Y2K Problem There."

Just wondering what you meant in your last post about us putting our faith in the Bilderberg meetings. This group is a bunch of elitist socialists who want to rule the world. Could you explain, please?

The easiest way to look at American Barrick is to think of a very large gold mine that removes about 4 million ounces of gold per year from a very large open pit. They have recently revealed total forward sales of 13 million ounces(410 tonnes) over the next several years. When and exactly at what price is lost in the wonders of averaging always used in this type of CYA reporting. In addition a few weeks ago they decided to tell their shareholders that oh! by the way we also have sold 4 million ounces worth of call options (another 125 tonnes)which means that someone other than Barrick shareholders will benefit on the upside of this amount of their future production should gold rise in price significantly in the future. So in simple terms what you have is a collusion between various groups who stand to benefit from a low gold price(fill in your own list of guilty parties) who had the financial wizards at American Barricks complete cooperation in bring to the market not only the gold produced in a given year but in Barricks case the total of the next four years. Obviously this had a depressing effect on the spot price. This caused more gold mining companies to have to sell their production forward to avoid bankruptcy.Net- net you have a situation were the world spot price has been artificially lowered to a level well below total production cost(not cash cost that they are always talking about,which excludes depreciation and exploration expenses) and the only survivors will be the large gold mines who because of the large forward sales at higher prices will be the only ones left financially able to acquire the unreplacable gold deposits that at the low spot price Barrick et all created are uneconomic. The reason why Barrick is vulnerable now is that their greed has got them into a situation where they probably could not meet their obligations to deliver their gold at superior(higher than the current spot price)prices that they origionally envisioned.Shareholders might be willing to pay management large bonuses when their forward sales give the company $60 per ounce better than spot(even if management directly helped the comparison)but I doubt shareholders will tolerate management when the spread is reversed. Lets see how much bragging you hear from Barricks management when their realized gold sale price is $60 below current spot. You will never hear that because all these managements know the game is up and now they have to buy future production back. Yes that is right, Barrick and their fellow producers not only have to honor their existing forward sales but must enter the physical market to retire their future sales before the other parties also caught short take up all the available physical gold. Well if all the mines sold their near-in production long ago in order to stay alive where does Barrick get the additional supply to close its prior mistakes. In aggregate the gold producers are trapped. The gold they sold long ago went to your wife or mine and is dangling from her ear. So Barricks toast and so are the Central banks who loaned their "surplus gold" to the bullion banks who loaned it to Barrick and made it possible to sell forward something that won't be mined for another four years. In Brief-Barrick sold their shareholders upside in order to lock in a higher price. But now they can't buy it back because 17 million ounces is 500 tonnes about the entire annual production of South Africa, and they are screwed. Couldn't happen to a nicer bunch of guys.

He who sells what isn't hism
Buys it back,or goes to prison.

Jesse Livermore









Anyone who would like to correct any errors in the above explanation,please feel free.

$292.50.

I sent this to the ACLU. I respect their work but find it ironic...well see what you think:

Frankly, I am at a loss as to why the ACLU would be an advocate for Civil Liberties and not even mention the Right to Bear Arms on your Home Page. You suggest bearing of arms is not a Civil Liberty, I strongly disagree. Here is why. I would presume you would be familiar with all significant court cases that have impacted civil rights.
Two recent significant court cases, in my opinion, should change your disregard of Second Amendment issues as being a Civil Right. They were the recent Appellate case U.S. v. Emerson, 6:98-CR-103-C (5th Cir. 1999) and the Supreme Court ruling under United States v. Verdugo-Urquirdez, 110 S. Ct. 3039 (1990). Both find that the Second Amendment is an individual right. Your mission on your web site holds the following:
The mission of the ACLU is to assure that the Bill of Rights -- amendments to the Constitution that guard against unwarranted governmental control -- are preserved for each new generation. To understand the ACLU's purpose, it is important to distinguish between the Constitution and the Bill of Rights. The Constitution itself, whose bicentennial we celebrated in 1987, authorizes the government to act. The Bill of Rights limits that authority.
And the Second Amendment states the following:
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.
As you know, your organization evolved before these two court cases made it clear that the Second Amendment was an individual right. I find it somewhat disturbing to find that you don't consider the Second Amendment an individual right. The irony I find in this is that you can select one group of rights and ignore others yet the taking of one is tantamount to taking of the ones you do care about.
I understand how hard it is to keep up with current court rulings and am glad to have pointed out the above cases and their potential impact on your 'business as usual.�
It is not often that a chance to break an old habit, accepted in the past, but now clarified can be made right. It is to this that I plea for your wisdom and strength of character to do the right thing: support the Constitution of the United States of America. Concerns about the social costs of enforcing the Second Amendment must be outweighed by considering the lengths to which you have gone to uphold other rights in the Constitution. The rights of the Second Amendment should be as zealously guarded as the other individual liberties enshrined in the Bill of Rights.
Justice Scalia said, [even if there would be] "few tears shed if and when the Second Amendment is held to guarantee nothing more than the state National Guard, this would simply show that the Founders were right when they feared that some future generation might wish to abandon liberties that they considered essential, and so sought to protect those liberties in a Bill of Rights. We may tolerate the abridgement of property rights and the elimination of a right to bear arms; but we should not pretend that these are not reductions of rights. Finally, As Professor Ronald Dworkin has argued, what it means to take rights seriously is that one will honor them even when there is significant social cost in doing so. Protecting freedom of speech, the rights of criminal defendants, or any other part of the Bill of Rights has significant costs�criminals going free, oppressed groups having to hear viciously racist speech and so on�consequences which we take for granted in defending the Bill of Rights. The Second Amendment is the most highly violated Civil Right in the United States in which thousands of innocent people have been charged with crimes for merely possessing a weapon because a law infringed their right to bear arms. I would guess that even felons who have been charged with weapons crimes have had their Second Amendment rights violated. Why? Is a felon not allowed the right to freedom of speech, the right to a jury, the right due process? Then why has the ACLU ignored the Second Amendment as an individual right when it is clear from the above cases that it is a civil right and worthy of your support? In view of the recent court rulings above, I urge you citizen to citizen, to reconsider your stance on the Second Amendment and list it on your web site as one of the individual rights in the Bill of Rights and all that means within your organization. Please don't act to oppress our Second Amendment Civil Right by ignoring its validity as an individual right, rather act to support the Constitution of the United States � I hope your duty is now clear. Thank you.

Leigh,
Although at the last Bilderberg meeting there was some garbage like Tony Blair, I understand there are also honest people like George Soros and Roland Leuschel there. Last May, some people at this Table hoped that the meeting would give fresh impetus to the gold price. I was wondering whether anybody still thought that this impetus could be given this time. Or do we really have to wait until Nov. 12? The IVH

http://www.kitco.ca/image/gold.gifFrom the graph, it appears that something very strange happened this morning between 2:30 and 3:00 am New York time to the POG. Does anybody know what happened?

Dear Capella: I was very interested to read your post last night about the practice drills for an anthrax emergency in New York City. Part of the reason I'm doing so much preparing is my fear that there will be terrorist acts or nuclear incidents next year. We live only three hours from New York City. I keep asking myself whether we have enough water, food, clothes, coloring books, homeschool materials, etc. to sustain us if we had to stay indoors and isolated for many months. The world isn't a safe place anymore, and I'm afraid that the United States is going to soon experience the terrors the rest of the world is going through.

previous post should read between 3:30 and 4:00 am, sorry

As far as Newmont Mining and Placer Dome it is the same except to a lesser degree.(I hope)

Dear Leigh, I don't know the organization but I got a junk mail a few days ago from "The American Sentinel" and they are saying they have proof of the readiness of people to carry out those anthrax attacks on 120 major US cities. They offer a years subscription to their newsletter and a booklet on how to survive these attacks, what advance prearations to make, what supplies to have on hand, etc. THey are charging $70 for this. I'm alarmed by what they are saying but not sure whether they are going the sensationalist route to garner subscriptions or what? I've not decided. Their ordering phone number is 800-800-1865. I myself was very concerned by some other forum members link to a site which showed school buses commissioned by out gov't to be painted white with the letters UN painted on the side to transport United Nations troops around the US. Also at the site was a POW camp set of photos, nice shiny barb wire, guard towers etc. It looked like a brand new Nazi death camp. This all scares me and I'm not sure what faith to place in what appears to be a potential for total disaster. Maybe someone else can comment.
and Leigh, what financial plans are you making to keep your wealth through whatever happens. Are you buying gold too? I did.

As for Newmont Mining and Placer Dome it is more of the same except less (I hope).

As for Newmont Mining and Placer Dome they obviously are diffent.(I hope)

As for Newmont Mining and Placer Dome they obviously are diffent.(I hope)

As for Newmont Mining and Placer Dome they obviously are diffent.(I hope)

I'm gonna say what I think is coming, although I am not an economist, and have not completed, as yet, my education at USAGOLD. Please forgive me if I make some mistakes, or over-generalizations.

That there has been a shift in the gold market is certain. The Washington Agreement has served notice on the United States, that it can no longer print up paper money with reckless abandon, and still manipulate the POG to make the dollar look strong. The gold carry trade is either dead, or very, very sick, and is now in its death throws. The shorts are showing their teeth one last time. All this is a precursor to the rise of the Euro.
What that means for the average little investor, may actually be of little signifigance. Major gold sales will happen out of the public markets, and we will be told what was actually paid. Big shorts are very likely to be bailed out by tax dollars, but we will not know when, or if, that occurs. The paper price of gold will continue to be orchestrated to appear nice and low, like nothing is wrong.
Judging from the past, it seems likely that our fine government will do its dirty deeds out of the public eye of scrutiny. Life here in these United States will appear to just be trucking along, and the media will make no mention of any deals to keep the dollar afloat. And for a while, we will be lulled back to sleep, because we can discern no cause for alarm.
But if the rise of the Euro causes a massive devaluation of the US dollar, and the dollar is dumped worldwide, then inflation will set in with a vengeance, that will only be satisfied when all those confetti dollars have come back home to haunt us.
The little guy will "take it" in the wallet, through loss of real earned value, and higher taxes. (Same thing)
Only those in the know will be able to maintain wealth, or gain wealth.
The wrold is basically a pyramid of a power structure, with a few rich and powerful at the top, and a whole mass of serfs at the bottom. Not being an insider usually means that a common person does not have a clue as to why things happen the way they do. But in studying gold, even manipulated as it is, the average person has a window of truth to look through, and a solid place to stand, from which to discern world political events. Someone has said on this Forum that gold is like a truth serum, or a bright shining light in the darkness. A B.S. tester, if you will.
Thanks again to MK, FOA, Another, et al, for sharing your thoughts. Thanks to GATA for daring to jump over the top of the fox hole.
God bless all gold hearts everywhere!

I got that mail as well. My thought is that if this newsletter knew about it, than so does the FBI, and I'm sure a threat has been conveyed to Iraq that a quick a certain retaliation would follw any such biological attack.
That said, I wouldn't mind knowing some of the techniques for survival such attacks.

Anyone know of a good way to go long oil without trading futures (or building a storage facility behind your house)?

Are there small domestic oil companies out there which will be immune from the problems the Saudis look to be facing, or is the problem in the refineries (in which case oil in the ground doesn't help)?

Hi, Capella. Thanks for the tip about the newsletter, but I'm going to pass up the opportunity since these things will either happen or they won't, and I'm already concerned enough without adding more fuel to the fire! This kind of information is also available on the Internet.

As far as preparations, there is only a limited amount I can do since we live in military housing and are scheduled to move away in January. I've bought lots of food, some canned, some in buckets (grains and legumes), and some dried. We have a number of 55-gallon blue drums for water. We have lanterns, an indoor camping stove, and other Y2K stuff, and I've also stocked up on clothes for all of us for years to come. As I said, I've tried to plan for being stuck in the house with the kids for months at a time, so we have many children's books, videos, art supplies, games, and so on. Everyone has snowsuits, down comforters, boots, down vests, and every other warm thing I could think of. About gold -- I cashed in half our mutual fund money and put it into gold (actually, I originally bought a lot of platinum and silver, too, but traded most of it in for gold). It is stored on someone else's property out of state.

I think we're in for terrible times, no matter what Y2K turns out like. As a Christian, I feel that our country is about to be judged in a major way. I imagine we'll see every kind of bad occurrence, from pestilence to dictatorship to threats of war (as well as hyperinflation and sundry other things!). I'll do what I can to protect my family, and the rest is up to God.

If you're in a paranoid frame of mind, you might want to check out a post on Kitco earlier this morning from a guy whose friend in Texas has seen trainloads of military stuff come through. Wire fencing and such. Apparently it's all top secret -- when this friend inquired about the train going through, he had his name and driver's license number taken down.

MARKET REPORT(11/3/99): Gold is up marginally in the early going
with not much happening in the way of news......Both European and Asian
trade were characterized as thin and uneventful. The European Central
Bank announced gold reserves amounting to 114,589 million euros -- up
15,399 million euros from the starting valuation of 99,589 million
euros. That's a gain of 15% since euro inception..........Not bad for a
moribund relic of past monetary systems that shouldn't be central bank
balance sheets, if gold's London based critics are to be
believed.......By the way has the dollar appreciated 15% against the
euro since the Bank of England made its decision to dump gold supposedly
to invest the proceeds in the interest bearing U.S.
Treasuries??.......Just askin'.......The Japanese gold market was closed
last night adding to gold's quiet time.............Commodities analyst
Malcolm Southwood of Australia's JB Were & Son says the price of gold is
"likely to return to the $350 level sooner rather than later." He
attributes the predicted rise to record demand for the physical
metal....................A Chase Manhattan employee was fired for
overstating the value of derivatives he traded for the bank..........The
dollar and stocks are up today in the early going.....The following from
a recent International Herald Tribune article: "Soon it (the European
Union) will set itself the long-term aim of absorbing the troubled
Balkan states of former Yugoslavia and extending its sphere of
influence, though not full EU membership, as far as Russia and North
Africa. It will be much bigger than the Roman Empire, its only remotely
comparable predecessor. Mr.(Romando) Prodi (President of the European
Commission) said he did not know where Europe ends. But it is clear to
most people that the aim of the EU over the next 20 years or so is to
include every country from the Atlantic to the western borders of
Russia, Belarus, Ukraine and Moldova. Turkey, too, as Washington has
long wanted, will ultimately be offered membership if it can meet the
economic and political criteria. Americans who remember how ''manifest
destiny'' drove their own westward expansion should be able to recognize
a similar phenomenon as it pushes the EU's frontiers
eastward.".........That's it for today, fellow goldmeisters. See you
here tomorrow.

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.

Should read: "we will NOT be told what was actually paid"

Am I ever sorry I postedabout turning in my gold for rice! For the last two days, many of us here have been airing our feelings, (or lack thereof,) about y2k, and other possible disasters.
While it is 'good' to know, that many of the fine brains on this forum are also considering 'gloom and doom' to be a possibile probability, (Oh, to believe that I'm just a nut), , I also liked this site, originally, because it would keep my mind off of such stuff, and away from other, very terrifying websites.
Solomon, thank you for being calm, and facing the facts, while still keeping a sense of humor. (and for holding my hand, along with DD, the other night into the wee hours). Also, thanks to whoever (I'm sorry, my memory stinks),asked, "Whatever happened to faith in this country? Faith in God?"
In short, I would like to say, that I am going to conentrate on spirit. If the nightmare becomes reality, I want to help my fellow beings any way I can, and the only way possible might be via 'spirit', whatever form It takes.
In the meantime, I am going to continue my education in gold, continue to prepare me and mine, and pray. A LOT!
whatever happens, death will come to each of us, no matter what, sooner or later. I believe there is more, beyond this world we know, and I will be doing my best to prepare my spirit, as well as my house, for the road we may travel from here to there, and for my entrance to 'there'. If I 'crossover' with multitudes beside me, I hope we have the strength to hold each others' hand as we go. That's 'worst case scenario'.
That said, I hope I'm done.
Leigh, I believe your intense love for your children and your Faith in God will pull you through whatever happens with stars and songs accompanying you. I am sorry I stirred up the 'fear' pot. Love, Megan

happy birthday to me,Im 40 today :(

I enjoyed your post and think that you represent the true American, and human, spirit. I don't get a chance to post here very often and don't have much to add except a difficult question or two usually. Unfortunately, goldbugs are no exception to the greed and selfishness that grip our world now. But you are. Thanks.

http:www.sennholz.com/current.htmlFound it on Gary North's site. This is the original link.

Wow,What a wonderful thing to say!
If that's all you EVER post, you've made a VITAL contribution! :}
(From Scrappys' eyes, anyway, :} :} :}}
Thank You!

P.S. keep posting. Difficult questions are absolutely neccessary.

http://biz.yahoo.com/rf/991103/i4.htmlThe Federal Reserve conducted an operation of tri-party overnight system repurchase agreements to add $4.515 billion in temporary reserves.

Happy B-Day you youngster you.

Treat yourself to something nice, your deserving.

Have a marvelous day and keep the posts a comin...

Sincerely,

Don

There is a friend of The Tower who recently said that he was as happy as he had ever been in his life. He went on to explain that the assessment of his own happiness was always taken as a "moving average" that encompassed the most recently passed two week period. When asked why he used such an elaborate "formula" to decide his level of happiness, he replied it was to give him a more reliable "reading" by smoothing out all of the short term spikes and dips in emotion. "Otherwise," he said, "the happiest moment in my life would always be whenever I was eating cake."

We hope there are many happy days of eating cake ahead of you, Lady Megan (Scrappy).

http://www.senate.gov/~jec/dollarization.htmSUMMARY



In many countries that have suffered high inflation and currency devaluations, the U.S. dollar is in widespread circulation as an unofficial currency. People trust the dollar because its long-term record has been among the best in the world. However, few foreign governments have been willing to officially dollarize, that is, replace their domestic currencies with the dollar. One reason is that under current arrangements, if they do so they lose seigniorage--the revenue gained from issuing currency.


This study explores the implications of the United States offering to share seigniorage with countries that officially dollarize and meet certain other requirements. It describes what official dollarization is, how it works, an idea for sharing the seigniorage from the dollar with officially dollarized countries, and the effects of dollarization both on the United States and on dollarized countries.


The study concludes that official dollarization has important benefits for the United States and dollarizing countries alike. Dollarization nearly eliminate the risk of devaluation, making domestic and U.S. investment more secure. In most emerging market countries, official dollarization will also reduce interest rates significantly, boosting their economic growth. Higher growth in other countries ultimately means greater demand for American goods and higher growth in the United States as well. People in many emerging market countries have already voted with their wallets for the dollar. By sharing seigniorage with governments that officially dollarize, the United States will promote growth and financial stability both at home and abroad."

From Plata, Mexico:
http://www.plata.com.mx/plata/worldres.htm

"This is the postwar bonanza for the U.S., which Americans tend to think is due to their superior productive and organizational ability. Actually, it is the collection of tribute from the world, on a scale which makes the Roman Empire pale by comparison. The Americans have had an imperial "bread and circuses" at the expense of the rest of the world. No wonder they are smiling!"

Also, growing indignance at the appearance of truth (a true rarity in the Mexican Press, as in ours):

"From the U.S., we cannot expect any advice whatsoever, that goes against U.S. interests. It is we � Mexico specifically - who must determine what our interests are; protecting them is our affair. The U.S. will never tell us that our situation, worse day by day, is the consequence of the monetary system which the U.S. controls. Brazil, the most recent victim. Ecuador, another. Argentina is stumbling. Hong Kong and China will devalue sooner or later. Chavez in Venezuela will fail to turn his country around. We are all in the same dollar reserve boat. For Mexico, dollarization, currently being suggested by some American politicians and seconded by myopic Mexican businessmen, is surrender to the U.S."

Finally, comes the question: Is US seigniorage being set up as future scapegoat for financial disasters past and those to come? I am sure villification of the US $ will grow (for the most part justified), will it go far enough that the "developing" nations ($ indebted nations kept in eternal debt service) simply announce that they will never pay back $, and will only accept gold as payment from the US?

Nice work. Thanks for the good summary a few posts ago.

http://www.venerosogold.com/library.htmSeptember 28, 1999 Rally Continues

http://www.venerosogold.com/library/0928%20Rally%20Continues.PDF

September 27, 1999 No New Net Loans

http://www.venerosogold.com/library/0927%20No%20New%20Net%20Loans.PDF

September 23 , 1999 Make or Break

http://www.venerosogold.com/library/0923%20Make%20or%20Break.PDF

Warning: Off-Topic Post! SKIP if not interested in food/Y2K!
(pardon again for the long OT excursion.....)

rsjacksr (11/2/99; 20:00:47MDT - Msg ID:18219)
AEL (11/2/99, 8:14:02MDT - Msg ID: 18164)
Mass Starvation

rsjacksr: "AEL, are we going a little over board? I feel you are scaring
people, who are not in the know, needlessly. Before we had computers, the
land was tilled, crops were picked, food was shipped and people were fed,
even in other countries. That was not ancient history. That was in recent
memory and what is your scenario for a complete infrastructure breakdown?"

You are right. In re-reading my post I realize that I did not make
adequately clear what I believed to be the relative probabilities (or
improbabilities) of these scenarios.

I wrote [and SHOULD have written]: "It would probably take a year or two
for a full-bore famine to get up a head of steam, even in a severe
infrastructure breakdown [(which is very unlikely)]. On the other hand,
processing and distribution problems could greatly narrow our customary
food options... [(which is rather unlikely, but a possibility worth
considering)]."

I did, however, indicate that the U.S. has massive feedstock reserves,
which could be used as food for humans; i.e. we are very far (at least a
year or two, even in the worst infrastructure breakdown) from an outright
famine, and I made this clear.

As far as what happened before we had computers is concerned, I think that
that is largely irrelevant. Modern agriculture, food processing, and food
distribution are, like most everything else these days, more or less
totally dependent on computers either directly or indirectly (via petrol,
petrochemicals, etc.). I became interested enough in this matter to
research it and put up a bunch of links on the topic; check it out:
http://www.provide.net/~aelewis/y2ko/y2ko_425.htm (pardon me for not
keeping this page up to date; there are some bad links thereon; have not
had time to repair...)

http://www.kiyoinc.com/WRP106.HTM: "The Archer Daniels Midland website
(http://www.admworld.com/farmersrole) says that a century ago a farmer fed
8 people with his labors. Today (1998) each farmer feeds 212 people."

If we were to revert to 19th century or early 20th century agricultural
(etc.) technology over any limited period of time, mass starvation *would*
*surely* result, with a drastic contraction of the population. Fortunately,
the likelihood of such a reversion is remote.

Ed Yardeni asked all the critical questions regarding Y2K and food in his
testimony to the Senate Committee On Agriculture, Nutrition, and Forestry
last year (http://www.senate.gov/~agriculture/yardeni.htm):

1) Will farmers have access to the information, the seeds, the fertilizer,
the feed, and the credit they will need to feed our global population in 2000?
[actually 2001-2 are more of a concern -- AEL]

2) Will disruptions in our energy supply chains (electric, oil, and gas)
hamper the ability of farmers to grow their crops and feed their livestock?

3) Will the distribution channels operate without any serious risk of
delays that might spoil food products before they get to market?

4) Will just-in-time inventory systems function properly so that food
retailers will have ample supplies on the shelves?

5) Can our food supply chain cope with a wave of panic buying late in 1999,
similar to what always happens during localized natural disasters?

6) Is there a risk that fertilizer plants might fail as a result of
problems with embedded chip systems?

7) How might disruptions in natural gas distribution depress fertilizer
production?

8) Should farmers be encouraged to stockpile the basic inputs they need to
produce food in 2000?

9) Will the railroads be able to operate at full capacity to transport
grains, livestock, [and critical ag chemicals -- AEL] and finished-food
products to their customers?

10) Will ships move freely in and out of ports to deliver the imported and
exported foods that are so important in global trade?

11) Should we be ready to provide food assistance to nations overseas that
have major Y2K-related problems with their food supplies?

....... unfortunately, most of those questions were never answered in any
kind of systematic or acceptable manner -- which seems to be par for the
Y2K course. We are cruising into this thing with a smile and a shoeshine.
Things will probably come out mostly OK. Then again, they might not. There
are many degrees of "not-OK-ness", from outright mass starvation (extremely
unlikely) to much milder scenarios involving high (or astronomical) food
prices, limited selection, poor quality, etc. (somewhat unlikely but
certainly worth considering). Such ambiguity is more than most people can
handle, so they retreat into denial, shallow rationalization ("they could
not possibly be so stupid"), etc. I don't blame them.

For a good current overview of the total situation, see
http://www.wbn.com/y2ktimebomb/Computech/Issues/bone9943.htm

However, keep in mind that "percent compliant" figures assume that individual
system remediation (compliance) will translate into system-of-systems
integrity/operability, which is by no means assured; note my earier post of
an excerpt from IEEE Y2K Chair Dale Way's writeup on this matter --
http://ourworld.compuserve.com/homepages/roleigh_martin/end_game_critique.htm

The whole thing looks to me like an enormous dice roll. Are we feeling lucky?

rsjacksr: "I feel you're discounting human ingenuity and co-operation,
especially in a crisis situation. There are some things at which we are
very good."

I could not agree more about human ingenuity, and that people more often
than not prefer to cooperate with each other. The thing I am *least*
fearful about -- contrary to what the typical corp/gov press release would
have me fear -- is people's reactions to crisis, and their ability to come
together and respond appropriately. The people are not the problem; the
problem (the broken code and embedded chips) is the problem.

But to think (as you seem to be suggesting) that human ingenuity and
cooperation could compensate in the short term for a drastic loss of
accustomed technological capability, critical raw materials, etc., seems to
me unrealistic. See Yardeni's questions above.

rsjacksr: "By the way, the last numbers I remember reading about our food
supply reserves was we were down to 30 days. It use to be 90 days. Now, I'm
sure with a little frugality and planning, we can stretch that to 3 or 4
months with ease, which would get us into a new growing season and extra
production can be brought online. We'll be fine as long as we don't windup
giving some away (political favors), but years? I disagree."

Not sure what you mean by "food". As I said, the U.S. has massive supplies
of *feedstocks* -- soybeans, wheat, rye, oats and other grains and legumes
-- many scores of millions of tons (I have URLs with the stats on this if
you want me to dig them out). If you run the numbers you will see that
grain reserves on that order would feed the U.S. population for quite a
long time, if consumed directly rather than being fed to animals. This
would be a major act of frugality and planning, and it would make for a lot
of hardship as these are not ideal foods (as I indicated before), and
distribution might be problematic, but at least we've GOT the stuff.

We have a much smaller supply of intermediate food ingredient materials and
finished food products as found on supermarket shelves... perhaps several
weeks to several months worth (it would be difficult to make a good
estimate).

Extra production (or, shall we say, simply present levels of production)
can be brought/kept online as long as the petrol is available, and the ag
chemicals (mostly petrol derivatives) are available, and the capital is
available, and the seeds are available, and railroad and other
transportation systems are running, and etc., etc. (see Yardeni question
list)... all of which is pretty likely, but in no way certain.

BTW: If there are food supply and distribution problems, the most
vulnerable people will be (as usual) the poor, the very young, the very
old, and the sick. Hence personal preps might mean a lot more to those
weaker and less fortunate than ourselves.

I had a hard time understanding your bottom line point. At first you seemed
to be saying that I was too much of a worry-wort/doomer (and perhaps you
are right); then you said that I was wrong about us having "years" of food
in reserve. Hence, your point was... (?)

rsjacksr: "Remember, we have a whole industry that produces food supplements
(you know, vitamins)."

I am well aware of that industry. It is my home!

PS: I totally agree with DD -- "wanting to get Y2K behind us no matter what
it may turn out to be". I am sick of the subject, tired of the ambiguity,
and want it to be OVER, no matter what. Unfortunately, it will be another
6 months at least before the real outcome of this imbroglio becomes clear;
i.e. before the ambiguity is resolved. Then it is a matter of living with
the consequences, whatever they may be.

PSS: The Stranger: "Another problem I have with y2k fever, is that it seems
so alarmist. Some people will tell you that the "sheeple" are paying y2k
insufficient heed. Then, almost in the next sentence, they will warn you
that the greatest risk of all is the inevitable public alarm." ... which
"some people"? On the Y2K discussion boards I occasionally see such
sentiment, but more typically I see that kind of thing on corp/gov press
releases, the line being "we're OK, everything is on sched, but we are
concerned about [choose one] alarmists / survivalists / gloom-mongers /
panicky masses / whatever." In fact there appears to be a large and
concerted effort to blame, in advance of the event, the general population
-- the (purportedly) panicky irrational masses. ("The system would be
perfectly OK, if it weren't for the darn people!") Of course, at present
there ARE no panicky masses, but quite understandably there would be some
when and if TSHTF, and our corp/gov masters have conveniently pre-blamed
them for the mess...

http://biz.yahoo.com/rf/991103/l8.htmlSberbank is Russia's biggest bank and is controlled by the Russian central bank. During the first three quarters of this year it bought over 16 tonnes of gold from miners, selling most of it in turn to the central bank. They had originally wanted to buy 50-70 tonnes in 1999 but will likely fall short of that goal. Sberbank head Andrei Kazmin said to a news conference that Sberbank hadn't entered any gold deals during the first six months due to unfavourable market conditions.

TownCrier's Bottom Line: The conclusion to be drawn is that market conditions are now FAVOURABLE.

So, this is 40.T.C., I LOVE the friend-of-the-towers' formula for assessing his happiness level. Never knew that that's what I've been doing, (except my moving average encompasses my whole life, when I do the figuring. I tend towards the dramatic just a tad), until I began my education here.
As for cake, I LOVE cake. (I can just hear 'em saying, 'Let them eat cake.') I'm gonna eat lots.
In fact, in honor of hitting the big 40, I'm going to go to the WONDERFUL bakery we have here in town, and get the BIGGEST, CHOCOLATIEST, TENDEREST cake I can, and eat the WHOLE thing. Let the era of the battle of the bulge begin.

HopeingII, If you are calling me a youngster, well,....I'm sorry. :}

Tanx for the wishes, folks.

(Anybody got a good lead on cake, physical cake, CHOCOLATE cake, to take delivery on no later than 12/31/99?)

Test

Gary North's Y2K Links and Forums

Summary and Comments
(feel free to mail this page)


--------------------------------------------------------------------------------
Category:
Banking
Date:
1999-11-03 10:07:16
Subject:
Economist Predicts Currency Crisis
Link:
http://www.sennholz.com/current.html
Comment:
Hans Sennholz for 36 years was chairman of the economics department at Grove City College in Grove City, Pennsylvania. He is one of four American students to have taken his Ph.D. under Ludwig von Mises. For five years, he was the president of the Foundation for Economic Education, retiring in 1997.

In this essay, he discusses the vulnerability of the international monetary system. It was vulnerable before y2k; now it is even more vulnerable.

This is not conventional economic analysis. It is based on Mises' theory of the business cycle: a product of fiat money issued by the fractional reserve banking system. (Mises, The Theory of Money and Credit, 1912).

Not many economists believe that y2k will impact the economy severely. Sennholz suggests otherwise:

Europeans may soon finance their trade in euros rather than U.S. dollars, which may result in a huge shift from dollars to euros around the world. It would signal a shift from dollar hegemony or dollar standard to a bipolar monetary world. The transition may depress the exchange rate of the dollar, boost the prices of all imports, and generate an upward pressure on inflation and interest rates. It could trigger a dollar crisis, burst the Wall Street bubble, and usher in a deep recession.

The situation is not likely to change for the better given the global electronic infrastructure which will be at severe risk of collapse in the coming year. Commonly called The year 2000 (Y2K) Problem, it threatens most financial institutions especially on the international level. The computer omission of the century digits from dates has erected computational ambiguities that corrupt individual computer systems and then multiply to endanger inter-related systems. It is quite certain that many millions of computer systems around the globe will fail at the beginning of the new millenium, which will have a serious impact on the ability to conduct business. It is likely to deflate all financial bubbles.

This essay was published on October 28. Read every word. Then print it out and read it again. Forward it to anyone you know who is still in the stock market.

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

A Perilous Dollar Standard

Hardly a year passes without a financial crisis. In 1998 the virtual collapse of the Russian economy led to serious losses on markets in Asia and Latin America. And the spectacular crack-up of a prestigious investment fund, Long-term Capital Management of Greenwich, CT, shook U.S. markets. The Federal Reserve felt compelled to move three times to stimulate economic activity by easing credit conditions to keep the U.S. economy from falling into a recession. The world monetary order which rests on the U.S. dollar as the most prominent reserve currency seems to be no stronger than the weakest link.

Last year's crisis passed, but the situation in many respects is more fragile today. There have been no fundamental reforms. The emerging countries are returning to their old free-spending ways and the United States, which for the last few years has been single-handedly sustaining the global system, may prove to be a shaky support. The downward pressure on the dollar � stemming from the fact that U.S. asset prices no longer are rising and capital inflows are drying up � highlights the fragility of the U.S. financial system and the vulnerability of the world economy. The dollar exchange rate is a barometer that may give early notice of the crises to come.

For more than half a century the U.S. dollar has been the primary reserve currency in the world of finance. It gained this eminent position as the most reliable currency among many, giving access to the world's largest economy with open capital and money markets. It emerged gradually with the decline of the British pound sterling during and after World War I. At the end of World War II it excelled and outweighed all other currencies with some 60 percent of the world's monetary gold as its backing in Fort Knox. This illustrious position of the dollar, however, provided an irresistable temptation for U.S. monetary authorities to inflate and expand credit in Keynesian fashion. During the 1950s and 1960s they expanded at various rates, which inevitably led to the loss of gold and to the first dollar crisis in 1971. Unable to make international gold payments of some $70 billion with just $11 billion of gold left in Fort Knox, President Nixon felt it necessary to default. The world has been on a dollar standardever since.

It is a fiat standard, not backed by gold or silver, and not redeemable in anything but government paper. It was born in default and crisis and, to this day, has suffered five major international crises, which inflicted much economic hardship and brought social upheaval and political turmoil to many developing countries. The next financial crisis is clearly visible on the horizon: the Y2K computer crisis. According to some analysts, it may be the worst of all, leading to deep recession and financial disruption. It may prove to be the knell of the dollar standard.

The history of the dollar standard since 1971 has been an exciting chapter of several ups and downs and makes and breaks. By 1978, with double-digit inflation at home and flooded dollar markets throughout the world, the U.S. dollar faced its first major crisis as foreign financial institutions began to liquidate their dollar holdings. Thirteen months later, raging inflation and a world-wide flight from the dollar forced the Federal Reserve to raise its discount rate to 13 percent with a three percent surrate for banks in New York and Chicago. The rate boost brought a halt to the credit expansion and saved the dollar standard, but cast the American economy and jointly the world economy into deep recession. By 1981 and 1982 the U.S. crisis became an international crisis with a number of foreign countries unable to make interest and principal payment on their debt. Mexico, Argentina, Venezuela, and some 40 smaller Latin-American and African Countries were forced to reschedule their foreign indebtedness to governments and banks. Even countries that were not facing severe liquidity problems, such as Brazil and South Korea, suffered painful economic effects. There was widespread fear that the crisis would lead to a chain reaction of financial failures with serious effects on the U.S. banking system.

During the 1980s the United States government embarked upon unprecedented deficit spending which was financed primarily out of domestic and foreign savings. Attracted by relatively high interest rates, the influx of foreign capital helped to cover both the budget and foreign account deficits. As long as a sufficient flow of funds from abroad was maintained, it proved to be possible to run large deficits and, at the same time, assure an appreciation of the U.S. dollar. But by 1987, the stock market crash of October 19, which spread to securities exchanges in other major countries, shook the financial structure to the core. The international value of the dollar fell precipitously while the currencies of Japan and Germany rose significantly.

The 1980s also saw Japan emerge as the world's largest creditor nation. Its high rates of saving together with massive credit creation facilitated and encouraged Japanese investments all over the globe. When in 1989 and 1990 the Bank of Japan finally raised its rate five times to deflate "the bubble of speculation" the Japan miracle began to fade. A crisis gripped the financial markets with the Nikkei stock average dropping precipitously and the banking system developing serious problems as a result of growing numbers of loan defaults due to declining property values and stock prices. The banking crisis ushered in economic decline and recession which numerous "stimulus packages" by several successive administrations managed to aggravate and prolong. The stimulus packages in the form of mammoth fiscal deficits and painful tax boosts fashioned � la John Maynard Keynes kept the economy in turmoil throughout most of the 1990s. Uncertain about Japanese economic conditions and facing minuscule interest returns, many Japanese investors looked upon the United States as a safe harbor and dependable source of revenue; they helped to stoke a Wall Street boom.

The recent weakness of the U.S. dollar versus the Japanese yen reflects a new confidence of Japanese as well as international investors in the Japanese economy. Output finally is expanding again in contrast to last year when it was contracting. Corporate stock prices have risen by more than one third in recent months. Japanese investors are restructuring their portfolios as are foreign investment funds that had been avoiding yen assets. Since the yen strength and the dollar weakness are driven by fundamental considerations, it is likely that the yen will remain rather strong.

The 1990s brought two major financial crises. The "Christmas crisis" of 1994 was triggered by the collapse of the Mexican pesos which transmitted shock waves throughout the Western hemisphere. The Mexican economy contracted painfully; goods prices rose more than 50 percent. Tens of thousands of small-and medium-sized businesses collapsed, and some one million workers lost their jobs. When the U.S. Congress refused to approve the Clinton rescue plan, the President worked with the U.S. Treasury, the International Monetary Fund, and European governments to devise a bailout estimated at nearly $50 billion. While American and European taxpayer funds were pouring into Mexico to keep the crisis from spreading, private capital sought refuge in American financial markets. U.S. stock and bond markets saw "the largest increase in market wealth in history."

In 1997, finally, the world was caught in the grip of the most serious financial crisis since the 1978 and 1979 flight from the dollar. Starting in Thailand and spreading quickly to Indonesia, Malaysia, and the Phillippines as well as affecting South Korea, Hong Kong, and Singapore, it posed a direct threat to U.S. finance and the world dollar standard. By the end of 1997 the Asian currency depreciation averaged 50 percent against the U.S. dollar, contributing to Japan's slide into deep recession and causing the yen to plummet. A deep depression settled over parts of Asia, causing severe economic hardship and leading to social unrest and political upheavals.

The new Asian crises augured the bursting of various financial bubbles � just as the Japanese bubble had broken eight years earlier. It revealed huge malinvestments in industrial capacity and property and caused massive wealth destruction through the collapse of asset prices, creating mountains of bad loans and leaving behind an illiquid and vulnerable banking system. The crises affected other countries around the globe as liquid capital sought to escape the troubled areas and find safe havens in Europe and the United States. The influx of frightened foreign funds added more fuel to the U.S. bubble.

Since the beginning of this year (1999) the bubble has come under new pressure which is bound to increase in the future. Annoyed by the hegemony of the U.S. dollar in world markets and fearful of its precarious base of debts and deficits, many Europeans would like to withdraw from the world dollar standard by creating a currency system of their own. Eleven European countries launched a common currency, the euro, to replace their national currencies. In time it may create a continent-wide economy very much like that of the United States, and challenge the dollar as the world's primary currency. The Euroland of eleven is as large as the United States, conducting more trade with the rest of the world than the U.S., has larger foreign exchange reserves, and enjoys a much stronger foreign trade and finance position than the U.S. Europeans may soon finance their trade in euros rather than U.S. dollars, which may result in a huge shift from dollars to euros around the world. It would signal a shift from dollar hegemony or dollar standard to a bipolar monetary world. The transition may depress the exchange rate of the dollar, boost the prices of all imports, and generate an upward pressure on inflation and interest rates. It could trigger a dollar crisis, burst the Wall Street bubble, and usher in a deep recession.

The situation is not likely to change for the better given the global electronic infrastructure which will be at severe risk of collapse in the coming year. Commonly called The year 2000 (Y2K) Problem, it threatens most financial institutions especially on the international level. The computer omission of the century digits from dates has erected computational ambiguities that corrupt individual computer systems and then multiply to endanger inter-related systems. It is quite certain that many millions of computer systems around the globe will fail at the beginning of the new millenium, which will have a serious impact on the ability to conduct business. It is likely to deflate all financial bubbles.

Some Y2K analysts are convinced that hundreds of American communities with many millions of people will be without public utilities in January. They are warning that New York City, for instance, may experience major utility failures, which would play havoc with economic activity. The New York Stock Exchange surely would close and the banks would declare "holidays," just as they did in crisis situations in the past. There could be a financial panic leading to runs on the banks, which would quickly spread to other countries. It is equally possible that the bank runs may not begin in New York; they may start in Manila, Kuala Lampur, or Rio de Janeiro and spread to New York City. After all, the capital markets of the world are interdependent.

The American bubble is at extreme risk; it is the mainstay and supporter of all others. As the dominant reserve currency of the the world, the U.S. dollar is in world-wide demand, which has given the dollar authorities the ability and power to inflate and create credit at astonishing rates. The demand allows the U.S. to suffer huge trade deficits and export some of its excesses in the form of dollar loans to business and governments around the globe. The U.S. dollars held abroad then serve as an ever expanding basis on which foreign governments and central banks build their own bubbles. They are resting their credit pyramids on a dollar base which itself is a giant pyramid of leveraged credit and debt.

The visible marks of the U.S. bubble are not just egregious malinvestments, especially in the telecommunication and media industries, but also a great stock market boom. Taking advantage of the stock euphoria, investment bankers underwrite new stock and bond issues nearly every day. Corporate mergers and acquisitions proceed unabated, facilitated by lofty stock prices and easy credit. Feverish issuance of mortgage-backed and asset-backed securities bolsters a residential housing boom. Fannie Mae, the publicly owned and government-sponsored banking corporation, alone holds more than one trillion dollars of new mortgages. Syndicated bank lending exceeds even this amount. Outstanding credit card debt is growing at double-digit rates, while personal savings are declining. There is leverage upon leverage as never before, as securitization is vying with banking as the primary source of credit. Countless trillions of dollars worth of derivatives are supposed to sustain the lofty pyramid. Global outstanding interest rate swaps, currency swaps, and interest rate options alone now exceed $100 trillion. According to Alan Greenspan, the derivatives market carries some $80 trillion of most short-term debt, world- wide, with U.S. banks holding $33 trillion of this debt.

If some of the debtors should ever default because of an unexpected decline in financial markets or Y2K failures, the banks will be holding worthless IOUs, which would cast doubt on their solvency. Surely, the Federal Reserve will want to come to their rescue, but it is inconceivable that it can create trillion-dollar credits or print trillion-dollar notes. Any such attempt would seriously damage the U.S. dollar, lead to rampant price inflation, and irreparably ruin the world dollar standard. It is more likely instead that the federal government will declare bank holidays and impose a myriad of controls on the people. The controls in turn will generate a financial underground which will develop standards of its own.

The Federal Reserve still wields great power because part of the stock of money consists of bank deposits; and banks are forced to keep reserves at the central bank. But this Fed power may prove to be rather hollow because the evolution of electronic means of payment in recent years deprives the Fed as well as the member banks of all leverage. The proliferation of non-bank credit reduces the power of central banks because bank credit is steadily contracting as a proportion of total credit. Moreover, even where commercial banks still issue loans, these may be "securitized," which means that they are sold to non-bank investors who are not subject to reserve requirements. In short, the demand for bank money is eroding as is the Fed power to manipulate the people's money and credit.

In these waning days of the dollar standard and the exciting new world of electronic means of payment, it is difficult to foresee the shape and color of the coming financial order. We cannot say what the rate of inflation will be, nor can we know whether national authorities will find new ways of controlling the people's money. Most economists are convinced that we will have to return to the financial systems of the past. Surely, the monetary authorities of the world will want to reassert their position through new controls over their subjects and new international agreements and treaties. But it is difficult to see how political machinations can redirect the electronic national and international monetary flows.

In the end the standard of value in which international prices are quoted and contracts denominated will be neither the U.S. dollar nor the euro. It will not be measured in terms of a unit of account defined in terms of a basket of goods because the international authorities will never agree on the content of the basket. We are convinced that the future standard of value will be gold again, as it has been for more than 2,000 years throughout the Western world. The political authorities will fight it unrelentingly and mercilessly, but gold undoubtedly will prevail in the end.

* * * *

At this time a gold standard has few friends and advocates. It limits the power of politicians and officials to manage and manipulate the stock of money. It denies them the means to "stimulate" economic activity and renders deficit spending rather difficult. The remarkable stability of gold serving as money lends stability to economic life, which made it the monetary standard throughout the ages. In fact, gold has been wealth and money since the dawn of civilization. Most of the gold won from the earth during the last 5,000 years can still be accounted for in man's possession today. There is no shortage of gold.

The world monetary system is about to change again. It is difficult to foresee the form and structure of the coming order. Clinging to their powers, the monetary authorities of the world will want to repair the old order with restrictions and regulations. But their failure to prevent the numerous crises, which put nearly all countries in serious jeopardy, is casting serious doubt on their credibility and ability. The precarious condition of the very dollar base and chronic foreign account deficits of the United States at the expense of all creditor countries are discrediting the dollar authorities. This explains why governments and central banks throughout the world are becoming ever more reluctant to grant the U.S. government a permanent monopolistic position in matters of world money. In crisis and despair the world may choose gold.


Link:
http://www.sennholz.com/current.html

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http://biz.yahoo.com/rf/991103/g0.htmlCanada's Finance Department said no gold was sold in October, and gold assets stand at 1.8 million ounces...valued at the October 31 London p..m. price fix of $299.10, these holdings were reported to be worth US$540 million.

http://www.sennholz.com/current.htmlHello -- I'm glad someone else noticed Sennholz Article as I was reluctant to post entire writing. This man has an incredible resume` which can be viewed by clicking box on his site. Also the article poted by "transparent" was on the money. Regards---YGM.

Hi All - Well, first the important stuff. Happy 40th Birthday Scorpio Lady of the Table Round. I didn't know they let kids post at this honored Table. You must have skipped a grade or two. Don't forget. Everyday is the day of your rebirth. Enjoy them all. Have a happy and meaningful day my dear. xxoo DDAEL - You are well informed, share your knowledge clearly and yet have space for those who disagree. That's about as much as we can do at this late date. Keep up the good work. Your info on oils was really helpful for me. Yesterday, I bought 15 gallons of soy bean oil to suppliment my food prepartation. Thanks, DD

I will give you an option on a chocolate cake, deliverable Dec 15 1999 loco London strike price 6 pounds not-quite-sterling.
In order to finance this option, I have borrowed one chocolate cake from the baker's bank at 1% and sold it in the market. The proceeds I invested in an immitation vanilla bond yielding 6% interest rate.
I have set my trading computer to buy back chocolate cake on the market in proportion to my option commitment in the event of cake prices rising to within 2% below my strike price.
Hopefully, someone will be interested in buying my immitation vanilla bond, some seem to preffer the real thing, though it doesn't bear much interest.

Happy Birthday.

HAPPY BIRTHDAY MEGAN, remember Phil 4:13 The Scot

http://www.libertarianpress.com/evm.htmlTo get an idea of where Senholz is coming from.

I pretty much take what little of his work whole. Contrary to Hayek, he does not muddy his positions with realpolitic considerations to placate his critics.

Looking at events which have a reasonable probability ofoccuring -- so you can plan for them -- is not gloom anddoom. The opposite (NOT looking at them) is sometimes called"denial," which prevents people from preparing. It's lackof such preparation that leads to gloom and doom. Regards, Journeyman

http://www.goldensextant.com/National Gold and Forex Reserves: Use and Misuse.

** ORO-thanks for the link, someday w/ enough education so well provided here at this forum, even I may be able to offer up some constructive insights to high finance (smile).---Regards: --YGM.

Scot, where have you been?? I was thinking about you just today as I was raking leaves. It's been weeks since we've heard from you.

Happy Birthday, Scrappy!! Would you like us to call you Megan, or do you want to be Scrappy?

http://goldworld.net/index2.htmJosh Wright has upgraded his Gold site. Very extensive and lots of info and links here.--

**Happy 29th birthday Megan (Scrappy)---Best Regards to you & Many More to come: Ken

@Journeyman(18306) - Not foolish at all, nor doom & glooming, but simply wisdom I believe buddy, they that have ears to hear let them hear.
The 'Parable of wise & foolishman' was in summary; He (the wiseman) recognised that there was a big storm coming & made sure that the foundations of his house were built on the rock. The foolish man however refused to look at wisdom, learn or make provision & built his house upon the sand (I guess this was easier for him). The mighty storm came as predicted on BOTH men, the foolishman's house which had been built on sand was swept away. The wise man's house which had been built on rock was still standing at the end of the storm.
@Scrappy - Happy 40th Megan! may your day be filled with joy & peace.
@The Scott - My inheritance (Col 1:27)

http://www.sacher.com/Dear Lady Megan,
Alledgedly, the best chocolate cake in world - The famous
Sacher Torte from Vienna. Comes in all sizes.
Enjoy your anniversaryand all best wishes from
over here - CB2

PS:Hope URL works -1st try

http://www.sacher.com/Dear Lady Megan,
Alledgedly, the best chocolate cake in world - The famous
Sacher Torte from Vienna. Comes in all sizes.
Enjoy your anniversaryand all best wishes from
over here - CB2

PS:Hope URL works -1st try

I'm a record producer who happens to like gold (funny huh!).
In a recording studio we have device called a limiter. What it does is takes loud peaks in a signal and squares them off so they don't overload anything downstream. If you look at the resolved output signal on a scope it almost perfectly matches the shape of the daily silver, and to a lesser extent gold charts. The physics are that there is a tremendous amount of 'amplitude' trying to modulate but is being 'brickwalled' by the circuitry of the limiter, and actually disipated as heat! the resultant wave is squared off at the top. The analogy is obvious, something is being patched into the chain post/after the fact. Butler is probably right. Gates is too. Once the fuse/limiter gives there's nothing to stop the GAIN downstream! Any thoughts?

The waves that are being truncated has kept me guessing for the last four years.I was afraid it might be manipulation of the market by forces that I couldn't understand but was afraid to cop to such a paranoid plea. Thus I joined GOLDBUGS ANONYMOUS and have been learning that maybe I wasn't so paranoid after all.

Gov't control>>>> Could you elaborate on your child killer thought? Do you think only the govt. should have the guns? <<<<<

To answer your question, no. I don't think that only the gov't. should have guns. By the same token, I don't think 5 year olds or the criminally insane should have weapons either. That means some kind of regulation and therein lies the trap. Once you give someone the power to dictate who does and who doesn't have the "RIGHT", virtually anyone, for any reason can be excluded. The consequence of total freedom is the probability of an horrible and disrespectful act like "COLUMBINE", children killing children. It is something we just have to learn to live with it. Otherwise the ultimate consequence is slavery.

Great analogy.

If the fuse weakens with each use by dissipating $ and eating up the gold available off market for lending, then it would also be loading the future signals, increasing their amplitude - or feeding forward to amplify the gain down the line, - then what?.
Catastrophic failure with 10 year's worth of accumulated demand being released into the market?

Another strange observation one can make from this is that hard square waves or clipped waves are excedingly rare in nature, meaning that most will round rather than this hard, 'switched on' limiter effect. Very curious.

http://www.pamp.ch/gold_comp/gg.htmlGold Forward Rate Agreement (GOFRA)

------------------------------------------------------------------------



A hedging instrument used by producers who, having drawn down gold loans , can lock in forward gold interest rate exposure. The GOFRA hedges against the combined effect of moves in both US dollar and gold interest rates with settlement in dollars.

The GOLFRA (Gold Lease Forward Rate Agreement) restricts itself to gold interest rates with settlement in gold. The increased activity of the central banks in lending gold to the market means that they, too, have exposure to gold rate volatility and the GODFRA (Gold Deposit Forward Rate Agreement) is tailored to their particular activities.

See also Gold Leasing ; Gold Lease Rate.


****I clipped this to show the wide range of info on Gold available at this page and because I'm on the trail of something --- But What I do not yet know. I do know that Goldman Sachs as of Nov /99 has 157 directors, but try to cross reference them to Republic Bank of N.Y. and you're out of luck. Republics Directors are not listed. Anyone have that info?---YGM.

This switched 'in- line limiter' effect is more related to digital signals than analog, digital needing extremely fast attack times to grab the peak. No human is fast enough to capture the info so computer programmed devices are set in the chain as fail-safes. If it all goes haywire these will 'eat' the momentum and dissipate it, at some pre-determined point just below the system damage level.

Scrappy - First Happy Birthday. Second, I enjoyed reading your post the other day. I pray to God I never have to use my 'stockpile' of food, etc., and gold for a y2k or natural disaster reason, but I'll be blessed a thousand times over if I need them. Share with a fellow human, you bet. Guard what I have so I will have something to share and at the same time provide for my own, no question, with my life. Being a good steward with 'what' you have been given, required. God bless!

Oro:

Thanks for the link on von Mises. Great stuff. I had not heard much of Sennholz lately. Up until today, anyway. I had to dig through my old books to find the one I read about 10 years ago. Money and Freedom by Hans F. Sennholz, 1985. It's a good introductory and doesn't take too long to read.


megatron:

That is a great observation. Signal limiting is pure distortion. Very unnatural.


Scrappy:

Happy Birthday!


To you guys worried about options on Nov. 12th:

Remember what FOA said on Monday:
"Anyone that isn't buying real gold and holding it until after this market fails, will be mentally whipped to death. It's that simple."

Not sure what you mean by "food". >>>>> We have a much smaller supply of intermediate food ingredient materials and
finished food products as found on supermarket shelves... perhaps several
weeks to several months worth (it would be difficult to make a good
estimate). <<<<<

Exactly. It's my understanding that the total amount of food on the grocery shelves and in the pipeline, finished or unfinished, would amount to approximately 30 days of supply if everything was to shut down simultaneously. It may have been reduced from 90 days to 30 days because of JIT (just in time) production. I wonder if W. Edward Deming ever thought of this scenario.

What we don't know is the mix of large "CENTRALIZED" computer systems ( Gov't., Airlines, GM, et al) vs small business " DISTRIBUTED" systems. For the big guys, there's going to be some headaches. The little guy, it's my opinion that they won't have that much trouble. Most of their computers normally don't talk to one another. They use faxes and the telephone for order confirmation and billing. They can even E-mail the orders that run on the same program. I agree there can be problems in the distribution channel. But again, most small companies are using the same programs (Thank you Bill Gates). Larger system that require input from different sources using different software ��.. LOOK OUT.
Their problem is if they "Crash", it could be a nightmare to get them back up, if ever. But again, a lot of companies are running software backups (every 10 minutes to guard against the lost of data) and in some cases, double redundant systems.
I just don't see the magnitude of the problem. Trouble? Yes. Catastrophe? Hmmm.

Here's something else to consider. If we get everyone to stock say 3 to 4 months of food before the end of �99 (food demand bubble) and the Y2K problem doesn't pan out as the experts claim, and we start utilizing our store of food, then in �00 (bubble gets pricked) the supply chain has our own induced version of production and delivery problems.

By the way, I don't mean to give the impression that I haven't prepared. I may be a little crazy, but I'm not stupid and caution, in case of panic, is advised..

"Everything" was up today...gold was up, the dollar was up, the bellwether bond was up, stock indices were up, but the day belonged to the Nasdaq. The Composite index closed for the first time above 3,000. Awwwwww...isn't that CUTE! Just like a toddler taking its first steps. But rarely does a toddler have such a potential to implode in the coming months. Let's examine a bubble, shall we?

Nasdaq trading first began on Febr. 8,1971
It first closed above 1,000 on July 17, 1995
It first closed above 2,000 on July 16, 1998
It first closed above 3,000 November 3, 1999

Officially, the Nasdaq gained 46.88 points (+1.57%) to close at 3028.51 on trading volume that continues to be very heavy these days...topping 1,339,000,000 shares. Advancing Nasdaq issues outnumbered decliners 2,334 to 1,625, new 52-week highs besting new lows 212 to 87.

"All around the mulberry bush the monkey chased the weasel, etc, etc." ...you know the tune. Or did the weasel *POP* him on the cobbler's bench? Where's a kid when you need one?

Meanwhile, the DOW had VERY choppy day today, though conducted almost entirely in postitve trading territory after an initial 60 point gain. But as the day wore on, the "price" of the DOW gyrated such that the sequence of peaks were all over the map, but the corresponding lows were progressively lower--the final one dipping into negative territory before the final "up-chop" of the day lifted the index back above water by 27 points for a daily gain of 0.26%. Also experiencing heavy volume at 910,532,000 shares tradded, the NYSE had 1,675 advancing issues poking their tongues at the 1,388 declining stocks. However, only 53 new highs could cautiously mock the larger number of 91 surly, new lows.

In currencies, the euro relaxed to a 5-day low against the dollar, pressured in part by comments from German Ministry of Finance Hans Eichel that a 50-basis point rate hike by the ECB would add 1.5 billion D-marks to Germany's debt servicing costs. Although a rate hike is expected when the European Central Bank holds its meeting tomorrow, the jury is still out with regard to the amount of the tightening. Some traders expect a 25 basis-point hike, saying that 50 basis points would likely shock the market. But others say that the market has already priced in a rate hike of that size. The Bank of England also meets tomorrow, and is expected to raise rates also. With all of Europe seen raising rates, the Fed is largely expected to follow suit when the FOMC meets on November 16. A holiday in Japan contributed to a slow day all around, and the dollar came off its ovenight 6-week lows against the yen to close up �0.86 at �104.98. The euro sagged a third of a cent against the dollar, ending trade at $1.0485.

Traders of USGovernment securities were a bit surprised today when the it was announced that the Treasury's auctions next week for quarterly refunding would total $2 billion less than the $27 billion figure that most economists had been expecting. The Treasury will be using the proceeds from the two auctions next week ($10 billion of 10-year notes and $15 billion of 5-year notes) to pay down $4.319 billion of outstanding debt. Hmmph! Seems to me the operation on a net basis put us deeper in the red. Must be some new kind of government math. Instead of the term "pay down," the Treasury should probably use the term "postpone" or some other such nonsense. Anyway, the long bond posted a small gain today of 2/32, easing the yield to 6.131 percent.

GOLD

As reported earlier, today, the Canadian government refrained from selling off any of their gold assets in October. Meanwhile, starting in the second half of 1999 the Russian central bank acting through Sberbank has acquired 16 tonnes of gold purchased from mines, and feels doubtful that their target level of 50-70 tonnes may yet be reached this year. The fact that the European Central Bank gold reserves weighed as much as they did from the previous financial statement came as no surprise. In his morning Market Report, MK gave us a good look back at the benchmark starting point. Although the total weight did drop by a couple tonnes due to some remaining obligation of one of the Euro System Member Banks (perhaps Austria had obligations to their mint for Philharmoniker production...can't recall if a clear explanation was ever given), the value of their total gold reserves has risen from the start of the year by �15.399 billion to �114.589 billion from the starting valuation of �99.589 billion. An apparent increase in reserves of over 15% without lifting a finger to raise taxes or risk capital through forex markets seeking interest bearing paper of other governments. Slick, huh? Granted, some of this is owing to the fact that the euro has dropped in exchange value versus the dollar since the January 1st introduction, but you can clearly see how this reserve "mechanism" will serve the ECB well as the gold value climbs through time against all currencies, euro included.

Spot gold prices posted yet another small gain as NY trade came to a close, last quoted at $291.30, up $0.80 from yesterday. You know, Melanie Lovatt just doesn't have her heart in the gold market. She's the most negative of all Bridge Reporters, and often chooses to focus on the white precious metals whenever she gets the Precious Metals Review duty. We'll cut her some slack today, though, because it was rather uneventful. Truth be told, today I'm surprised The Tower's scouts were able to gather enough info to keep typing this long, and I really LOVE this topic. Tip for Ms. Lovatt: buy yourself some gold. Your spirit will soar, and you'll love your job. Until that day arrives, maybe we could convince Leonard Kaplan to post his comments directly to the Round Table on the days Ms. Lovatt shows up without that gold in her pocketbook.

NY Precious Metals Review: Gold still recovering from Mon dip
By Melanie Lovatt, Bridge News
New York--Nov 3--COMEX Dec gold futures settled up 90c at $293.30 per
ounce, continuing Tuesday's recovery from Monday's $8.80, 2.9%, slide. It
traded in a narrow range, with the rest of the complex also staying
subdued, as many players focused on entertaining visitors here in town for
tonight's COMEX annual gold dinner at the Pierre hotel.

Traders said that they had anticipated a quiet session, due to the
COMEX event, and the market delivered on these expectations.

Gold managed to edge higher on some subdued short-covering that
continued to spill into the market after Monday's price fall. While the
short covering could continue for the rest of the week, many are
predicting that precious metals trade in both Europe and the US will
remain subdued until all the players have traveled home from the COMEX
festivities. "It'll probably take until Monday before we see any real
activity," said one trader.
***
(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.
---
No movement was seen today among the stock of gold comprising the official COMEX inventory of the yellow metal. Registered stock remained at 783,905 ounces while Eligible stock totalled 131,025 troy ounces.

Open interest on the closely watched COMEX December gold futures fell yesterday by a net 1,989 contracts on total trading volume of 19,660. December open interest has now dipped below 100,000 contracts as people seem to be leaving this particular paper chase; 98,758 Dec contracts were in open interest as yesterday's trading ended.

Crude futures could have been in for a day of rough sledding. As indicated in yesterday's GOLDEN VIEW, American Petroleum Institute data was in line with analyst expectations, showing a rise of 1.376 million barrels in crude stockpiles when the data was released after the market closed. The potential problem was this morning's release of US Department of Energy data which reported a fat 3.7 million barrel gain. Traders shrugged it off as they were busy trying to interpret today's official release of OPEC production data.

A Bloomberg News survey showed that October's output rose 80,000 bpd to 26.35 million bpd. Compared with OPEC's output baseline, this translates into 86% compliance versus 89% in September. A Bridge News survey reported that total OPEC production rose 254,000 bpd in October to 26.514 million bpd, for a compliance rate of 84.4%, down from 87.9% in September. Excluding Iraq and their "pump it if you got it" philosophy, OPEC production was only up 148,000 barrels per day over September daily output levels of 23.5 million. Of course, all of this was also compared to the data we reported on yesterday by the Geneva-based oil research firm PetroLogistics that indicated total OPEC production rose by 300,000 bpd. And if that weren't enough, Dow Jones reported their own set of data that OPEC output decreased in October by 183,000 bpd to 26.315 million bpd, translating into a compliance of 88.3%, an improvement over the 84% level cited in September. December crude ended up 17c at $22.56.

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

Since you seem to not like the subjects that I am posting could you tell me how to extinguish my password?

Obviously the censor is not always paying attention.

Why American Barrick could be at risk in spite of bombast to the contrary!
The easiest way to look at American Barrick is to think of a very large gold mine that removes about 4 million ounces of gold per year from a very large open pit. They have recently revealed total forward sales of 13 million ounces(410 tonnes) over the next several years. When and exactly at what price is lost in the wonders of averaging always used in this type of CYA reporting. In addition a few weeks ago they decided to tell their shareholders that oh! by the way we also have sold 4 million ounces worth of call options (another 125 tonnes)which means that someone other than Barrick shareholders will benefit on the upside of this amount of their future production should gold rise in price significantly in the future. So in simple terms what you have is a collusion between various groups who stand to benefit from a low gold price(fill in your own list of guilty parties) who had the financial wizards at American Barricks complete cooperation in bring to the market not only the gold produced in a given year but in Barricks case the total of the next four years. Obviously this had a depressing effect on the spot price. This caused more gold mining companies to have to sell their production forward to avoid bankruptcy.Net- net you have a situation were the world spot price has been artificially lowered to a level well below total production cost(not cash cost that they are always talking about,which excludes depreciation and exploration expenses) and the only survivors will be the large gold mines who because of the large forward sales at higher prices will be the only ones left financially able to acquire the unreplacable gold deposits that at the low spot price Barrick et all created are uneconomic. The reason why Barrick is vulnerable now is that their greed has got them into a situation where they probably could not meet their obligations to deliver their gold at superior(higher than the current spot price)prices that they origionally envisioned.Shareholders might be willing to pay management large bonuses when their forward sales give the company $60 per ounce better than spot(even if management directly helped the comparison)but I doubt shareholders will tolerate management when the spread is reversed. Lets see how much bragging you hear from Barricks management when their realized gold sale price is $60 below current spot. You will never hear that because all these managements know the game is up and now they have to buy future production back. Yes that is right, Barrick and their fellow producers not only have to honor their existing forward sales but must enter the physical market to retire their future sales before the other parties also caught short take up all the available physical gold. Well if all the mines sold their near-in production long ago in order to stay alive where does Barrick get the additional supply to close its prior mistakes. In aggregate the gold producers are trapped. The gold they sold long ago went to your wife or mine and is dangling from her ear. So Barricks toast and so are the Central banks who loaned their "surplus gold" to the bullion banks who loaned it to Barrick and made it possible to sell forward something that won't be mined for another four years. In Brief-Barrick sold their shareholders upside in order to lock in a higher price. But now they can't buy it back because 17 million ounces is 500 tonnes about the entire annual production of South Africa, and they are screwed. Couldn't happen to a nicer bunch of guys.

He who sells what isn't hism
Buys it back,or goes to prison.

Jesse Livermore









Anyone who would like to correct any errors in the above explanation,please feel free.

Dearest Lady Leigh,
I'm always here, listning and learning. We have so many fine new posters, I hate to take up the space. This Forum is gaining daily in integrety. I love to just sit here and absorb.
Sincerely, The Scot

Thank you for your wisdom. Rom1:11,12
Sincerly, The Scot

Thanks, Nickel62, for the review of American Barrick. It certainly explains why the stock barely moved when the POG recently jumped. So much for the naiive notion that if a company touts a substantial reserve of gold and the POG goes up that the value of the company ought to go up as well. Life ain't so simple any more and this doesn't look like Kansas, Toto.

Does anyone know about Newmont and its forward sales?

Are there any mining stocks whose reserves are remain a play if the POG starts reflecting value against paper currency?

Over the past few days since first joining this incredible forum, it seems that some folks are concerned that any assets not in your own backyard are at risk. As risk is a relative matter, I'm wondering if I wanted to hedge by buy physical Gold and play a gold mine stock would a US or Canadian or other national company be best.

Also in buying gold coins, is there a dollar horizon under which one should keep on each sale to preclude reporting requirements? Is there any advantage for an American to buy Gold in Canada?

I am sorry if this comes a bit late, however, yesterday you asked about the options market, I think. These are just a few thoughts.

It has become quite apparrent that manipulation in the PM markets were well underway when the expiry on options came due during the last round. The Banks realized that they simply could not cover and did all that they could to get the POG below $300/oz. I know a few who were able to pocket some profits with difficulty before POG retraced below $300/oz in the last run-up. They were the lucky ones who did not get (completely) carried away with greed. A few held on for what they thought would be the inevitable rise in POG and they lost. They were not wrong in their assessments about the Au market, but they underestimated the resolve of the market makers. The market makers will likely pull out the stops for the Nov. 12th expiry as well. During this last phase the rules were changed again. Market orders only, no limit orders accepted, and clearances were delayed for several days. The facts are clear that the market makers were caught flat-footed by the CB's announcement on Sept. 26th. I don't think much will change come Nov. 12th. The "Fear Factor" in my opinion won't take hold until very late Dec. when Y2K concerns and possible FED rate hikes are realities. Sheep are complacent by nature (and perhaps breeding), they procrastinate until danger is upon them. They do not plan until the wolves are bearing down on their throats! Why should the options markets reflect any increased agitation so soon (Nov. 12th)? I would expect any concerns to be reflected much later, probably when Y2K starts to enter the collective minds of the sheep. History shows many examples of this. I don't see anything different happening.

"The only thing that we learn from history, is that we learn nothing" Albert Einstein

I tend to agree with FOA and Another to point about the "paper markets". They said that "paper will burn". Under the market manipulation of the bankers and investment houses this is probably true as outlined above. Many mining companies are also at risk if POG rises. However, some mning companies will do very well. It does come down to whether the companies are hedged or not, and more importantly, how those hedges are structured. Stillwater Mining (SWC, though not a Gold mining company) has the best of possible hedge structures, where the hedge places a floor of about $300/oz on platinum, with the upside potential completely open. On the other hand, Ashanti (ASL) was structured where they were vulnerable to a rising price resulting in what is essentially margin calls. I think that with all investments one should investigate as best as one can, unfortunately most mining companies don't or won't come clean with the investing public about potential liabilities such as restrictive hedges.

Options are too risky for me under this kind of market. It is rigged. Our rulers allow this to occur. Has anyone heard of the CFTC investigating these violations of the Sherman Anti-trust Act? Of course not, but when some small time investor uses insider trading, the regulators are on him/her like flies on dog s**t. I would be very careful and try to be aware of the risks in the options market at this time. If you wish to play this game, I wish you the best of luck and hope that you clean up "Big-Time". I know that this doesn't really answer the question but just a thought or two about the risks here. Take care.

First, Newmont (NEM) has hedged some of it's production. Ironically this occurred just a couple of weeks before the POG rose over $300/oz. They essentially were told to "lock-in" their price or have their bond rating lowered. The Banker in question is, also ironic for the conspiracy crowd, Goldman sacks. I don't know the structure of their hedge, howvever, it is a relatively small position. There are other mining companies that don't hedge as well. For example: Agnico-eagle (AEM), Harmony Gold (HGMCY), Compania Minas Buenaventura (BVN), and Canadian producer Franco-Nevada (T-FN). HGMCY and BVN can be purchased directly by side-stepping a broker by purchasing DSP's, and FN is primarily a gold royalty company with an operating mine in Nevada (Ken Snyder Mine, Midas, NV). There are very few other mining companies that don't hedge. A few have hedges, but either have substantial cash reserves or hedges are structured so they can benifit from a rising POG such as Placer Dome (PDG) or are well diversified into other metals as well such as Freeport McMoran (FCX). Then of cousr there are other plays such as PGM's with Stillwater Miniong (SWC), or silver with Apex Silver (SIL), Pan American Silver (PAAS), etc. Of course the safest bet is physical form of PM's. I Invest in both stock and physical, and rarely play the futures market unless I feel "Mean and invincible". Hope this helps.

s&p futures up +6.00 and gold up +0.30 at $291.60. At these levels looks a slightly higher open on tomorrows market.

NEW YORK (Dow Jones)--Vancouver-based Placer Dome Inc. (T.PDG) declined to comment on talk that the company is interested in buying troubled Ghanaian gold producer Ashanti Goldfields Co. Ltd. (ASL).

A Placer Dome spokeswoman said that the company does not comment on rumors or its acquisition plans.

Speculation about a possible buyer of Ashanti has increased following news Monday that the mining company has reached a three-year agreement with its 15 counterparties on its hedge book. The agreement will exempt Ashanti from any requirement to post margin on its hedge contracts up to Dec. 31, 2002. In return, the company will issue the counterparties with warrants which convert indirectly into Ashanti ordinary shares.

Ashanti became heavily exposed on its derivatives hedge book following a surprise rally in the price of gold last month. The company's counterparties were entitled to margin calls of around $270 million.

Thank you for your kind recognition of my bleating and blatting.

I know I didn't say anything new, but I hope to add to the weight of truth, so as to tip the scale towards righteousness.

Its also fun to listen to myself talk, and see my words in print. (I'm easily amused. Even rubberbands are good for hours of s-t-r-e-t-c-h-y fun)

I hope my wry sense of self deprecating humor is not lost on you. Don't worry about me, I'll certainly be back to normal tomorrow.

On a more serious note, I often read where you talk about the Fed processing billions in "overnight repos" Is there a place, or post, where I could read up on this mysterious process?

Good evening friends (& good luck for Sth Africa in the rugby world cup play off's tomorrow morning, they'll need it!)

Mr Kaplan's Gold summary for the day;
SUMMARY: My current outlook has been raised to MODESTLY BULLISH for gold and its shares. On Wednesday, November 3, the XAU underperformed
the price of gold, which is negative. On Tuesday, November 2, the XAU slightly outperformed the yellow metal on an up day, while the put-call ratios showed
modest investor pessimism toward gold mining shares, both of which are positive signs. Monday's (November 1) drop in the price of gold has removed a substantial
portion of its potential downside. Commodities and currencies in general are showing signs of exhaustion, with their traders' commitments clearly showing that they
have become overextended. The one-month lease rate for gold is having trouble just staying above 1%, after being at 10% just three weeks ago. As the stock and
bond markets rally simultaneously, money will likely be leaving precious metals for more traditional investments. Those gold analysts who were most bearish this
summer are currently the most bullish. Gold's volume is often higher on down days than on up days, which is usually a precursor to lower prices. It would not be at
all surprising to see gold eventually go below $280 and the XAU go below 60. The current rally in stocks and bonds might serve as the kiss of death for gold's
short-term performance as many investors will feel that they don't need a hedge against uncertainty. The strong performance of unhedged mining shares is also a
cause for concern; many of these shares are actually trading at higher prices than they were when gold was at $320. Before any strong rally in gold, the unhedged
producers are usually the weakest performers, as investor skepticism about the prospects for a gold rally scares share buyers away from the uncertainty of always
selling at the spot price. One strongly negative factor is the number of analysts who now say that gold is a good investment "as long as it remains above $285." If
gold is a really good investment at $292, then it should be an even better investment at $282. If people are actually listening to these analysts, then there will be a lot
of sell stops just below $285 which could eventually trigger a final wave of stop-loss long liquidation. On the plus side, commercials appear to be finally accumulating
gold healthily on dips. Traders' commitments show commercials, primarily experienced multinational corporate treasurers, going more and more heavily long the U.S.
dollar against most major currencies; a rising dollar is usually negative for gold. Traders' commitments also show commercials long very few commodities or
currencies which usually correlate positively with gold, which is of course an intermediate-term negative for the yellow metal. Bonds may recently have bottomed,
and rising bonds are very bad for gold since a certain critical mass of money often switches back and forth between fixed income securities and the yellow metal.
Keep an eye on the JOC commodities index. If it breaks below its 200-day moving average then look out below. On the other hand, if it can regain its 100-week
moving average then gold should find support so long as the other bearish factors can reverse themselves in time.

THOUGHT OF THE DAY: Implied volatilities for gold futures and gold shares have contracted sharply in recent days, indicating that investors
expect gold to fluctuate within a narrow trading range in the near future.

Black Blade
Sir Black Blade, did you post something a while back that calculated the accumulation of gold by the ME oil nations? I recall that the number was in the neighborhood of 11,500 tons.
If this was your post would you repost or direct me to the post number? Thanks for adding so much to this forum.

Sorry, but that wasn't me. I had wondered about that myself. Perhaps FOA or Another would be in a position to know. Someone posted some info about a book that discussed the oil/Au agreements with Saudi Arabia circa 1933 when gold ownership in the US was criminalized and the subsequent Au trade agreement problems with the ME oil producers. I don't know if the book has info about Au amounts held by the ME countries, etc. though I seem to recall that the book was somewhat dated. Considering the amount of petroleum that was exported, and if it really was paid for in Au, then the amount of Au involved must be unbelievably huge. Good luck!

MARKET REPORT(11/4/99): Gold stayed rangebound with London dealers
reporting "some signs" of physical demand returning to the market,
according to a Reuters report this morning...... Overnight European and
Asian trade, however, was featureless....Ashanti says its 8.9 million
ounce hedge book is still $219 million under water at $292 spot price.
The mining company was relieved of its margin predicament by a
consortium of lenders in an agreement made last week. According to a
Reuters report, "Ashanti chief executive Sam Jonah said (yesterday)
Ashanti would be actively managing its hedge book but intended to retain
the current overall level." In other words, we have the very odd
situation of a gold mining company saying a prayer each night that the
price of gold will not go up and force it out of business.............
My fellow meisters, if you are looking for an anti-gold investment, you
might look into Ashanti whose stock chart is negatively correlated to
the gold price. When gold goes down, its stock price goes up; when gold
goes up, its stock price goes down. You might ask yourself a question
though: How do I win as a stockholder in a gold mining company that has
bet against the commodity it produces and whose future depends on that
commodity's demise? All the foregoing of course is tongue-in-cheek
commentary on how Ashanti's situation impacts the gold bullion market
and not intended to be stock advice. For that you need to contact your
local stockbroker.... By the way the bottom line on the Ashanti
situation is this: Those call positions haven't gone away. Somebody is
holding a winning hand and might like to pull that pot from the center
of the table before the game's over. Ashanti's market position has
temporarily improved by about half -- since it was some $500 million
under water 30 days ago and was staring a $270 million margin call in
the face. If gold goes back up from here, Ashanti' back in the
soup....or is that fire.....That's it for today. See you here tomorrow.

Please call 800-869-5115 (Ask for Mary Conway) if you have an
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and submit your request by E-Mail. You will also receive our
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http://www.usagold.com/wgc.htmlOnce again it is time to grab your torches and wander down that familiar hallway to this room where you may see the World Gold Council recount the events and sentiments that shaped the global gold market for the previous week, October 25-29. Of note is the indefinate extension of the 5% tariff on Russia's metal exports. The tariff, which includes gold, had been about to expire when the extention resolution was signed by Prime Minister Putin. Some traders had been anticipating a window of opportunity during which time tax-free gold exports might become available to help feed the global gold financial system.

No dice. (No gold, either.)

I think what you are looking for is some of ORO's work. Whenever I get to feeling cocky & smart, I go read some of his work, and the problem is taken care of. The post that I could lay my hands on here at the office is "Msg ID 18006" dated 11/01/99. He estimates 1500 tons per year minimum, 3000 tons probable, and 4500 tons possible.
Regards

You may remember MK's "Mr Insider" putting forward a 5800 ton figure for the Saudi position.
Judging from Veneroso's estimates, this figure would be high. From my own work, the figure seems low. Since Veneroso does try to be conservative (as opposed to Milling-Stanley's blind eyes), I suppose that is a reasonable figure.

http://quote.bloomberg.com/fgcgi.cgi?ptitle=Top%20Financial%20News&s1=blk&tp=ad_topright_topfin&T=markets_bfgcgi_content99.ht&s2=blk&bt=blk&s=2d76dac39ef1a62edb68bde8714ca71eThe European Central Bank raised its refinancing rate to 3%, up from 2.5%, marking the first increase since the euro's January introduction, and the first rate increase in the euro region since October 1997 when the Bundesbank raised borrowing costs from 3% to 3.3%. The bank also raised its marginal lending rate from 3.5% to 4% in their effort to keep inflation below 2%. ECB President Wim Duisenberg said of today's rate raise, "The current economic climate is far more favorable" than earlier this year, increasing the balance of risks toward inflation. "A timely rise will avoid
the need for a bigger rise later."

Rates are now back at the level upon euro introduction, with today's move undoing the 0.5% April rate cut which was prompted by slowing growth and declining business confidence.

Today's 0.25% boost by the Bank of England of its benchmark interest rate to 5.5 percent was the second increase in two months in the UK's efforts to hold inflation to a target level of 2.5%.

http://biz.yahoo.com/rf/991104/j0.htmlBut even on top of this early morning operation to provide a long-term addition to reserves, analysts expected a small add need remained. Dana Saporta, economist at Stone & McCarthy Research Associates Inc, said, "There's a good chance they could layer something shorter on the 84-day. The operation this morning was not a surprise, given the larger add need we see going forward through year-end."

And in fact, the Fed did follow up a short time later this morning with a tri-party settlement operation of overnight system repurchase agreements totaling $2.505 billion.

http://biz.yahoo.com/rf/991103/4p.htmlHow many of you realized how close Brazil's currency, the real, was to Monopoly� money?

Brazil's Central Bank President Arminio Fraga said "We are working on a project which aims to give the citizen that follows the law, that pays his taxes, more freedom." Brazil is considering bringing to an end all forms of capital controls to make their national currency fully interchangeable with any other currency on demand. Essentially this means the currency would be completely free to seek its own level in free float against other world currencies, it's value dictated by market forces of supply and demand based on balance of trade levels with a dash of speculation acting as the "fly in the soup." On a more troubling note, the Central Bank announced that it would now be capitalizing on an agreement it had reached with the IMF allowing the bank to further lower their minimum requirement of foreign reserves. This is a move intended to give it more resurces to intervene in the foreign exchange market, but we all know from the experiences of the Asian Contagion that such forex interentions are a temporary "solution" that only succeed in draining away the national savings. On the other hand, if they were to use these forex operations to purchace gold rather than their own currency...

http://www.usagold.com/THEGILDEDOPINION.htmlVisit this link from time to time to choose from our growing selection of notable gold commentary. Scan over the excerpts and descriptions in this index then click on the title of your choice to learn more from these Gilded Opinions.

note that the long repo is a 1% add to Fed monetization - would make it to 12% y/y growth.

Fed monetization is adding to monetary base - already up 10% y/y. Going up 1.2% per month of late.
Probably y2k stashes behind some of that, as well as bank prep for that purpose with vault cash.

Acummulate Physical Gold Cheap & Create Mtns. of New Debt.Go ahead & mortgage the farm to buy paper assets. We shall soon see in the year ahead who knew what and what part Y2k played in this "Great Bankers Scam"--IMO--YGM.

---------------------------------------------------------------------------------------------

Homeowners Are Under a `Gold Mine'��(Associated Press)
Federal Reserve research lends credence to the observation that the American home has evolved from simply a roof over one's head to the great consumer lending institution.
- Nov 04 8:04 AM EST

http://www.kitco.com/lease.rate.htmlHey yall and Hi!, been awhile since i posted.. i've been reading but have had little time to post...

i would like to say Hi! to all the new posters here.. and Welcome!

*** Now down to business... LOOK at the link i've provided..Platinum lease rates have soared today UP 12%..to 45.4% 1 month lease...
After the steep climb in lease rates Platinum then jumped 6 dollars at the Comex close.. While Gold lease rates continue to deteriorate... Gold Jumped at the close 1.5 dollars....OIL has spiked 50 cents.....

What does all this mean? To me it says LOOK for a run to begin.. i belive BIG money knows something and is telegraphing their move in the Platinum lease rates. i am excited to see this spike transfer to the Gold price...
It looks to me as if the Wolf Pack.. Platinum/Gold/Silver.. is preparing to move up!!!
Why?.... i don't know... maybe some of you have the scoop as to why... Or Who is responsible.....

http://www.nrsc.org/contents/taskforce/At the above link ( on line straw poll) Steve Forbes leads all Rep. contenders. 59% of totals nation wide. Looks like most like his thinking on taxes. Less taxes, less government gets my attention.
Does anyone here know his thinking on Gold and/or Guns?

Stockpile the three meteals. Gold, Silver, and Lead.

Thanks to all here. el

http:www.tfc.com/syndication/TFC/taylor.html



If This Is The Beginning of a New Bull Market, It Is Going To Be HUGE

By Jay Taylor,
Taylor Hard Money Advisors, Inc.

Posted Thursday, November 04, 1999 at 09:33 AM EST

Based on some information we had last week from one of the gold mining firms that had gotten itself into trouble by selling more gold forward than it could produce, we suggested last week end that gold would likely head toward or to around $290 per ounce. This would allow Hannibal Lecter (Goldman Sachs & other Bullion banks) to bail out itself and other gold carry trade players and gold market manipulators to be bailed out from potential financial disaster that seemed quite likely a couple of weeks ago. Like clockwork, the price of gold was managed down to $290 on Wednesday as quoted in the London P.M. Fix. The decline could not have been more orderly. From $302.40 last Friday, the London Gold price declined to $302 on Monday, $296 on Tuesday and $290, (the magic number) on Wednesday. By Thursday, the price of gold began to rise once again, closing in London at $296 and then on Friday it closed the week at $299. For the month of October, gold's daily average price as quoted by the London P.M. fix was $310.72 or 17.2% above the average September price of $265.23 and 21% above the average August gold price of $256.73. In terms of the profit potential for the stocks covered in our newsletter, this is an enormous improvement so things are beginning to look much better from our perspective.

Why did the September 28th announcement by the 15 European Central banks have such a large impact on the gold markets? I am confident it is because the fundamentals outlined by Frank Veneroso and Bill Murphy are correct. What are those fundamentals? According to Frank Veneroso, a shortfall at current gold prices, between what is produced by mines and recycled sources and what is demanded by the markets for jewelry and industrial uses, is between 160 and 180 tonnes per month short of what is being demanded. Veneroso and Murphy have calculated that the amount of gold sold short is on the order of at least 8,000 tonnes to 10,000 tonnes, possibly more. In any event, this is more than twice the amount that the establishment has estimated has been leased or lent out by the Central Banks. But our politicians and bullion banks cannot fool the laws of the market.

The short sellers were overwhelmed because of the huge shortage in supply to meet demand. This was able to go on for quite some time because central banks were continuing to lend gold and sell it out right, thus closing the gap between supply and demand. But as the amount of gold that was lent out began to become a very significant total of all central bank reserves, the European banks said "enough is enough". If this version of the events of the past couple of months and years is correct, I think a new bull market is under way and I would not be surprised if the action in the stock market is the mirror image of a bull market in gold. At least the historical relationship between paper assets and gold is on the side of that expectation. If we are at the beginning of a new bull market, it is going to result in a huge bull market in gold shares. After riding out 20 years of bear markets, this turn of event will be most welcomed by all of us.


Jay Taylor is a regular contributor to MarketMavensReport.com . In 1981 he began publishing North American Gold Mining Stocks, which preceeded J Taylor's Gold & Gold Stocks and J Taylor's Gold Resource & Environmental Stocks. Jay completed most requisite course work for a B.A. degree in geology from Hunter College in New York. On August 15, 1997, Jay resigned from ING-Barings to devote full time to his newsletter.

http://www.africanews.org/south/southafrica/stories/19991103_feat14.htmlIn contrast to the picture described earlier of Brazil's reserves dwindling in size through possible forex operations in defense of the currency, South Africa's Reserve Bank is now seen to have increased the size of their gold and foreign exchange reserves. Some economists have suggested that Y2K may be the rason behind the unexpected increase over the recent month. One economist said about this build-up, "This is done to create a liquidity cushion in the event of a liquidity squeeze over Y2K and it is unlikely the Reserve Bank will use these reserves to protect the rand."

Lincoln & Jackson on Bankers Being a "Den of Thieves and Vipers"

"This country, with its institutions, belongs to the people who inhabit it. Whenever they shall grow weary of the existing government, they can exercise their constitutional right of amending it, or their revolutionary right to dismember or overthrow it." Abraham Lincoln, First inaugural Address, March 4, 1861

Benjamin Franklin was the man of destiny who, inadvertently, caused the International Octopus to turn his greedy eyes toward the New World. At the time, neither Illuminism nor Communism had been perfected, international organizations were just a dream of the future. But Meier Amschel Rothschild had already established himself as king of the international bankers. And the first most powerful tentacle of the Octopus was interested in the wealth of the 13 colonies.

An agent of the Rothschild House asked Franklin, then in London, how he accounted for the prosperous condition of the Colonies. Franklin replied: 'That is simple - in the Colonies we issue our own money. It is called Colonial Script - we issue it in proper proportion to the demands of trade and industry.' (Page 98, Senate Document, No 23, Committee on Banking & Currency.)

Rothschild decided to change all this, caused an order to be issued prohibiting the Colonists from issuing their own money, forcing them to use bank money. Said Franklin: 'In one year (1765) the conditions were so reversed that the era of prosperity ended, and a depression set in, to such an extent that the streets of the Colonies were filled with unemployed.

The Bank of England refused to give more than 50 per cent of the face value of the Script when turned over as required by law. The circulating medium of exchange was thus reduced by half...The Colonies would gladly have borne the little tax on tea and other items had it not been that England took away from the Colonies their money, which created unemployment and dissatisfaction. Then Rothschild financed the Revolution which he created, selling Hessian troops to King George at eight pounds per head.

Despite active and organized lobbying on the part of agents of the Rothschild controlled Bank of England, our Founding Fathers wrote into the Constitution: Congress shall have the power to coin money and regulate the value thereof. This safeguard did not disappear until 1913 with the passage of the Federal Reserve Act - by that time all the tentacles of the Octopus were at work on the American continent.

But agents of the Octopus did achieve one success: establishment of a Bank of America, a Federally-chartered bank owned and operated by private interests which Thomas Jefferson, Andrew Jackson, John Adams, James Madison and Benjamin Franklin denounced as being an agency of the Bank of England, now totally in the control of the International Bankers.

In 1811, when the Bank's charter expired, Congress refused to renew it. Nathan Rothschild, son of Meier, issued his ultimatum: Either the application for renewal of the charter is granted or the United States will find itself involved in a most disastrous war. President Andrew Jackson answered just as determinedly: "You are a den of thieves - vipers. I intend to rout you out, and by the Eternal God I will rout you out." He did. The result: The War of 1812." Pages 250 & 251 from Conquest or Consent by W. B. Vennard

Interesting stuff! Can you provide a link or more background? -Al

http://www.devvy.com/index.htmlHere you are Al. Sorry I should have included it as I thought after I posted it that folks might think I was plagurizing (sp)
It is definately a good site. ----Regards----YGM

PS-my post was found in the "Quotes You Should Remember" section.

Goldspoon Re 18347 - I wish something were happening but I suspect we will see heavy paper selling in Sydney/Asia again & the POG brought back within the "approved" trading range.

Eurex is World's Biggest Derivatives Exchange

Is CBOT becoming a has been?

Eurex, Germany's derivatives exchange, last month traded four times as many contracts as Liffe, its London-based rival, in a dramatic reversal of performance just 18 months ago.

Eurex, the product of last year's merger between the Frankfurt and Zurich-based exchanges, is now comfortably the largest derivatives exchange in the world, having traded a record 300m contracts since January. The previous annual record was set by the Chicago Board of Trade at 280m in 1998.

With a turnover of 34m contracts last month, Eurex traded almost double the volume of the CBOT, previously the largest exchange in the world.

The volume traded came to about 80 per cent of the combined turnover of Liffe, the CBOT and the Chicago Mercantile Exchange. Eurex was the fourth largest exchange in the world by volume of turnover until mid-1998.

It was also the only exchange to buck the trend of declining month-on-month volumes in advance of the transition to the new millennium. "Eurex is now the Goliath and Liffe is now the David," a US banker said.

Analysts said Eurex had managed to defy the overall fall in volume occurring in the exchanges with the help of activity generated by the launch of the euro. By abolishing 11 currencies, European monetary union created a larger pool of liquidity in the benchmark euro-denominated contracts, which are dominated by German instruments.

Liquidity has shrivelled in French, Italian and Spanish derivatives based on government bonds. At a turnover of less than 1m last month, the future on the 10-year French government bond on Matif, the French exchange, was dwarfed by turnover on its German counterpart in Frankfurt, which hit 12m.

Hugh Freedburg, chief executive of Liffe, yesterday warned that volumes were likely to fall further during the next few months.

The drop in activity comes at a difficult time for Liffe, which is making its final transition from floor-based to screen-based trading during the next fortnight. "As we approach the year-end, we expect to see a decline in volumes generally as activity drops across all markets ahead of Y2K," Mr Freedburg said.

At just 8m contracts last month, turnover on Liffe was almost 30 per cent down on October 1998. The combined turnover in all Liffe's products, which includes futures and options on commodities and equities and bonds and interest rates, was lower than the turnover on the future on the 10-year German government bond, Eurex's most popular contract.


The Financial Times, November 3, 1999

http://infoseek.go.com/Content?arn=a1970LBY327reulb-19991104&qt=&sv=IS&lk=noframes&col=NX&kt=A&ak=news1486At $290.00/oz, doesn't addd up to 612 billion dollars in gold? I thought Russia was destitute. Sorry, my mistake.

This question has been asked many times. If Gold
is nothing more than a barbaric relic and blah, blah, blah,
then just who the heck is buying all this no longer desired
junk that someone is so obviously selling ?

Perhaps it is the CB's themselves ?

I don't know if it is at all possible, however, given
the financial system as it exists today if the CB's could in
some underhanded, dirty dealing way, which would not
surprise me at all, "OWN" (or even somehow, perhaps
more likely, control) Bullion Bank's then we may have
an answer. It would seem to me if this were possible the
CB's would be in a virtual "NO LOSE" situation.
One of the greatest scams of all time.

Let me walk you through my "Imaginary" Sting.

Hypotheticals:

1) The "CBC" - Central Bank of Canada
2) The "BBC" - Bullion Bank of Canada
a wholly owned subsidiary or, if you prefer,
controlled entity of the "CBC", but, hidden,
not out in the open.
3) The "GMC" - Gold Mining Company of Canada
or any Gold Mining Company of your choosing.
4) The POG is for purposes of illustration US $ 350.00
per ounce.
5) From here on all dollar amounts are assumed to be
in US dollars.
6) Contracts are assumed to be honored.
Fact:

1) The POG can do only one of three things.
a) remain the same.
b) rise.
c) fall.
2) This entire exercise is purely theoretical and quite
possibly a waste of your time and mine. If so I'm
sure I'll hear about it and I apologise in advance.

The Sting:

The CBC (Central Bank of Canada) "loans" the BBC
(Bullion Bank of Canada (it's wholly owned subsidiary))
1,000,000 ounces of Gold valued at $ 350.00 dollars per ounce.
This "loan" is repayable in twelve months with 1,000,000 ounces
of Gold plus a small interest (lease rate) charge of 1 %,
also repayable in Gold.

The BBC in conversation with their preferred customer,
the GMC (Gold Mining Company of Canada), relates that
rumour has it (from reliable sources) that the POG is heading
down. Now, since the GMC is such a valuable and preferred
customer, the BBC would be willing to loan up to 1,000,000
ounces of Gold to GMC at exactly the same rate and conditions
as they borrow from their CB. The GMC, hardly believing their
good fortune, snap up the entire 1,000,000 ounces and promptly
sell these ounces forward.

As stated above, from the time of this contract
forward, the POG can do only one of three things. Lets see
how the BBC, or more accurately, the CBC (since they own
or control the BBC) would fare in each of the three scenarios.

1) The POG is exactly $ 350.00 at contract settlement.
The CBC is repaid $ 1,010,000 dollars in Gold. A $ 10,000
profit for simply lending their Gold for a fixed period of time.

2) The POG is higher at the time of contract settlement.
The result is the same as above except now their 1,000,000
ounces of Gold are worth more.

3) The POG is lower at the time of contract settlement.
The result is the same as 1) except now their 1,000,000
ounces of Gold are worth less. Had they simply held on to the
Gold they would be poorer to the tune of $ 10,000 dollars.

I realise this is a simplification of how these contracts
are actually drawn and there are many other factors that could
come into play, but, I think the basic premise is sound. I also
understand that this is not what CB's are supposed to be all
about but just look at the BOE. Furthermore, the Bullion
Bank (or a subsidiary it might own) could be shorting Gold
stocks, dealing in derivatives, the possibilities are endless.
If I'm way off course here, please advise.

http://nordenl.com/~hawkins/CIVIL.HTMThis IS very off topic and I apologize to any or all--- But it's so quiet out here. I imagine many like Bill Murphy are at the Blanchard Investment Conference in New Orleans. This site was emailed to me by a friend (Bryant) over at GE Forum and it IS something all should read & digest.---YGM.

PREFACE
In September 199 1, I re-entered The Ohio State University and started taking courses in advanced microbiology, in preparation for taking my National Registry of Microbiologist Certification Exam. I soon entered into a clique of nontraditional students, whose average age was around 40. In that clique was a delightful lady known by the name of Miriam Arif. We soon became close friends. Miriam was from Iraq, and was here studying microbiology. She had an unusual background. One of her very close relatives, General Arif was a President of Iraq. In April, 1966, He was killed in a helicopter accident (I later learned the General was actually her father). There was a long succession of military coups and now Saddam Hussein and the Republican Guard are in power. In these coups, her family had not faired well. She said that several members of her family had been hung. And at the present time, she felt it safer for her to be here in America, until she could do something that would make her famous back in her home country of Iraq. In February, 1993, 1 had arrived early in order to get a parking spot in the rapidly filling student parking lots, and was having coffee in the small vending area in the bottom of the building where the Med-Tech. courses were taught. The vending area was deserted except for Miriam Arif and myself. I will never forget the way her face and eyes looked that morning. They were very tired and glossy. I have little doubt that she had not gotten any sleep since the World Trade Center building was bombed. This was the Monday after. She must have thought that her arrest was imminent, for the whole time she was rambling on. It was as if she was in a daze. She was silent for a few minutes then she said, "Larry, you are a dear and trusted friend, and what I am going to tell you in the next few minutes you can use to protect yourself and a few friends. When it is my time to act, I do not want your death to be on my conscience. You obviously do not know the danger you face concerning the emergence of Biological Warfare as a major threat to the United States."

She went on to state that nearly all of the emerging countries: Libya, Iran, Iraq, Syria, North Korea, etc., were actively pursuing a germ warfare program, and scraping their nuclear programs. There are two reasons for this shift. The first being complexity & cost for the acquisition of a sufficient nuclear stockpile to be meaningful. The second reason is that BW is antipersonnel warfare, but not anti-materiel warfare, in that housing, buildings, factories, and other structures remain intact and can be made useful in a short time. I asked her if she had actually seen any of Iraq's germ warfare facilities. To this she gave a resounding,"Yes." She went on to state that Iraq uses the plain-Jane approach, in that Iraq has a very large stockpile of biological agents on hand in the form of special bombs, and is developing rockets to spread the infection over a very large area. They have two separate areas of biological operations, one foreign and one regional. The ones that are regional have all the facilities located at small air strips around the country that are deliberately designed not to draw much attention. These airstrips will not handle large to medium class aircraft. In fact they are designed around a single class of aircraft. These aircraft art single engine high wing turboprop's that can be used for crop dusting. The regional Biological operations would take only a couple of days to get into operation if you are using Anthrax, or a couple of weeks if you are using Plague. The production equipment located at these Facilities is kept empty so that it can be explained away as holding tanks for agricultural spray products, if they were ever questioned from abroad as to their purpose. The finished culture fluid flows into a refrigerated tank for holding before it is transferred to the aircraft just before the mission. She further stated that these aircraft have exceptionally long range and that only one aircraft is located at each facility. If that aircraft were to be lost, a replacement aircraft could be flown in from another facility. This keeps every thing small and very difficult to detect. I asked her why we didn't see any Germ Warfare being waged during the Gulf war. To this she responded, "Iraq thought that the multinational force would respond with Nuclear Weapons." I inquired further, You stated that I and the people of North America are in grave danger of Biological Agents being used against us. Would you care to elaborate on that? To this, she replied, "A few hours ago a band of fanatics blew up the World Trade Center. I am sure that my beloved Iraq did not do this thing. For when payback comes, I am sure we will demand at least one American life for every one of my country that you Butchered. We would not settle for some silly old building." I asked her if she knew how such an attack would be carried out. To this she responded, "Don t be silly, of course I know! The vessel of choice would be a metal spray can (stainless steel). You know, like the one you use to spray your garden and exterminators use to spray bug spray. The one that has the little air pump in the middle that you pump up when you, are ready to spray. To this you would add your culture. Following an appropriate amount of time, the batch is ready. You then insert the spray tank's air pump, pump up the sprayer and you are ready." I then asked her, what the most likely targets would be. To this she replied, "For one thing, it will not be just a target, but many (hundreds of) targets simultaneously across the country. The prime of these would be the subway systems. Who would notice another maintenance man down there spraying for bugs? Other inviting targets would be the air ducts of large office buildings. Or, say, a large gathering of people like at a stadium, or just sticking it out of the side of a budding over those crowded streets of many cities. Who is going to notice a little mist coming from some building? Several cells (each cell has ten men, and one woman to act as a carrier) will be using aircraft venturi like the ones that are used to drive the vacuum instruments on airplanes. They are easily obtained mail order in this country. These will be mounted underneath cars. The spray tank will be in the car with the tubing going to the venturi (which acts like a carburetor). When the car is going 60 miles per hour one simply opens the valve and a fog of death will be coming out from behind the car. Other cells will be using these same venturi mounted on light aircraft to attack whole cities at a time." I asked her how she would get her culture (bacteria)? To this Miriam replied that it is very easy for a woman to hide a small sealed vial of dehydrated culture vaginally and get it into North America. "What are they going to do?" She continued, "Take every woman entering the country, have some little room, say in the airport, and make them lay down on a table with their feet up in stirrups and have some one looking up her privates? I think not." I then asked her, "Why not use something that she could obtain in this country without going through all that?' To this, she replied, "That is where the real irony is, for you see, Iraq bought all of the dehydrated vials from companies right here in the United States, who shipped them to Iraq, and those same vials are the ones that Iraqi women have been bringing back into this country to be used against this country." Miriam said that she herself had made several trips back and forth between Iraq and the United States, and every time that she came to America she was carrying a vial inside her as well. (Ed. Note, Miriam has been apprehended doing just this).

I then asked her, "What are the microbes of choice?' To this she responded, 'Plague and Anthrax are the bacteria of choice. For you see, plague is easy to work with. We take the proper amount and kind of antibiotic and then we are fairly safe. Once you are finished, you can very easily clean up any spills with disinfectant. Any you miss will be dead in a couple of days. Anthrax would be used by specially trained cells for attacks on big cities. These cells have to be extremely careful, thus requiring a lot of advanced training. If you got some on your clothes and happened to inhale it several years later, it could kill you. So they will have to strip, thoroughly shower, and leave all articles of clothing that were worn during the attack behind. The only two other bacteria that were considered was Cholera and Typhoid fever but these usually do not kill. They only inconvenience people for a few days." I then asked her when she thought these attacks would begin. To this she responded, "Some time with in the next few years." Miriam said that she personally knew cells training to attack the Olympic Games when they are held. Also, the attacks are centered on three Muslim holy days that are coming up in the next few years, starting in July, 1997. One thing is certain, before the year 2001 this country's population will be reduced to less than fifty million. Miriam stated that she had no problem telling me all of this because 'no one will ever believe you." The door to the elevator opened just then and several students walked out. Miriam quickly entered the same elevator before the doors could close and was gone.

That afternoon I started a barrage of phone calls to the FBI, the CDC, and just about every one that I knew to call. Miriam was right. No one cared. Every bureaucrat that I called simply was not interested. I called the CDC back and after an afternoon of phone tag I finally was transferred to Fort Collins, vector division. I told them what Miriam had told me, and they responded that they thought I had been watching too many science fiction movies, and not to worry about it. I asked them if they had a contingency plan if something like this ever occurred. They said that they did, so I asked them if they would send me a copy. They said that they would. But after a couple of weeks nothing had arrived. -------------------------------Cont'd on Site Above---YGM

http://www.gold-eagle.com/gold_digest_99/chapman110299.htmlThis was posted to Longwaves yesterday. It is an old story but I had not heard this version before. Thanks to Tracy O'Hearn from Longwaves. The post is concerning the possibility that the U.S. may not have all the gold (8,000+ tonnes) that everyone thinks it does. It was written in response to the attached link. Has anyone else heard of Dr. Beter and this story?
-----------------------------------------------------
I came across that idea a long time ago and thought it preposterous. The Chapman article makes me wonder. The information I bookmarked came from a series of audio lecture tapes by a Dr. Peter Beter who died in 1987 and whose wife continued his international consulting firm.

A lot of what he said in these audiotapes seems "off the wall" but his credentials aren't --
http://www.lillybetercapitalgroup.com/main.html
(about the middle of the page)

The excerpt quoted below is from a 1975 AudioTape (#2), Topic #3, at http://www.etext.org/Politics/Conspiracy/Beter.Audio.Letter/dbal02

The part of the audiotape that deals with Fort Knox first provides the contents of an affidavit dated 4/17/75 from a former Congressman (Frank Chelf) who represented the Fort Knox district for 22 years (until he started asking questions about shipments and requesting an audit). In
the affidavit, he swore that he was told by friends who worked at the facility that they were moving lots of gold out and loading it onto trucks "at twilight." He also swore that he tried to bring this to the attention of President Johnson via a telegram. He was referred to the Treasury Department whose answers were always "noncommittal or evasive."

From this affidavit and other testimony, Beter concluded that "the recent final emptying of Fort Knox ...was not an isolated GOLDFINGER-style heist, nor was it remotely similar to any of the other ridiculous gold theft movies you may have seen lately. It was simply the final phase of a very long-term project culminating nearly 15 years of gold removal from America.

"The hemorrhage of America's gold was begun in 1961 with the initiation of the so-called 'London Gold Pool Agreement'.

Beter "challenged the Government to test his charges in court" but the law requires that one must first exhaust administrative remedies, which he did by going to Congress, the Treasury, the Justice Department, the GAO, and the Comptroller General. For his trouble he received "silence,
evasions, and half truths" despite providing examples of inconsistent information about gold shipments from Fort Knox.

One such discrepancy involved an official U.S. Mint document dated June 19, 1975 entitled 'GOLD SHIPMENTS FROM THE UNITED STATES BULLION DEPOSITORY, FT. KNOX, KENTUCKY, January 1, 1961, to June 30, 1974.'

Noting that these shipments did not jive with information received from Congressman Chelf's sources, Dr. Beter wrote a letter to the Director of the U.S. Mint and asked: "What was shipped in the four tractor-trailer loads on January 20, 1965, from Fort Knox to railroad yards across the river to Jeffersonville, Indiana?" He enclosed photos of gold being
moved into the trucks.

The reply from the Director, Mrs. Mary Brooks, dated June 19, 1975 stated: "On January 20, 1965, 1,762,381.353-fine ounces of gold from the Fort Knox Bullion Depository was shipped by way of rail from Jeffersonville, Indiana, to the United States Assay Office, New York, New York."

Dr. Beter goes on to say that "There is no explanation as to why this nearly 2-million-ounce shipment does not appear on the official listing, but this violent conflict among their own statements is only typical of the entire Fort Knox fiasco."

Dr. Beter further charged that "A year ago [would have been 1974], the Chairman of the privately-owned Federal Reserve System, Dr. Arthur Burns, admitted in a letter to Congressman John Rarick that the assets of the Federal Reserve do not include gold; and yet, at the same time,
official statements of the Federal Reserve did list gold as a prime asset, and they still do today. This discrepancy has never been cleared up, Congress taking a ho-hum attitude about it all. The only concrete result so far is that Congressman Rarick, who had been very popular with his constituents, was washed out of office last November with a sea of Rockefeller campaign funds that went to all of his opponents! It so happens that the aforementioned private owners of the Federal Reserve System are the Rockefeller interests, and they react very vigorously whenever anyone dares to poke around at this keystone of their economic
empire."

This guy Beter and what he says might sound crazy but you gotta wonder who is nuttier-- him or our lawmakers who don't appear interested in making sure the gold is safe and sound with periodic audits.

Can't get your link to work, please check.

http://www.egroups.com/group/gata/280.html?It's what's happening in gold
this week and GATA is there.

Was it something I said? Check out this offering by FWN...

Iranian Crowds Burn US Flags on Anniversary of Hostage-taking
By Agence France-Presse
Tehran--Nov 4--Thousands of Iranians burned US flags and chanted
anti-US slogans outside the former US embassy here in an official rally to
celebrate the 20th anniversary of its seizure by militant Islamic
radicals. Some 4,000 people gathered outside the hated "den of spies" to
mark the "Day of Struggle Against Global Arrogance," an annual holiday
commemorating the 1979 embassy hostage-taking which ruptured Iran-US
relations.
---
Having a very good Iranian friend, we'd conclude at some level the citizen-to-citizen relations are not at fault. Chalk this one up to governmental differences and an expression of an all-too-typical sentiment (albeit better organized than most into an actual annual event) found variously throughout the world. Of note, we've never met an arrogant "gold meister." There's probably a lesson in there, somewhere...

On Wall Street today, after a 100-point spike opening on the DOW, buyer's remorse apparently set in, and the rest of the day was spent paring that gain to only 30 points in a slow and steady selloff. NYSE volume neared one billion shares traded as 981,041,000 shares swapped hands.

There was no stopping the Nasdaq though, which extended its record high level on a sixth straight day of gains. On heavy volume of 1,363,504,000 shares, the Composite Index still increased by 27 points after giving back earlier gains, closing up 0.91% at 3055.95. Despite the apparent herculean strength of the indices, the underlying market stats are not as convincing, and belie a tale on the brink of easily becoming a Brothers Grimm fable...slipping into a dark conclusion. In New York Stock Exchange trading, advancing stocks beat decliners by a narrow margin of 1,582 to 1,459, as did the Nasdaq's gainers--2,020 to 1,948. New NYSE 52-week highs edged out new lows 90 to 87. However, the exuberance of extremes was in fact apparent in this stat on the Nasdaq, new highs besting new lows by 210 to 86.

The 30-Yr Bond dipped to 6.088% as the price was bid up 16/32 in action that was inspired by a John Berry article in the Washington Post today that traders were eager to interpret in such a manner as to justify their own excesses. In the article, Philadelphia Fed President Edward Boehne, an reputed dove, said, "There is nothing in the numbers to suggest that inflation is about to jump up and get us," adding that higher inflation is a risk that "may or may not materialize." Mr. Barry drew the conclusion that Fed policymakers will not tighten rates at the November 16 FOMC meeting, and further, will likely leave rates unchanged through the end of the year based on evidence that US economic growth "has crested." Both stock and bond traders seized the day.

The gains on US Treasuries were then extended when the European bond markets rallied following the widely expected rate hikes by the European Central Bank (0.50%) and Bank of England (0.25%). The odd rationale investors were clinging to was that because the European bond markets were able to rally in the face of rate rises, the US bonds would likely be able to shrug off a Fed rate hike equally well. What seemed to please the European bond markets, however, was ECB President Wim Duisenberg's comment which implied that this ECB hike would render further aggressive hikes as unnecessary. Surely this same situation is not to be expected on this side of the Atlantic. In fact, it was only two days ago that J.P. Morgan upped their forecast for Fed rate hikes, anticipating a total of three 0.25% hike all coming before mid-summer next year.
+
Stock and bond traders are now both looking ahead to the October employment report, due out tomorrow at 8:30 a.m. EST. A Reuters poll of economists projects October nonfarm payrolls to increase 313,000 with the unemployment rate to hold steady at 4.2%.

Completely ignored today were comments by Fed Governor Edward Gramlich who said that foreign investment in the US is likely to fall, which could lead to higher domestic interest rates. Frankly, that little tidbit seems to be the more significant news as it pertains to rational investors. Well, I guess that explains it...

Moving over to currencies, the dollar managed to surge during the US session against the euro on technically driven trading. Here's what happened. Those with long positions in the euro against the dollar were startled as the expected rate hike failed to boost the currency as strongly as expected. When the euro opened for trade very close to the trendline, it spooked some traders into closing their postitions (through selling) in what happened to be a thin market, driving the price even lower, triggering ever more sell-stops, and so on. Just as with gold markets on some days, you can see here that the world wasn't suddenly awash with more euros and fewer dollars to justify the euro's loss of 1.12 cents against the dollar (closing at $1.0372). Against the yen the dollar settled with a small loss of 0.05 yen at �104.95.

GOLD

Yesterday's COMEX activity was described as subdued because many market participants were focused on entertaining their visitors for last night's COMEX Annual Gold Dinner at the Pierre hotel. You won't likely see it reported, but trade was likely subdued today, also, as participants were focused on attending to hangovers. When the quiet session was done, December futures were trading up 40c from yesterday at $293.70, but a last minute blast on the physical market lifted spot gold to be quoted up $1.50 at $292.80. Here the Bridge brief on the paper based non-event...

NY Precious Metals Review: Dec silver down after 1-week high
By Melanie Lovatt, Bridge News
New York--Nov 4--COMEX Dec silver futures settled down 0.5c at $5.222
per ounce after creeping to a 1-week high of $5.255. However, the session
was extremely subdued and silver essentially remains confined to its
recent $5.15-5.40 range. Dec gold settled up 40c at $293.70 after a quiet
inside day.

Traders said that precious metals remained dull after Wednesday's COMEX
annual gold dinner. One called the market "sleepy" and noted that a lot of
floor traders were absent during the Gold Week festivities.

David Meger, senior metals analyst at Alaron Trading, said that the
market appears to be "comfortable" with gold at its current price of
$290-293 per ounce basis spot. On COMEX Dec gold managed to claw its way
higher on short-covering, continuing the recovery from Monday's $8.80,
2.9%, slide.
[TownCrier note: Ok, if Melanie insists on mentioning Monday's baby price-slide at every turn, then The Tower must counter with a reminder of the late-September price runup that even after all the trading turmoil and hoodoo STILL nets out today at nearly a $40 gain (+15%)!]
***
(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.

The COMEX depositories--Scotia Mocatta specifically--appears to be boning up for something...fallout from something past, present, or future? The physical equivalent of 200 gold contracts was wheeled in, rolling right past the Registered gold over to the side of the Scotia Mocatta vault where they keep the Eligible stock, thereby raising the Eligible inventory by 20,022 ounces today. After Tuesday's 400-contract equivalent injection, total COMEX Eligible inventory is now up to 151,047 ounces (enough to settle 1,500 contract demands), while Registered gold stocks remain steady at 783,905 ounces.

How many COMEX contracts are out there, you ask? December open interest fell yesterday by 100 net contracts on the low volume of only 14,791 futures trades for December paper, leaving 98,658 contract. (November open interest fell to one, with one contract delivery intention announce for this off-month.)

A bit of a flurry of activity has developed again in the trading of crude futures. FWN reported a broker telling the tale, "With the strength in Brent, the arbitrage window is firmly shut and with refineries coming out of turnarounds, you need crude oil. So everyone is buying up the WTI and paying whatever to get them in." Traders report that there is speculation of an impending squeeze on the December contract as London's Brent crude market exibits strength. In NYMEX trading December crude settled near its highs for the day, ending up 58c at $23.14. Adding strength to the market was the Energy Information Administration prediction that next year's world oil demand would outstrip supply, and that admittedly was based on the assumption that Y2K disruptions to oil would be "minimal." Further, we've gotten used to OPEC member announcements that production cuts might be extended beyond the original March 31, 2000 agreement deadline if warranted by market conditions. Venezuela's Energy and Mines minister Ali Rodriguez said today "that is something that is being studied," to be decided in the next OPEC ministerial meeting scheduled for March in Caracas. He said a technical meeting among OPEC delegates will take place November 13 and 14 (in Vienna) to plan for the Caracas heads of state meeting . In stronger terms, Venezuela's Energy and Mines hydrocarbon director Bernardo Alvarez said he thought the oil output cuts should be extended throughout all of 2000.

In our final word, here at The Tower we certainly won't be burning any flags on this "Day of Struggle Against Global Arrogance." But we just may venture out and spend away some of our few paper notes which are themselves the very picture of arrogance.

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

Test

YGM (11/4/99; 19:00:43MDT - Msg ID:18358)
VERY Off Topic, BUT VERY Important None the Less!
http://nordenl.com/~hawkins/CIVIL.HTM
Please check and advise why there's no reply from
this site.

http://norden1.com/~hawkins/CIVIL.HTMTry this I may have used a small L instead of 1, sorry about that. I just read the first part and gave up. We'll just have to give up breathing I guess---YGM

s&p fututres down -0.50 (essentially flat), and Au up $1.25 to $292.25. Boring day at the open if these levels hold till morning.

When Johnny Carson declared that there was a toilet paper shortage in the late 70's, there was a run on toilet paper. Now the Year 2000 approaches and....

an excerpt from www.prnewswire.com

Purchases of toilet paper have edged out
champagne according to BigYellow's monthly Millennium Personality survey results. Champagne-loving "Party Marty" personalities lost their first place spot held in September to toilet paper and peanut butter buying "Able Mabel"
personalities that took over first place in October.

Y2K preparations, or do these people have harsh dietary habits? hmmmm.....

the previous one does not. Scary stuff--had to go away after posting, I was scared of catching heck for posting it---YGM

By Alden Bentley

NEW YORK, Nov 2 (Reuters) - Gold prices should grind higher in the coming months, moving back above $300 an ounce amid curtailed official sales, solid investment demand and reduced speculative shorting, said gold market consultants CPM group.

Price weakness which pushed bullion just below $290 this week may be ``viewed as an opportunity for fresh long buying, as well as for some shorts to unwind some of their positions,'' the group wrote in its 1999 Gold Survey which was released Tuesday.

``In other words, it would be expected to be short-lived. Prices are ultimately expected to stablize around the $315-$320 level, before heading higher,'' CPM continued.

The gold price surge off 20-year lows in August marks a cyclical turn in the market, though the September 26 announcement of a European central bank sales cap was only one, and not the first, catalyst for the rebound, the firm said.

A technical rally was under way before prices soared $65 to 23-month highs in the days following the pledge by 15 European central banks to cap gold sales, lending and derivatives use.

``Technically based players will continue to be the opportunists they always have been. But going forward the opportunities are more likely to be on the long side than the short side,'' CPM research director Jeffrey Christian said at a seminar about the report.

``They will still short the market but their shorts will probably be shorter term and smaller than they have been,'' he said.

A big mobilizaton of official gold reserves -- partly in the runup to the start of European monetary union in January 1999 -- created a ``hysteria'' of concern about central bank sales in recent years, but was already waning when the rally started.

CPM estimated central bank gold sales at 7.4 million troy ounces (230 tonnes) in 1999, down 49.3 percent from 14.6 million ounces in 1998 and nearly two-thirds lower than 1997's 20 million ounces of reserve sales.

Investment demand for gold, though sporadic, was also already rising. This was seen in the heavily oversubscribed second British gold reserve sale on Sept 21, which initiated the first wave of shortcovering as prices moved through the $260s and $270s.

In 1999, CPM said demand for coins, bullion medallions amd the like may total 11.8 million ounces, off from 15 million ounces in 1998 but above the demand levels of 1994-1997. Next year investment demand could rise to 12.2 million ounces.

``Lower and volatile equity values, a declining dollar, rising oil prices, signs of inflation and Y2K concerns have been reflected in investment demand for gold,'' the report said.

Whether prices exceed the October 5, 23-month highs near $340 an ounce in coming months could hinge on the performance of the U.S. stock market, which fell hard in early October before rebounding in recent weeks.

A continued bull run on Wall Street could sap potential investment into gold, in which case prices would be expected to trade between $300 and $320 an ounce, Christian said.

But if equities loose their attraction, gold could range higher to between $380 and $400 an ounce, he concluded.

http://www.lOpht.com/pub/tezcat/Beter/Beter08.txtI picked this up a while back. Possibly here. Hope the link's right---YGM.

Sorry for so many posts--It's Expose Bankers Night!!!

Since 1917 the Rockefeller empire has been allied with the Soviet
Union, with which we are to be merged against our will and with the
Soviets ultimately in the driver's seat!! As I explained last month,
and have often discussed on other occasions, we, the people are the
victims of an alliance between State Socialism in Russia and Corporate
Socialism here under the Rockefeller Brothers. And, my friends, this
is not an informal arrangement. Since at least the early days of the
Eisenhower Administration, which was actually run behind the scenes by
Nelson Rockefeller, there has been a White House Directive which I am
about to reveal to you for the very first time. It is short, but not
sweet. It establishes as a prime goal of federal policy, and I quote
here:

"to so alter life in the United States that it can be comfortably
merged with life in the Soviet Union."

My friends, I do not merely challenge, I dare President Ford or anyone
else in the White House to deny the existence of this Directive under
oath. They won't do so unless they have become so desperate that they
are willing to gamble on any bluff, because I have access to
documentary evidence on this matter that could immediately convict
them for perjury and lead to impeachment and/or prison.

Yes, this short White House Directive, my friends, quote: "to so alter
life in the United States that it can be comfortably merged with life
in the Soviet Union"--that's the key to all of our domestic and
foreign policy today. It explains why we have become the factory for
the Soviet Union. It explains why so many multinational corporations
are being used to build up the Soviet economy while depressing our
own. It explains why the many huge Rockefeller-controlled, tax-exempt
Foundations, which are all working in this direction, are immune to
prosecution for their flagrant violation of their charters. It
explains why the Rockefeller-controlled banks and financial
institutions are so single-mindedly financing the Soviet Juggernaut at
American taxpayer expense.

President Clinton is arriving back in D.C. after a trip to his home state of
Arkansas. He steps out of the plane carrying two pigs, one under each
arm. When he reaches the bottom of the stairs the Marine guard sharply
salutes him as usual.

Clinton says:
"I'd like to salute you back son, but as you can see my hands are full."

The Marine replies:
"Yes Sir! Mighty fine pigs Sir!"

President Clinton responds:
"These aren't just ordinary pigs Marine, they are pure Arkansas
Razorback Pigs!!"

The Marine replies:
"Yes Sir! Mighty fine Razorbacks Sir!"

The President then responds;
"I got this one for Hillary, and this one for Chelsea."

The Marine guard then replies;
"Yes Sir! Good trade Sir!"

YGM, your Soviet/USA theory is intriguing.

I read a book, (NO pictures!!) that showed that the minority Bolshevics took over all of Russia, from Petrograd, I think, against an overwhelming White Russian majority. They did this, according to the book, with Western financial backing of $17 million, from international banker Max Warburg. (Max's brother, Paul, wrote the initial plan for our US Federal Reserve.)

The theory postualted by the book was that real true communism was the only real threat to the worlds status quo, of division of wealth, and the ruling elite. So they set up a straw man, to show how awful and unworkable communism is. The Soviet system was the creation of Western banking money, to prove to the world that communism was not to be admired, or followed, and it would wreck a country. In setting up this false show, they hoped to disparage communism, and thusly maintain their strangle hold on the worlds political and financial hirearchys.

I must add at this point, first of all, that I am a businessman. I believe every man and woman has a place in this world, where each must work, and earn the rewards of their labors. No one deserves or needs the State to look after them. The Bible talks of making money, in an entreprenurial endeavor, in a positive light, such as in Proverbs, where the woman is honored, because she sells leather goods at the market, and uses the proceeds to buy land. God himself puts his seal of approval on the capitalistic system right there. And also, in many other ares, such as in the New Testament, the apostle Paul tells the congregation htat "He who does not work, shall not eat".
OK, you get the point.

The only thing I'm trying to point out here, is that the West looks to a manufactured enemy in the East, and this is used to unite the sheeple, and justify higher taxes. The first rule to keeping a people quiet, subdued, and pre-occupied, is to give them a common enemy, which unites them in fear and anger, and diffuses the real issue of who is enslaving them.

The book is called "None dare call it Conspiracy"

I wonder how many gold mining companies will be trying to close out their hedge books at the next auction?
Wouldn't that be something to find out that over ten or so companies bid on the gold?
We saw how much shock the declaration from two African companies had on the market.
I hope Newmont makes a bid. I actually like that company.

THX-1138
Go Gold, Go GATA, Go Alan Keyes for President.

Some find it hard to imagine there are any certifiable conspiracies. The antithesis to this polly-anna attitude is right under our noses. Look how the shorts hold gold down until option expiry. Just cause one does not like to admit to conspiracies, does not prove that they are not real. Rather, some who have tender hearts can not hold to the unadulterated truth, because it is too grievous to bear. Imagine the pain of having to be woke up from a simple world of transparent cause and effect, and be made responsible for information that demands those with good conscience to act. It is far easier to dismiss skullduggery, and thereby lighten the load on ones mind, and see the world through a child's eyes. Some will automatically capitulate to this easy no-load kharma right away, at first mention of any behind the scenes groups, because they are either conditioned, or have been conditioned by the media to do so.

The book is carried by Amazon.

Former Federal Reserve Chairman Paul Volcker said on Friday, May 21, 1999: "The fate of the world economy is now totally dependent on the growth of the U.S.
economy, which is dependent on the stock market, whose growth is dependent on about 50 stocks, half of which have never reported any earnings."

Before posting this message, I would like to give a special thanks to Michael Kosares for this Forum and for the magnificent Silver Dollar received yesterday (POG Contest)
It will go nicely with my other maple leaf Silver coins.

I found this post interesting and thought of sharing it with you:

by: oldspeculator (M/Nashville, TN) 11/4/1999 11:39 pm EST
Msg: 23337 of 23345
Hello,

Any market and particularly the stock market is a game of "financial chicken". It is continuous in varied degrees of seriousness. Lately in the gold markets it has reached deadly seriousness. The opposing forces are taking the standoff to the limits and beyond. They are aware of the extreme consequences and nobody wants to blink first.

In the normal course of price discovery prices move between oversold and overbought and reverse relatively quickly. Now in case of golds they are taken to extremes on the down side and held there. In the case of the general stock market it is taken to the extremes on the up side. This is called "holding ones feet to the fire".

In the case of gold the producers and shareholders have been demoralized by the long manipulated bear and capitulate. However you can be absolutely sure at some point it will reverse. It always does.
The gold carry people and other manipulators are going to lose. Too many people are beginning to find the truth. Which is: IT IS NOT POSSIBLE TO SELL SOMETHING THAT IS NOT REAL AND PROFIT BY IT. Somebody is going to have to pay. So far the investing public has paid.

The miners and their shareholders have the goods. The shorts are obviously becoming panicky. They are going to have to deliver something they do not have. You can be sure they are not going to give up easily but they surely will have to.

I am just going to hold my golds lay back and watch the history unfold. Take care, oldspec

--------------------------------------------------------------------------------

I am not sure if Newmont or many other Au companies would be allowed to make bids at the next BOE auction. Only those who are part of the inner circle of banks and few miners are allowed to participate. However, it would not surprise me if some mining companies were to use those who are "allowed to bid" to act as their agents in order to participate. If several mining companies were to bid, it would certainly send a strong message to the BOE and others that the manipulation game will not be passively tolerated.

What does that say for the "civilized" world we live in. God help all sentient beings.

elevator guy (11/3/99-Msg ID:18333)
"I often read where you talk about the Fed processing billions in "overnight repos" Is there a place, or post, where I could read up on this mysterious process?"

Like a foreign language, isn't it? As near as I can figure it out (*wink, wink, nudge, nudge*) repo operations are where you traded your wealth in on some sure-bet paper investment strategy as recommended by a slick broker or CNBC commentator. When the laws of nature in a closed system regain the upper hand, and the card houses built to the sky on a leveraged foundation come crashing earthward, these repo operations are what the Fed uses when you can't make the next payments on your two SUV's and bass boat all parked in your three stall garage.

To start with, you must understand that banks have the distinct privilege to create money from "thin air" as needed to give to a borrower rather than to be limited by the fact that what "real" money they have is often owed to someone else that might choose to claim it back at any given time. This is what fractional reserve lending is all about, and arguably is the biggest culprit to the boom and bust business cycle. (Many varied opinions on that claim, you can be sure.)

Banks are limited in their ability to expand the money supply, however, by legal reserve requirements...a minimum percentage of the bank's liabilities to its depositors (bankspeak for money deposited with the bank by its customers, particularly money held in checking accounts) that must be kept on hand to meet any anticipated immediate demand of withdrawals. If the reserve requirement were 10% and the bank had one customer who had placed $10,000 in a checking account, the bank would be required to keep 10% of this ($1,000) in readily obtainable form (cash in their own vault, for example). So while this one customer "owns" this full $10,000, and has the ability to spend it at will, the bank also has the green light from congress to lend out up to $9,000 to a borrower, who might use it to pay for a remodeled kitchen.

Let's say the contractor takes his $9,000 payment from this borrower, and he also places it on deposit in a checking account with this same bank. The bank may then set aside 10% ($900) of this additional deposit and be free to lend out $8,100 to someone else. At this point, from the original deposit of $10,000, you can see that the bank now miraculously has $19,000 (called "liabilities" because the bank owes this money to its depositors) on deposit in two checking accounts. On the other side of the balance sheet, the "asset" side, the bank has $1,000+$900=$1,900 in vault cash as mandated by the reserve requirements, it has an outstanding loan written to that borrower (for his new kitchen) for $9,000 (which the banks expects to be repaid with interest), and at the moment, the bank also has the remaining $8,100 in available funds from the second deposit (after setting aside $900 from the second deposit of $9,000). So in total assets, the bank has $1,900(vault cash) + $8,100(available funds) + $9,000(loan) = $19,000. Assets are seen to be equal to liabilities on the balance sheet. (Recall, only $10,000 was originally introduced into the banking system as "seed" money to start this inflationary process.)

The bank looks to that $9,000 loan as a profit maker for their own pockets because it gets to keep the interest when the loan is paid back. (Because the bank "temporarily" *created* 9,000 new dollars that didn't originally exist (inflation), the bank has an obligation to destroy (strike from the ledger) this $9,000 as the principle of the loan is repaid...deflation.) Clearly, the bank would like to make similar profits on its remaining $8,100 in available funds. And if these fund get redeposted with this bank, they will be able to yet further expand the money supply from that original $10,000 checking account deposit.

Let's say that there is no one else in town that wants to borrow money. The bank still wants to earn "profits" on these available funds, so the bank does the natural, next best thing and purchases U.S. Treasury bills that pays interest at 5.5% with a maturity of three months. Now, let's say that first depositor is reading this, and is now keenly aware of the shortcomings of this financial system. He decides to pull out $6,000 in order to swap it with MK for an independent monetary asset, gold.

The bank has only $1,900 in vault cash with which to pay this smart customer. Obviously, the terms of that $9,000 outstanding loan are such that it isn't going to be of any help in this matter. The bank must use its Treasury bill as collateral to seek a loan from another bank for two piles of money. First, the bank needs $4,100 to meet their vault cash shortfall on the $6,000 withdrawal. Second, the bank still has a total checking account liability of $4,000 + $9,000 = $13,000, so it must also borrow another $1,300 cash in order to meet the 10% reserve requirement on this remaining level of checking deposits.

That is a simple example of a traumatic turn of events for a bank. They don't net out much "profit" on their assets (outstanding loans and T-bills) when they are forced to be borrowers themselves from other banks, paying the Fed Funds target rate (decided by the Fed at the FOMC meetings) which is currently 5.25%.

More often, the adjustments needed to maintain reserves are small and short term. The reserve requirements are calculated on a daily average basis over a two-week reserve-maintenance period, from Thursday to Wednesday. Yesterday, for example, marked the first day in a new two-week period. In a more typical situation, let's assume one of our depositors withdraws or writes a check on $1,000. As the bank pays the $1,000 out of the vault funds, it is left with only $900 in reserves. However, that amount is only half of the 10% required on the remaining checking deposits of $18,000. They must make arrangements to borrow 900 more dollars to meet their $1,800 reserve requirement until such time as new deposits arrive from customers, or else until their 3-month Treasury bill matures (or perhaps they sell it outright on the open market for cash.)

This is where the Fed repo operations come in handy...simply put, the Fed is writing a short term loan. Repo is jargon for repurchase agreements. The two parties, the Fed and the bank in need, both agree to an effective yield that will be realized when the bank "sells" its collateral (in this case the T-bill) to the Fed for a set short period of time, and then "buys" it back at a slightly higher price that produces the agreed-upon yield. Time periods are short, from overnight, to the special 3 month period in use for Y2K liquidity needs. (Also by special concession for Y2K liquidity shortage is the Fed's willingness to accept crap collateral, referred to in my news reports as "tri-party" operations because there is a potentially dubious third party in these operations that ultimately stands behind the credit-worthiness of the asset/collateral. The Fed isn't generally worried about the USTreasury as the third party behind T-bill repo operations, but when you start scraping the barrel on agency bonds and whatnot because the bank has already sold or borrowed against all of its prime collateral, well, you can see the recipe for disaster with the Fed left holding the bag on defaulted bonds if the bank fails to buy it back as agreed followed by the third party failing to honor their own payment on the bond.

Now you know more than 99.995% of all Americans about much of the banking system, and about overnight (three-day, weekend, 7-day, etc) system repos in particular, although in truth, we only scratched the surface on repo operations, and Fed Funds, and re-discount rates, and a whole host of ways to play musical chairs to find and create money as needs. Some people say that gold is manipulated. Well, insofar as it is also a financial asset that must endure these same banking practices, and further, that it must endure the indignity of bogus "price discovery" through futures markets. That whole game finds its limit, however, where the call is made for the "virtual metal" (paper gold) beyond the ability of the sytem to deliver. Notice how the European central banks have backed safely away from the coming implosion of that degree of artificial-supply manipulation. On the other hand, The Tower submits to you that the dollar is subject to unlimited manipulation...like Quasimodo at a chiropractic clinic. There's no practical ceiling at which the artificial supply of the artificial dollar may be held in check, and worse, no practical floor at which its value may be held at any meaningful point above worthless.

YGM - sounds to me that you are into conspiracy theories.

Check into the Lease/Loan agreement between the US & Soviets
during the 2-nd WW, where the US GAVE the Soviets ALL nuclear tech. knowledge, the Soviets got first crack at ALL war supplies and they got TWO printing presses WITH the plates for the scrip used by US millitary in Europe.

How much Gold do you mine ?

Hey all, Anyone have a date for the next Gold auction?
TIA :)

http://www.bankofengland.co.uk/index.htm

Next BOE auction is Nov. 29th. Oh no! Au down -$4.20 at NY open, and s&p fututres +21.00. A wild ride on Wall Street!

Apparently the employment numbers were "better than expected" and the SP futures are rocketing up, and the POG and the POS are speeding dowmwards.

Time to reassess premises again. My personal wealth is far lower than it would be if I had not bailed out of the market last late summer and early fall, during the big downturn. Perhaps it would have only been a transitory, chimerical gain in wealth (which I suspect is true, as I'm still posting here), but the hard, inescapable reality is that if I were caught in an financial emergency today, and needed to liquidate assets, I would've been far better to stay in the market than accept the theories of both the anti-equities "bubble" position and the gold/precious metals position. Whatever one thinks of the fiat currencies, I have no doubt I could liquidate my mutual funds today, get $Cdn. for my mutual funds in a just over a day, and pay bills and do what I needed to do with those $Cdn. My gold/PM/commodities shares and my actual PM's just could not respond the same way, at least as of today. Now, I suspect this won't be true a year from now, but in purging old e-mails dating back over two years, I've been anticipating the end of this equity bull for over 18 months now, and the rise of the gold bull for the same period, but it never happens. At some point, the anti-equities/pro-gold theory must be proven in objective and quantifiable results, or it will be discredited.

http://www.africanews.org/south/southafrica/stories/19991103_feat14.htmlAFRICA NEWS ONLINE,
`
Y2K Liquidity Build-Up May Be Behind Gold Rise

November 3, 1999
By Samantha Enslin

Johannesburg - A build-up in liquidity ahead of Y2K could be behind the unexpected rise in gross gold and foreign exchange reserves last month, economists said yesterday.

According to the Reserve Bank, preliminary gross gold and foreign exchange reserves increased to R42,6bn from R39,2bn in September, exceeding the Reuters consensus forecast of R40,4bn.

In dollar terms, October reserves stood at $6,9bn, up from $6,5bn the month before. Reserves now cover 14 weeks' worth of imports.

An increase in the Bank's revolving credit facility for the third consecutive month, now at R19,7bn, means the use of credit lines are now higher than during the height of the currency crisis last year.

The Bank was forced to draw excessively on foreign credit lines and increase the use of the forward book in an attempt to stave off an attack by currency speculators.

Noelani King, economist at PSG Investment Bank, said this time around the Bank was building up liquidity in its cash component to be able to respond to possible volatile market movements over the year-end.

"This is done to create a liquidity cushion in the event of a liquidity squeeze over Y2K and it is unlikely the Reserve Bank will use these reserves to protect the rand," she said.

Standard Bank economist Goolam Ballim said among the concerns around Y2K was that foreign portfolio investment in SA bonds and equities could lighten towards the end of the year, placing downward pressure on reserves.

Nico Czypionka, chief economist at SG Frankel Pollak, said it appeared as if foreign banks had adopted a "use it or lose it" attitude to some standby facilities, and the Reserve Bank decided to lock in liquidity timeously.

The net reserve position - which excludes the use of credit facilities - also improved, rising to R22,9bn from R21,5bn due to the effect of a 2% depreciation in the rand-dollar exchange rate.

Economists were encouraged by a continued decline in the net open foreign currency position - SA's uncovered exposure in the forward foreign exchange market - which stood at $14,9bn from R15,6bn. The forward book dropped to $18,7bn from $19,2bn.

Czypionka said this reduced exposure was crucial to SA's assessment by foreign analysts.

"To have reduced it so much since last year's peak must enhance our chances of a rerating to investment grade by Standard & Poor's." The build-up of now sizeable foreign currency balances offshore would assist the Bank ultimately to withdraw from the forward market all together, he said.

Economists agreed that an improvement in reserves supported a further easing of interest rates. But Johan Rossouw, economist at ABN Amro Securities, said other factors such as higher inflationary pressures, liquidity and other concerns relating to Y2K, should reduce the probability of a significant reduction in interest rates.

However, Rossouw still anticipates a 50-basis-point cut in the prime lending rate before the end of this month.

Ballim said that, coupled with disinvestment by offshore investors on Y2K concerns at the end of the year, a weaker gold price would negatively affect reserves and could negate the positive effects of currency revaluation.

Copyright (c) 1999 Business Day. Distributed via Africa News Online (www.africanews.org).

MARKET REPORT(11/5/99): Gold was down this morning in what FWN
described as "trade" selling. Overnight European and Asian trading was
thin and lacked direction. When the market opened in New York, the
bears/shorts saw the current thin market as an opportunity to drive the
price lower. The FWN report quoted one COMEX trader as saying that there
was also some disappointed long liquidation. South Africa's Standard
Bank described the current gold market as being in "a quiet phase of
consolidation." Once this consolidation phase finds a bottom, we could
begin to see some upward potential manifested on gold's developing
strong fundamentals.

Here's what we mean:

In 1999 the mines will produce 2450 tons according to Gold Fields
Mineral Services' estimates and scrap will account for another 550 tons
-- a total of 3000 tons on the production side of the ledger. 1999
estimated demand is 4050 tons leaving a 1050 ton gap the largest on
record. That fact alone might not be enough to move the market because
we have had record supply/demand deficits before. Those have been made
up by forward sales, leases, the gold carry trade, official sector sale
etc. This is where the Washington Agreement (Please see our Gilded
Opinion page for details -- The Dawn of a New Gold Market.) In a
nutshell the supply/demand picture has been radically altered at least
for the next five years by the European central bank declaration of
September 26 which put a moratorium both on sales and leases of central
bank gold. What is important to grab a hold of here is that at a time
when the European central banks have shut down the leasing faucet and
the bullion banks are scrambling for metal anywhere they can find it,
this huge deficit between gold demand and supply shows up. This is
likely to exert a great deal of pressure on the price in the weeks and
months to come.

Robert de Crespigny, the chairman of Australia's largest producer,
Normandy Mines, was recently quoted as saying that the recent fall below
$300 was orchestrated "bank manipulation disguised to protect option
exposures." If true, the logical extension of that observation would be
that the price of gold is being run down by Wall Street and London
players to keep flagging mining companies and their bullion bank lenders
from taking a major hit in the options market and gold carry trade.
Whether or not these "manipulators" are successful will depend totally
on how the massive and unprecedented physical gap mentioned above is
managed -- or not managed, if you will. Perhaps that's why we are seeing
so much pressure being exerted all over the world by the British and
U.S. governments to keep gold in the leasing pipeline with the recent
pledge by Kuwait being the most notable example. But these pockets of
bullion stores are few and far between. As we have already pointed out,
that gap between production and demand is now at an all time high at
precisely the worst moment for the bullion banks. It will be interesting
to see how all this plays out.

Leanne Baker of Salomon Smith Barney, one of this country's top experts
on the gold market and gold mining companies, offers an interesting
adjunct to this scenario which could have enormous implications in the
gold leasing market. Gold leases as many of you know have played a
significant role in filling the gold deficit mentioned above. She and
her firm have issued a provocative and scholarly report titled "A New
Millennium Gold Rush: The Bull Market Is Just Beginning." In it she
drives home several important points with respect to gold's future which
we will be alluding to in the weeks ahead -- most of them positive --
but none perhaps more important than the change in accounting procedures
with respect to how options are handled on mine company and bullion bank
balance sheets.

Beginning June 15, 1999 a new accounting standard will go into effect
which will force financial institutions and mining companies to mark
their gold derivative positions to market and report them on the balance
sheet. Now these positions can be expressed as footnotes to the
financial statement and do not flow to the bottom line. Referring to the
new rule (titled SFAS 133), Leanne Baker says that "Under SFAS, the
recent gold rally and plunge in mark to market value of mining company
hedge books would result in huge hits to net income from call options
sold and to equity from sub-market forward contracts." She goes on to
say that if gold were to stay in the mid-$320s or go higher "the SFAS
133 derivatives- related damage to company income statements and balance
sheets will be staggering."

Ms. Baker makes conservative gold price estimates of $350 average for
2000 and $375 average for 2001. We'll delve into other aspects of the
Leanne Baker/Salomon Smith Barney study at a later date both here and in
our monthly newsletter (To receive your complimentary copy or our
newsletter, please see below.).

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

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
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http://dailynews.yahoo.com/h/ap/19991105/us/religion_in_the_news_1.htmlA number of months ago, I posted that one possible (albeit far-fetched) U.S. response to an attempt to disestablish the $US' primacy as the reserve currency by changing the rules of oil currency settlement could be military action against Saudi Arabia and perhaps other Mid-east states. The pretext would be human rights - the defence of women's rights as the justification to the liberal Democrat mindset, and the protection of the rights of Christians as the justification to the conservative Republican mindset. I noted that American Evangelicals were advocating that US power be brought to bear to protect Christians worldwide. In somewhat the same vein, see the attached article "Catholics Alarmed by Islam's Rise", which highlights the fact that Saudi Arabia financed the building of Europe's largest mosque in Rome, yet denies to Christians the right to worship openly in Saudi Arabia.

George W. is a moderate Republican who would resist calls to protect Christians overseas. But he probably needs the Evangelical "movement conservative" activists to win the election. Pat Buchanan may be an isolationist, but skillful agitation by him could win the US Reform Party some support on this issue and expose a weakness on Bush's part, thereby forcing Bush fils into a proactive stance on protecting Christians worldwide.

Let us be frank and honest: Saudi Arabia violates human rights probably far more so than China, but Saudi Arabia's violations are ignored because: (a) SA is "onside" geopolitically, (b) SA does not pose a direct, clear and forseeable threat to US global supremacy, and (c) SA has lots of desireable cheap oil. What happens to SA when it's "offside" geopolitically, acts to undermine US leadership and cuts off the supply of cheap oil?

http://www.gata.org/elevator guy- Thanks I will pick up a copy for my winter reading.....Regards...YGM.

ss of nep- Somehow the term "Conspiracy Theories" doesn't fit anymore w/ the mtns of evidence presented over the last century or more. The so called theories are now coming to be realities IMO. It seems that all is done in plain view and those that see are eliminated or debunked as being from la la land. Soon I fear many will regret they so easily dismissed the warnings of Beter and lord knows how many others. As for Gold poduced it can vary from 0 oz at these prices to 100's or hopefully 1000's if one has the right creek. There are some in Yukon who do 1000+ oz clean-ups every 24 hrs. I remain in the middle somewhere, especially w/ respect to beliefs in 'Theories.' -Regards....YGM

"Go GATA" & Bill Murphy and my highest regards to those who have made a donation to the only "United Voice for Gold & it's Advocates"..................Thank You All!!!

test

test

The following paragraph should be inserted in Today's Gold Market Report after the paragraph that ends with:

(She goes on to
say that if gold were to stay in the mid-$320s or go higher "the SFAS
133 derivatives- related damage to company income statements and balance
sheets will be staggering.")

It explains the significance of the new accounting standard:

________________________________

The net result of the new accounting procedures is likely to be a more
conservative posture at both the mining companies and bullion banks due
to the potential "staggering" damage to balance sheets, i.e., we could
see an unwinding of the carry trade or at least a significant reduction
down to more reasonable levels. As the Ashanti and Cambior instances
have shown so well, market retribution can be swift and deep with the
very existence of the company threatened overnight. Once stockholders
and fund managers see the danger potential for what it they will put
pressure on the management of these companies, particularly the mining
companies, and they will have to alter their hedge book practices. We
have already seen instances of this including the very close questioning
of Anglo's Bobby Godsell about their hedge book by a fund manager during
a recent open conference call.
---------------------

Thank you.

Town Crier, thank you very much for taking the time to answer the question about bank repos. Your efforts are sincerely appreciated.

There is so much to learn here on this site, its incredible. I consider myself blessed to have stumbled in here, and found so many well read and educated individuals who are willing to educate others, with what was heretofore insider information.

Best regards, Elevator Guy. (That name doesnt sound like someone sitting at a Round Table. Maybe I should change it to Gold Elevator Guy, or Golden Retreiver, or?

I am in pretty much the same situation as you are. I am also a fellow Canadian and I got out of the market in Oct 1998 and turned all my money into PMs. There is no doubt about the fact that this list and others are full of postings that foretell the imminent bursting of the "stock market bubble" and the long-awaited bull market in gold. There is also no doubt that this has become a religion to some people who cling to this position by faith alone, not performing their own analysis of the market or working to understand the pros and cons of the views presented. It is also true to say that some posters are gold dealers who have a vested interest in selling gold. All true.

I eagerly read all the posts here and try to investigate and think about these things on my own too. And while my reasoning should not be a seen as an effort to convince you to any action it may help you to make up your own mind one way or the other. I need to make it clear that I am not a gold dealer, I am a software engineer working for a major manufacturer of PLCs. I have been writing software since 1979.

Apart from any condition of shortage that may or may not exist in the gold market, the looming uncertainty of Y2K is real. The management of my company has said that they expect the next year to be "the most interesting year of our lives". Many things that are said about Y2K are ridiculous, but one thing is certain: We don't know what will happen and the stakes are high.

The stock market relies heavily on predictability. The market responds well to the meeting of analysts expectations, whether good or bad. All is well as long as we feel in control.

The PMs are the other side of the coin. They do well in an atmosphere of uncertainty, when fear abounds, when things look out of control.

The media, the government and the financial community have put all their eggs in the "we are OK" basket. They have painted themselves in a corner. If anything major goes wrong for Y2K the shock will be gigantic. If you are in the stock market when that event occurs you will have no hope for saving your assets. You will be left with a handful of paper. It will take an act of religious faith in the restoration of those assets so large that it will make Peter walking on the water look easy.

I don't cry over a few dollars that I lost in paper stock market gains over the last year. I know that while I lost a few dollars at least my life savings are more or less intact in PMs. If PMs don't protect you from whatever may happen in Y2K then the collapse of civilization really will have occurred and the only currency will be food and guns.

I could write more about why you should prepare for Y2K, but everything I could say has been said in this forum over the last week.

Think about it.

Test

Hi all, long time listener, first time poster. As most of you, I am worried. First, I'm not a Y2K nut, there are as many theories out there as there are, well I'll be nice and not say. But I am conservative, and for this reason have decided to plan ahead, maybe a little bit too ahead, but as you will see below, maybe not. My personal belief is that it will be crowd psychology that will do us in, not the computers. For this reason I decided to take "some" cash out against my home equity line of credit yesterday. To do this I deposited a check into my checking account and let it clear. Yesterday, I went to the bank to get "my" money. Well you can all guess what they told me. They have to order it and it wont be here until Wednesday.

My point is this, and you have all heard this before, the banks simply do not now and will not in the future be able to handle even a slight disruption in normal operating procedure. If a normal sized branch does not have enough cash on hand ($60K) for a small time fry like me, what will happen when the media frenzy really starts the Y2K hype in December. Most people will want to take out at least a few thousand bucks, wont you? All it would take is 30 people x 2K$ to achieve the same result that I created. Those 30 people will each tell 30 people and well, that will be all it wrote.

My suggestion is dont wait till December. If nothing happens all you will lose is 1 1/2 moths interest. Some of you will ask why dont I just convert to bullion. Well, I already did before my bank experiment, but until (and if) things get really bad, people will want to deal with what they are familiar with, $$$.

Comments would be appreciated.

MK,

Thx for the excellent daily report. Very calming and good for this gold investor's blood pressure. Here's to hoping the turnaround is sooner than later.

ganymede,

Thx for your well-reasoned reply. I hope to catch up on previous posts sometime during this week, and I will then have a chance to read your Y2K posts, to which I am looking forward. A guru I follow jokingly referred to old Soviet missiles hitting North America due to Y2K (though my sense is that he believes Y2K will have an impact). However, errant Second World weapons of mass destruction are perhaps the one thing my untrained, non-scientific self genuinely fears about Y2K; I can perceive some supply problems stemming from disruptions in the less advanced parts of the world, but eventually those can be worked out, albeit at a cost. But an errant ICBM is not so lightly dealt with, given that my city is an A-list target. A country that can't stop itself from disintegrating conceivably may have forgotten or failed to make all its weapons Y2K compliant.

(N.B.: I saw Ross Perot on Larry King a few months ago: His short-term solution to Y2K is to convince the computer it's 1972, until the bugs can be ironed out.

N.B. #2: Everyone, I apologize for all the typos today.)

http://biz.yahoo.com/rf/991105/o3.htmlThe Labor Department's October employment report closely matched expectations: non-farm payrolls rose 310,000 last month, compared with 313,000 as predicted by economists. Some economists are concerned over the unemployment rate falling to a three-decade low of 4.1 percent (below their forecast for 4.2 percent) because Fed Chairman Alan Greenspan recently warned of a shrinking pool of U.S. workers. Some see that the Fed now has a stronger case to raise rates.

"There's relief there and despite the upward revision to September, the payrolls came in somewhat below the 'whisper' number. But the point is the slowdown is occurring because there are not enough workers which has totally different implications."--Northern Trust chief economist Paul Kasriel

For those that don't know the USAGOLD Hall of Fame at the top of this page, represents a collection of the best and most educational posts submitted on this forum. To qulify a post must be nominated to The Hall of Fame, and seconded by TWO other posters.(Do I have that right Sir Townie?)

Having said that I would like to nominate TownCriers post of 11/5/99 #18379 -Subject:Bank Repo's- into induction into the USAGOLD Hall of Fame.
Can we get TWO seconds?

You're doing a great job Townie...Please keep it up....beesting

YGM, I just finished reading the link to Davy Crocketts speech and I can't thank you enough for providing the link to devvy.com. It gave me a chill to read about such integrity and patriotism, something which every American could all take a lesson.

Let's look at the record. You say, "I've been anticipating the end of this equity bull for over 18 months now." Well, Bingo! April of 1998 marked the top for most American stocks. Today, the average American stock is down well over 20% from it's peak of the last 18 months. If you are looking at the S&P 500, you are looking at a WEIGHTED index. That means the S&P 500 is very heavily skewed towards the stocks with the biggest capitalizations. And as each of those big stocks goes higher, its capitalization increases, therebye increasing its weighting in the index. Because of this, 1999's increase in the S&P is now entirely dependent upon, believe it or not, just 11 stocks, every one of which has an outrageous PE. So, I don't know what you owned when you turned bearish on stocks, but most stocks and most investors have had a tough go since then.

The problem with being out of the market is that we tend to get caught up in our awe of the performance of a shrinking minority of gravity defying names and forget that a broad majority of stocks has been steadily in decline. This is why the bubble thesis, in its broader context, is so silly. How can the market be a bubble when the advance decline line is at 4 YEAR LOWS?

Now, let's look at gold. You say, " My personal wealth is far lower than it would be if I had not bailed out of the market last late summer and early fall, during the big downturn." Once again, I don't know what stocks you bailed out of, but if you start with late last summer, August 31, to be exact, the XAU (Philadelphia index of gold and silver stocks)is now up 38%! Year to date 1999, the XAU is up only 7%, but that is a far cry better than you would have done in the average stock this year, or bond either, for that matter.

One of the problems, I suspect, is that too many of us are falling victim to pie in the sky forcasts of $3000.00 gold and beyond, which is supposed to happen overnight. We also get to believing that in order to make money one must be in the metal itself. Obviously, nothing could be further from the truth. Except for one news-dominated 5 month period, May to October, 1999, bullion has been just about glued to $300/oz. for the last two years. Still, can anyone doubt that $253 was a major long term bottom for gold and that the news background has now clearly turned in gold's favor? I think not.

Obviously, the recent gold market has required a lot of patience, but it is not without hope. It also requires careful selection and timing, but it has not been without profit. One thing it clearly does not require, however, is a collapse in the stock market. Such an event might satisfy the perennial doom and gloomer, but how is it in any way essential to what you seek?

P.S.- I just reread this thing. I sound like I am lecturing, and I apologize. Your wisdom and knowledge always inspire me, as you know, canamami. Please believe that my intent is only to buck you up, which you sometimes seem to need, and in no way to preach. Thanks.

Thanks for sharing your experiences and thoughts. In your final analysis, you said "Some of you will ask why dont I just convert to bullion. Well, I already did before my bank experiment, but until (and if) things get really bad, people will want to deal with what they are familiar with, $$$." Then you asked for comments, so here's a quick view from The Tower.

This could theoretically play out in any number of variations, so the best you can do is either prepare against all of them, or where resources are limited (as is always the case) try to reasonably anticipate the most likely scenarios and prepare for those.

To say that $$$ are supreme because everyone is familiar with them seems to be a quite reasonable conclusion. Some additional items should be kept in mind, however. Just because a thing is familiar, it is not given immunity to lost confidence or contempt. Just as stocks on Wall Street are familiar during the boom, they are not wanted during the crash, and people try to get rid of them at any cost. Further, they are not eager to hitch their wagon of fortune to that particular horse for some time to follow.

Listen to these words by Fed Chairman Alan Greenspan about this phenomenon in his August 27, 1999 speech from Jackson, Wyoming:
"It has become evident time and again that when events are unexpected, more complex, and move more rapidly than is the norm, human beings become less able to cope. The failure to be able to comprehend external events almost invariably induces fear and, hence, disengagement from an activity, whether it be entering a dark room or taking positions in markets. And attempts to disengage from markets that are net long--the most general case--means bids are hit and prices fall. ...investors suffer an abrupt collapse of comprehension of, and confidence in, future economic events. It is almost as though, like a dam under mounting water pressure, confidence appears normal until the moment it is breached. ... History tells us that sharp reversals in confidence happen abruptly, most often with little advance notice. These reversals can be self-reinforcing processes that can compress sizable adjustments into a very short time period. Panic market reactions are characterized by dramatic shifts in behavior to minimize short-term losses. Claims on far-distant future values are discounted to insignificance. What is so intriguing is that this type of behavior has characterized human interaction with little appreciable difference over the generations. Whether Dutch tulip bulbs or Russian equities, the market price patterns remain much the same."

Conceivably, the dollar could suffer a similar fate, just as those familiar stocks become reviled when Wall Street crashed in 1929--a vicious circle to be sure as the market headed lower. Due to the inflated nature of our money supply, built upon bank's ledger entries, our money is largely represented by digital money, with only a very small percentage (less than 3%) in paper or coin form.

If you have convinced yourself that a situation is likely to develop in which you want to extract your deposits because other depositors' withdrawals will surely leave you "out in the cold" if you delay long enough, you'll want to recognize that condition for what it is--lost confidence in the banking system. Far more people would be left out in the cold, unsuccessful in their attempts to get their deposits, they may very well choose to completely disengage themselves from the dollar, and spend down their digital accounts in a flurry just as investors who sell stocks in a panic. Argueably in their disengagement they would flee to real assets...food, clothes, GOLD. (It's easier to park $10,000 worth of life savings in small cache of gold coins than it is to park it all in boxes of corn flakes and instant pudding.) Higher prices for everything real would be the result, and those with a fistful of real paper dollars would quickly find that they don't buy very much anymore.

Another consideration, discounting that scenario or not, would be that the government would try to take necessary measures to ensure that the whole economic structure isn't brought to its knees just because 9 people out of ten were not able to get their money in paper form. Think about it...we operate semi-smoothly today with each type of our familiar dollars having an equal par value, most of them being digital, of course. The government might, for example, declare photocopied dollars to be legal tender to help get through this crisis, or they could introduce completely unfamiliar measures or surrogate currency. But you see, there goes your familiarity argument right out the window. People may balk at the attempted stop-gap measures, and if temporary government regulations have closed the door on cash withdrawals of our familiar bucks, people will disengage as described above, gold as the natural resting place for their accumulated monetary wealth. Believe it or not, people can learn and adapt quickly to pressing economic realities. A lowly chimney sweep would likely choose not to be blackened if the reward offered were not more than paper cluttered by government designs, seals, numbers and presidential portraits. People are generally "dumbest" in good times (though they all feel like financial wizards). Only after the storm are they much wiser and capable of making rational economic decisions. The form in which they hold their wealth is likely the one choice people will look back on after the storm and say "I wish I knew then what I know now." But importantly, they will have learned the lesson, and as a gold owner you will be able to help them acquire what they want. A neighborhood boy might mow your lawn all summer long, rake leaves and stack firewood in the Autumn, and shovel the snow from your driveway and sidewalk all winter for a single gold sovereign. He sure wouldn't consider doing that today for today's purchase price of that sovereign. In this way, as it ever has been, everyone's newfound wisdom after the fall (stock bubble bursting) will will most benefit those who found wisdom before the fall. It matters not that your wisdom arrived one day in time, or two years "too soon" or ten years "too soon." That's the view from The Tower, anyway.

...but I'm certain it's far too long given it's less-than riveting subject matter. For the record, though, a HOF nomination must receive at least three seconds to be considered for inclusion, unless we decide we all decide to retool the process. The USAGOLD Archives are truly the internet's Hall of Fame, with the actual HoF being a specially bright room with ample seating for our many invited visitors...a good starting point for our friends and relatives when we try to introduce them gently to the realm of gold.

I'm certain you liked the post simply because I used my favorite phrase..."crap collateral." A phrase hardly befitting a knight of the Round Table. That's why I stay up here in The Tower outpost with my cries from the rooftop.

An updated version of None Dare Call It Conspiracy with the title, Call It Conspiracy, written by coauthor Larry Abraham, includes the original text plus new material. You can get it at American Opinion Book Services, www.jbs.org/aobs/. They also have many other books on conspiracy, which incidentally are fact not theory.

Westergaard Site----Gabriel Heilig, Y2k-Facts, Guesses & SilenceThe Link is a block and a half long--Easy in search engine if desired-----

'Clip'.....................................................................

The Y2K issue is more than a "computer crisis." It has become a crisis of public denial, a loss of public courage: (1) a loss of moral courage -- believing that electronic tools are somehow better than human truths; (2) a loss of intellectual courage -- our refusal to look at facts we do not like and face a problem that may change our lives; (3) a loss of political courage -- our leaders' refusal to candidly prepare us for what lies ahead; and (4) a loss of journalistic courage -- the press's refusal to look beneath the surface and do more than poke fun at an issue that is extremely easy to mock.

But when January arrives, the joking will stop.


***Crossroads-You are very, very welcome---YGM

Just Tell Them:I'm 'prepared' to be Right or WRONG about Y2k are you?


Go GATA, Go Gold and GO PHYSICAL.

Just seems appropriate today sir knight

Gaily bedight,
A gallant knight,
In sunshine and in shadow,
Had journeyed long,
Singing a song,
In search of Eldorado.

But he grew old-
This knight so bold-
And o'er his heart a shadow
Fell as he found
No spot of ground
That looked like Eldorado.

And, as his strength
Failed him at length,
He met a pilgrim shadow-
"Shadow," said he,
"Where can it be-
This land of Eldorado?"

"Over the Mountains
Of the Moon,
Down the Valley of the Shadow,
Ride, boldly ride,"
The shade replied,-
"If you seek for Eldorado!"

Edgar Allan Poe

http://biz.yahoo.com/rf/991104/7f.htmlHEADLINE: Banks draw from special Y2K discount window-Fed

The Federal Reserve announced on Thursday that this week banks had for the first time made "significant borrowings" from the discount window using the Fed's special terms which were set up in anticipation of special year-end liquidity needs. Borrowing under this facility Wednesday totaled $210 million. Through these special loan facilities, the Fed will truly take on the limits of crap collateral. And yoy know the banks are at the end of their rope because the interest rate they pay under these special arrangements are higher than the Fed Funds rate, higher than the rediscount rate, but fortunately, lower than a typical cash advance on a standard credit card. Hey, it would seem that these two rantings from the rooftop today were quite timely to help some people better judge for themselves the implications of this development.

I'd like to second beeting's nomination of TownCriers post of 11/5/99 #18379 -Subject:Bank
Repo's- into induction into the USAGOLD Hall of Fame.

I remember when I started collecting coins at age 10 and wondering "where does money really come from." I knew gold and silver coins were minted, and mines dug the metals. But I couldn't figure out exactly how that all got into circulation since we weren't all miners. I thought someday when I was older and wiser it would make sense.

Well I was wrong. The answer wasn't "over my head" then. It was just incredibly absurd that the Government/Federal Reserve could print money our of thin air and jail any competitors.

very nice indeedy. Everyone at The Tower has a weakness for poetry regarding gold. And some here, as has been told. (the slenderest of the lot), has a weakness for cake.
Methinks we need a poem about a cake of gold!

It's a thing of beauty, arrived yesterday, thanks Michael. Long live Centennial Metals, USA GOLD, and this FOURM.
It being a 1905 Gold French rooster, MS65 or better. Have to decide what to do with it, hide it away or frame and display it. All I know for sure is it will not be sold, trade for necessities maybe, but never sold.

Now if my year end guesstimate comes close to mark, we will all be doing great.

It's great to see all the new posters here. Welcome all. I'll pass on the same advice (20 odd years worth) I have given to my children, buy some Gold, hide it away, and hope you never have to use it. Sure is a great feeling to know it is there if needed. I personally feel it will be needed, also hoping I'm wrong.

Thanks again MK...........I hope my kids get to fight over the Rooster........In 20 or 30 years.......el

The Stranger,

Thx for your post. No need to apologize. Your post was a good reality check.

You are quite right. The flood of money into index funds a la the Motley Fool is to a great extent skewering the market's signals, causing people to believe it's going up when it isn't. The fact is that many people are now using the stock market index funds as their savings accounts. As you once pointed out, over the long run equities outperform everything, and as a result investors are socking their money into low MER index funds as surrogate savings accounts. This unthinking, Pavlovian response means the big cap indices and constituent stocks go up no matter what, impervious to P/E rations, earnings, etc. A further pillar is the foreign money which drives up the big cap indicies. The foreign money tends to go to the big caps, and until the outflow of foreign capital starts again, this will be another pillar of the indices. Don Coxe has pointed out the relationship of the Euro to the SP500; when the Euro is up, the SP500 goes down as money flows out, which seems to corroborate somewhat FOA's beliefs concerning the centrality of the Euro to future developments. One caveat: the previous occasion the composition of the Dow was changed, the "removed" stocks have since outperformed the market, which may be somewhat of a counter to my "Motley Fool" index fund theory.

In all fairness to the advocates of owning the metal itself, I believe that most of them on the Forum (e.g., MK himself) point to gold as a form of wealth insurance, not as an investment. I don't believe MK has ever argued that gains in $US terms from metal ownership would exceed share ownership, just that it is a hedge against hyperinflation or the disestablishment of the currency. For example, my take is that owning some physical gold may be a good idea for a Canadian, because the country (and presumably the currency) could some day go the way of the do-do bird. I agree that some of the extreme predictions (e.g., $30,000) could be interpreted as advocating holding physical gold for investment purposes, though I would think that FOA is arguing more that the $US will become worthless for international purposes and hence the wild valuation. I disagree with FOA on that point: the underlying fundamentals of the U.S. are too strong for such a decline to take place, though the $US could be in for a "conventional" period of heavy devaluation, but not disestablishment. (In fact, it is already well off its highs vis-a-vis various currencies, but without a big gain in the POG).

The Forum is interesting because all branches of the goldbug world appear to be here, and I submit may be dependent on one another. One pillar of the POG is its valuation by some as a financial asset. It holds this value because (a) some fear the stability of their national fiat currency, (b) they view gold as a long-term, secure alternate currency and (c) prefer gold as hedge to other fiat currencies. Presumably, the POG goes up in times when such fiat currency doubts and desire for gold increase, e.g., market turmoil. When the POG goes up, gold shares go up. Others don't doubt their national currency or view gold as the alternate currency, but note the swings in the POG and gold shares, and play those swings to maximize dollar gains. (Of course, just as the flow of money into index funds drives them independently of underlying reality, the POG and gold shares can be moved by purely speculative money; however, I submit there must continue to be a faction of diehard "gold is the only ultimate money" investment to drive the swings on which the "speculators" place their "bets".)

Thus, there is a symbiotic relationship between the two goldbug factions. Without a new generation of believers in the metal to drive the POG in times of crisis (and with it the even greater swings in gold shares), then those who play the gold market will have no swings to play, because if the swings are purely speculator driven they will cease to have staying power, and cease to be profitable. My posts impliedly point to my fears that a paradigm shift of worldwide magnitude may have taken place. If gold no longer can hold or recruit a significant and material mass of believers in its role as the final currency, then efforts to play the swings in the market are doomed to failure as the gold market itself dies. Hence, my question of a few days ago: Where's the offical-sector Asian money?

I pulled much of money out of index and other big cap funds, as well as tech funds, as many predicted the Dow to drop to as low as 5500 or 6000. So I bailed at near the bottom, fearing even further drops, as well as the effect the Euro would have on the NA markets. Some of this money found its way to gold mutual funds and stocks, and a little into the metal (not much wealth to insure). In any event, if I had left my money where it was, as of today (I emphasize that) I would be better off if I had kept my money where it was, and also had never invested in the gold and other stocks in which I did invest. (Mea culpa, I was playing the pennies ---serves me right!!).

Kindest regards, canamami.

Sir night this scribe tries to please.
Could have done better but late for work.


Gaily bedight,
A portly knight,
He cast an ominous shadow,
Had journeyed with jake,
Eating a Cake,
Like there was no tomorrow.

But he grew full-
This knight so dull-
And o'er his heart a burning
Fell as he found
No spot of mead
To stop his stomaches turning.

And, as his strength
Failed him at length,
He met a pilgrim shadow-
"Shadow," said he,
"Where can I find-
More cake to eat tomorrow?"

"Over the Mountains
Of the Moon,
Down by the 7-11,
Ride, boldly ride,"
The shade replied,-
"The Cake there tastes like Heaven!"

Edgar Allan Poe NOT

Sir Stranger, your message to Canamami served to buck up some other people as also. To go back many years, thanks, I needed that!

Black Blade and ORO. Thanks for your response regarding the accumulation of gold by the Mideast oil nations. I know someone covered the subject. I just wish I had copied it.

In Donovan's recordings of a year or two back after a long abscence from the public venue, he put that poem to song. When I first heard it I thought "What a brilliant piece of writing." I didn't know it was EAP. The melody he put to it is as unforgettable as the words. The song makes me go back to the Donovan recording frequently.

Thanks for posting that.

"What happens to SA when it's "offside" geopolitically, acts to undermine US leadership and cuts off the supply of cheap oil?"

Europe takes it under its protective wing? Cheap oil remains cheap oil to all willing to pay the fair price. America simply loses its long privilege to get it at no price higher that the cost to run printing press. Clearly, any need for military protection in the past was a hidden cost (printing press money again), but any need for future protection would likely come from those who perceive themselves to be benefactors of cheap oil. Okay, so America has to start working for a living (again) to attain a trade balance. What's the big deal? Europe has been working for years to pay for their oil. I imagine they will continue, but will no longer have to underwrite the American privilege by importing the American inflation.
...just the view from The Tower.

This is a post from kitco earlier today. I have chatted with DD1stlight on another forum and she is opinionated as indicated. I also think she makes a lot of sense.


Date: Fri Nov 05 1999 06:28Space Ranger (It's all over...the fat lady is singing) ID#297222:Copyright © 1999 Space Ranger/Kitco Inc. All rights reserved
Sorry this is so long. But it's definitely a Must Read. Go GOLD...
=====
Y2K People Finding People - http://www.webpal.org/list.htm
The following captured discussion is, how shall I say it, not hard news. It is opinion, and the opinion of a doomer at that. Nevertheless, it has an internal integrity that impresses me. It appears to me to be INSIDER discussion. It is the sort of thing that helps shape and direct my thinking. BUT, it is not the type of thing that I usually broadly share. HOWEVER, a number of people with whom I have shared this think that I should share it more broadly.
It came to me as a secondary source of an edited version of a chat Jon Hylands participated in Oct 26. AND I have edited it further.
Many, many months ago I wrote an article saying how Gas and Oil are the SMOKING GUN of Y2K, and so this sort of thing still comes to me. To me, this verifies my position further. But you must remember the following discussion reflects the views of a doomer. Selection of a discussion by a polly could give you quite different views.
My source reports that Jon Hylands has had private conversations with DD and can vouch that she is for real and that she also had a private conversation Greg Caton ( who had a two hour phone conversation with DD ) and agrees with what is reported here. ----------------------
( Allaha ) DD, tell us about your background.
( DD1stLight ) I am a top problem solver/facilitator in the oil/gas industry so have a broader picture than most in my industry. Have been working with some large independents ( none of the 'public' companies will admit or do much ) that are doing what they can to ensure as large an output as they can.
( Ryker ) How's things in the oil industry?
( DD1stLight ) Actually I am working on a job that is geared to propane, so it feels good to be doing things that will actually aid these problems. I am in Corpus Christi right now. None of the work I am doing is close enough to my home to help us out, but it will aid some.
( Ryker ) I've heard conflicting reports on oil supply. One person says there's a 6 month supply stored up in US. Other reports I've heard say about 30 days. Which is right?
( DD1stLight ) Neither. The 'strategic petroleum reserve' is a bit of a myth. It is very poor grade and the ability to pump it out and then refine it is very limited. There is about a 3 1/4 day supply of refined product available in the system in normal times.
( Hylands ) Since the SPR is stored in caverns, I would suspect contamination problems.
( Ryker ) So, the claim of 6 month supply stored up is WAY off base?
( DD1stLight ) Well, it is MAYBE 6 months of very limited basic usage, but it would take a couple of years to get it out, transport, refine, etc. so it is basically a myth. We have deep problems some of which are not fixable - period
( Ryker ) The reserve is not for public use, just for military, power plants, and distribution of essential goods?
( DD1stLight ) Generally but even that would be improbable at best. After January, public use - even rationed - is out of the question given the short supply.
( Hylands ) That would spiral into an economic collapse so fast it wouldn't be funny
( Ryker ) I know... Think we're headed for that anyway...
( DD1stLight ) I see absolutely no way that economy will not fall very flat on its face. Remember, that at the very worst in the 70's "oil crisis" we were dealing with a 7% reduction in availability. I will be jumping up and down if my industry can supply 45% of today's refined product, ( and remember that is only about 40% at best of our daily usage at present )
( jcollins ) How would this affect the local production of oil? Booming times for local crude?
( DD1stLight ) Local crude is in deep trouble, problems down hole not possible to fix, then have to get to refineries ( which are band-aided to pieces as it is ) then distribution etc. But some of the biggest problems are that we have few 1 for 1 replacement chips. So we have to re-blueprint DAB's etc. and that takes many long months most times
( Ryker ) And chip plants are overseas which involves other problems
( y2kworried ) So, it sounds like it will take a long time to get oil production back.
( DD1stLight ) That's right. There are no quick fixes for lots of things
( Hylands ) If it takes more than a few weeks to get it back, I don't think it's going to happen at all
( DD1stLight ) Lots of power companies are stocking 2 to 4 weeks of fuel so we don't expect most problems to become critical until 3rd week of January. For the first time in my life I find myself agreeing with the Dept of Defense. They are figuring contingencies on 30% availability of today's supply of oil and gas.
( Hylands ) Susie, any new news on the Fed Reserve dude?
( susie0884 ) The guy, who retired from the Fed, was planning to spend the winter in the Northern mountains. Will be there before Nov. and to get out of DC where he is presently. Who goes to MT or ID for the winter?
( DD1stLight ) People for the most part are so terrified of it crashing that they will and are doing lots in hopes they can keep it afloat etc. Remember that half of all American households are invested in the stock market or commodities and most of them are hip deep in debt to boot. Amazing the number who have taken out home equity loans and used all or part to invest in the market. Scary
( GregCaton ) I have been getting reports this week about likely disruptions in oil supply, mostly foreign. I got a call this morning from a good friendin San Antonio who has a business associate ( retired full-bird colonel from Navy ) who has been overseas recently and confirms that very little remediation is being done where it needs to be in oil.
( DD1stLight ) Well, foreign has big troubles but not much worse than our own, I am sorry to say
( TymeNTide ) My company in Alabama has about 1000 employees, in my case. not more than 10 compliant computers in the entire biz..... still "working on it".....
( DD1stLight ) sounds about right from what I am getting from buddies who are still overseas ( most of which have come on home already ) . The best we can figure is 26% to 34% of today's availability, sorry wish it was better news. If oil production is over 40% I will be dancing in the street. I am looking for a minimum 60% drop in availability. Anyone want to hear a true story?
( Hylands ) Sure, DD1
( DD1stLight ) The 3rd week of July last year Mobil Oil got their 'analysis' for remediation. It was $460 Million + and over 3 1/2 years. They came back 2 weeks later and asked for a new analysis with differing base criteria. About 6 weeks later they did a 'merger' with Exxon, remember? 11 majors have since done similar things and the number of filings to reorganize into limited liability companies and partnerships is amazing. The majors are joining and the front companies will fold under and the back up companies will reestablish when they can. Why would an industry let itself start the big problems now when they can cash in for however many months they can? Like Exxon front, Mobil back etc. The back up companies are taking the cash and will start again under new names when they can.
( GregCaton ) Is this to avoid the effects of litigation? Distinguish between front and back companies.
( Dean--DuhMoyn ) Do they think deflation will cause all prices to drop, so a long is a big gamble?
( DD1stLight ) To take a "long" you have to figure there will be enough to go around somehow. This move is for litigation and the surety that they will fail on supply contracts. Remember they have had experience at being made the "bad-guy" to the American public. They learned well.
( GregCaton ) But with something like this, no one can believe that there is a basis to single out oil companies and make them a whipping boy.
Want a whipping boy for Y2K? Microsoft is a far more likely candidate. From a supply / demand situation... what is the basis for thinking that there will be a deflation in oil anytime soon?
( DD1stLight ) Supply has deep problems. Our refineries are some of the oldest and nastiest there are and we have been unable to build new ones in this country for many years now. They are band-aided to the max now. Remediation for most is next to impossible. It is MUCH cheaper to build new when they can.
( GregCaton ) Yes, DD, but you are assuming that the laws of supply and demand will go out the window
( DD1stLight ) Nope, supply and demand are basic but when the supply falls so far below even the minimal demand, people will get very angry. We had this situation in the past.
( Hylands ) So, does the govt know this, or are the oil companies lying to them?
( DD1stLight ) Read the Senate 100 day Y2K report, go to the utilities section. http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001eAu and look at the part about oil/gas, and pay close attention to how they got their numbers
( GregCaton ) Explain.
( DD1stLight ) 8000+ letters sent to producers and only got back 450+ answers. Not many, so they just decided to use the 66 companies that they saw as most major and still their scenarios are a bit daunting. They tried to put a good face on it even then.
( GregCaton ) When will the problem get out of control?
( DD1stLight ) Expecting things to get sticky big time around the 3rd week of January.
( GregCaton ) Is there a probability curve here? Or are you speaking with surety?
( DD1stLight ) I have spent a good bit of time for the last 10 years gathering solid date, good math from my industry where possible. I like good numbers and want them to be verifiable in at least 2 ways; 3 is better. I would say this is real. The best I can come up with is 26 to 34% of current supply, optimistically 46%
( GregCaton ) Is there anyone here who doesn't believe that if we had 60% drop in oil for 30 days, that we wouldn't be ( a la Howard Ruff ) at 2,000 Dow in 2000 ?
( Hylands ) If it lasts for 30 days, it's all over
( Ryker` ) Greg, if we have a 60% drop in oil for 30 days, the stock market won't be around any more...
( GregCaton ) it will be around. Dormant, perhaps. Even under 2,000 points... but still around
( DD1stLight ) I am trying to be optimistic, am hoping for 40% availability of today's supplies being available
( underpaid ) Loss of oil flow - candling of pipelines - problems with tankers/ports - VERRRRY SERIOUS - End of economy PERIOD.
( Tulladew ) Gasoline might be expensive, even if rationed
( DD1stLight ) Rationed assumes there will be enough for basic services with some left over. These amounts are not sufficient for basic services etc. I expect nationalization at the least
( DD1stLight ) Can anyone here think of a single industry that is not wholly or secondarily reliant upon the oil/gas industry? Refineries take several years to build even at critical speed, pipelines the same, wells take a while too etc.
( GregCaton ) How long have you held these convictions, as to percentages, time line, etc ?
( DD1stLight ) Greg, the first time I jumped up and down in a corporate board room about Y2K was in 1976. I started gathering serious data about 8 years ago as I saw little being done still about my industry specifically
( GregCaton ) What caused you to be so concerned in 76 ?
( DD1stLight ) I needed to input 1800's info into the computers and could not.
( GregCaton ) 1800's info? Why?
( DD1stLight ) My industry pays people who own the land/mineral interests according to the % the own so is very important, also for getting the rights by lease to explore for oil/gas etc. Deeds and court suits from the 1800's are many times still in effect today.
( Ryker` ) Can I try to summarize to see if I got all this? You're saying that there may be a 60% drop in oil supply that will become evident about the 3rd week of January. And this drop may last years due to Y2K computer problems at everything from oil wells to refineries?
( DD1stLight ) Yes. Add to that problems when/if a system that is down-hole noncompliant. A system that is physically located several hundred or thousand feet below the surface and is totally not accessible, and therefore cannot easily be fixed.
( GregCaton ) Were they really that stupid ????
( DD1stLight ) give him a cigar, yes. Redrill IF you can, but it is not possible to redrill many and get production again.
( Hylands ) Greg, some of the natural gas wells up here in Alberta are dug 20,000 feet down
( GregCaton ) DD1 ) And these deep wells do NOT have manual overrides?
( DD1stLight ) not stupid, maybe ignorant - scariest thing i am seeing is some of the simplified assumptions that so many are making in remediation analysis
( Ryker` ) It comes down to short term profits. If they can drill the well and start making money immediately, that's all they were worried about... Didn't want to spend time to redesign systems to make them compliant for an event that was years in the future...
( DD1stLight ) EPA requires that the wells have RAMS - that is a great big snap valve that closes shut if there is a problem with the well that would/could make it unsafe/blowout etc. EPA required immediate response and actually very few people ever really gave it much thought
( y2kworried ) The implications are staggering, our whole economy is based on automobile and truck transportation, and planes, and ships, and locomotives
( DD1stLight ) Even hydro electric is totally reliant upon large amounts of very specific lubricant
( GregCaton ) How many in upper management fully grasp / accept what you are now saying ?
( DD1stLight ) Some. Most are like most people. They really do not want to look at the possibilities. Can't say I blame them. It's not like one guy knows the ins and outs of how his product is drilled, pumped, refined, distributed, etc.
( GregCaton ) Is there the slightest doubt in your mind that this all equates to a depression more serious than the 30's ?
( DD1stLight ) NONE. I am in a very unique position in that I am consultant to most majors and many minors and have been around so long I can get info
( GregCaton ) How is it then that you would have a broad interdisciplinary overview... but few others in the board room would ???
( DD1stLight ) Because I am a mean old lady who is more likely to kick someone on IT than kiss IT so I work strictly on contract. Also have more degrees than carter has pills and am known in the industry. I do everything from facilitate the sales of major companies to figure out how to get around a bottleneck at a refinery.
( GregCaton ) Alright. ( WIPING THE BLACKBOARD CLEAN.. ) Let's start fresh and talk about how this impacts the Inflation vs. Deflation arguments. Where do you stand on this issue? Inflationary Depression? Deflationary Depression? A complete economic collapse?
( DD1stLight ) most of the old stripper wells have been plugged, few left really but no the refineries are in worse shape than the wells
( Hylands ) No commercial airplanes. Think about that for a minute.
( DD1stLight ) we need to remember that $ is only worth anything because we all agree it is, when we stop agreeing we call it inflation or deflation. Most workers I talk to think it is only this plant that has problems. Another example of ostrich syndrome which is very understandable from a psychological viewpoint.
( GregCaton ) .... feeling like we really ARE the first people in thefirst Titanic lifeboat.
( Hylands ) Exactly my point.
( GregCaton ) Amazing when you consider than 99.8% of the people in society reading this would think we're all psychotic.
( Hylands ) Airplanes, trains, transport trucks, ships, electrical generation, you name it
( GregCaton ) How much have the electric utilities done to stockpile gas, oil, coal, etc.
( DD1stLight ) best I can find is that most are attempting to store an average of 3 weeks supply Some, like TU in east Texas, have their own coal mines and rails to them, but only have the ability to store about 4 weeks of lubricants
( GregCaton ) So then the SHTF in late January?
( DD1stLight ) Yes
( y2kworried ) What is even more important: that oil is the basis of food production
( Hylands ) oil is the basis of electricity, thus it is the basis for just about everything
( DD1stLight ) most fertilizer is made from natural gas condensates. I have looked and looked for years now at every industry i can see becoming more dependant upon oil/gas and computers. NOT less. Tenneco and Chevron actually came clean on their last year's Q10 third quarter reports and stated they expect to have about 30% production available after Y2K
( DD1stLight ) i keep hearing about the 'national grid system' which is a joke. texas has its own grid NO major AC connection to any other and only 2 main DC's for ballast
( Hylands ) There are four main grids in North America
( Alwyn ) San Onofre Nuclear Plant here sounded the all clear today ...forty people, three years, $10 million and repaired or replaced over 300 components./
( DD1stLight ) The Texas grid is totally integrated, all have it or none have it, not possible to 'island' anywhere in Texas
( GregCaton ) DD1 ) So... let's define what "10" means. In your mind will this cause the collapse of the U.S. Government as we know it?
( DD1stLight ) government as we now know it, may well be. Some form of government will remain though. It is why the very best minds I know have already stopped taking contracts or if employee just did not show up for work one day and left no forwarding address
( Ryker` ) Greg? Have you risen your estimate to a 10 now?
( GregCaton ) If you live in Watts... it will be a 10. But if you're a self-sufficient farmer living in Colorado ... it might be a 3 as far as you're concerned. Don't know.
( DD1stLight ) You got it, Greg. That's why I opt for 8.5 is a mean
( Hylands ) Greg, how many people do you think depend on electricity, even rural farmers?
( GregCaton ) Hylands - There are some farmers who have only had power since the '30's ... I think that farmers, with or without oil, are steeped in a tradition of hardship and "having to make due". "A country boy can survive..."
( Hylands ) Exactly, how many? I'll bet it's not many. Now, we're pretty smart, so we'll figure a lot of stuff out, but still...
( Hylands ) How many farms can irrigate their crops with a hand well pump? How many farmers today can grow their crops without bought seeds, fertilizer, diesel tractors, etc?
( DD1stLight ) Few, and mules and oxen are a lost art to most and not available or trained etc. not like a tractor you can't just build one you have to grow it . And those horses are for the most part "pets" LOL
( Alwyn ) They are pets, in the sense that they don't pull a plow. But, they are a resource.
( GregCaton ) I'd say enough farms for about 10% of the people to make it.
( Hylands ) Greg, that's about my figure, 10% . Yep, can you be sustainable with water, food, heat, and sanitation. People, without clean drinking water, will die
( GregCaton ) So that's the task: be one out of the ten. ( New slogan for the Marine Corp ) : "We're looking for a few good one out of tens!"
( DD1stLight ) for goodness sakes folks DO NOT just take my word for all this, do your own research, there is plenty available on the net for you to see, just go to the real sites etc., check out the defense departments contingency plan figures for oil/gas. I think the biggest killers besides cholera, typhus, thyphoid and diptheria and dysentery. Will be pure old culture shock
( Hylands ) This is why I think a 2 year food supply is a wise idea
( DD1stLight ) I have to thank Hylander for inviting me to this room, it is good to be able to talk to people who have more than 2 brain cells to rub together and play with and are not caught into immobility by fear etc. * Hylands takes a bow
( Alwyn ) Ryker...you can go low-tech and cheap on the purifier...Pur has systems for $30 that do everything a Kaytadn ( sp ) does for $300.
( Hylands ) Alwyn, problem with the PUR is it won't do 20,000 gallons, and the Katadyn will
( GregCaton ) DD1 ) ) Allow me to give you some perspective. Speaking personally, we're got two cisterns, a water well, ( motor and manual ) ... 24 solar panels ( 75 watts each ) within a complete solar system... protection ( won't elaborate ) ... ham radio equipment ( I'm an Extra Class holder ) ..... who would do this if they didn't take Y2K seriously?
( DD1stLight ) the RAMs located down-hole in the wells, we know that there are a goodly number that are NOT ok, when they malfunction we know ( by actual testing ) that they close the RAMs which cannot be reopened, cannot get to them to reset etc.
( Gary_Seattle ) but Katadyn might not handle all of the stuff pur gets rid of
( Hylands ) DD1, I'm really glad you came, and hereby invite you back again every Tuesday, same time
( DD1stLight ) well we have cisterns, well, food etc. ( actually can feed about 300+ people for about 3 months ) but not much in the way of electricity generating, no radios etc.
( DD1stLight ) one of the scariest assumptions i see people making is "it's analog, look no further" SHEEEEEESH!!! Many date sensitive chips were used in nondate related places because they were cheap, available, and did the job
( Aubrey ) I've got a First Need deluxe and a simple Pur pitcher that will take out everything up to virus size particles
( DD1stLight ) nite tyme, would not blame yall if you dreaded the day I came in. LOL and kicked Hylander for bringing me
( underpaid ) DD1 - thanks for the doom! I like to keep those stress muscles worked out - gotta go - bye
( DD1stLight ) still working with a couple of large independents that are racing to get small gas fields with propane generating capabilities up for the turnover so some will be available more
( DD1stLight ) I really am called DD
( Hylands ) DD1, I'm curious, have you noticed an increase in refinery explosions over the past year or so?
( DD1stLight ) Not really. Lots of major breakdowns, but that is to be expected from antiquated refineries. What I cant figure out is how so many miss the implications of my industry. Its like most do not even think about it in the equation. I see it even in people who are honestly looking for real info. Come to think of it, why would most know much about it? It is a very 'closed' mouth industry, very competitir. The Sea Sh�Tp�"�p in the are� Pr the express purpose of monitoring Makah intentions. If a whale hunt is attempted, the Sea Shepherd Conservation Society will be ready, the Edward Abbey will be on location and the harpoons of the Makah nation will be closely watched.

The Makah Tribal Council claims that the resumption of whaling will give their people a sense of worth and identity, stop alcoholism, drug-related crime and domestic abuse. Sea Shepherd disagrees; the economic and social impacts on the Olympic region, much less the state of Washington, will greatly outweigh the cultural benefits to be had by a few for a resumed whale hunt. The Makah people are as much a part of 20th-century society as other rural Washingtonians -- they shop for the same foods and are exposed to the same cultural and societal influences as other non-native people living on the Olympic Peninsula.

A society can never evolve by adopting archaic or inhumane rituals. Progress affects everyone living in this new era of the Global Village. No legitimate argument can be made that the Makah, or any other ethnic group, can move their culture forward through ritual killing.

Sea Shepherd will continue to watch the Makah whaling proponents and will take whatever actions are necessary to prevent the blood of whales from staining the shores of Washington State. There is a possibility that the Makah will proceed with a hunt, regardless of their failure to receive IWC approval. From a public perspective, this coming year will be critical, and we need all the support -- political, activist-based, and professional -- that we can muster to fight the Makah on this issue at the IWC meeting in 1997.

We are committed to preventing the songs of the Gray whale from being silenced again.