USAGOLD Discussion - January 2000

All times are U.S. Mountain Time

Jeff
(01/01/2000; 00:04:36 MDT - Msg ID: 21954)
Happy New Year
Just making sure everything is working :-)
-Jeff
Peter Asher
(01/01/2000; 00:22:39 MDT - Msg ID: 21955)
Days of Gold Gone By

Should Gold's true value be forgot.
And never brought to mind
Then pour a cup, of memories,
To days of gold lang syne.

Chorus
For gold lang syne my friends,
For gold lang syne,
Come drink a toast to our good host
And days of gold lang syne

Columbus sailed across the sea,
When Silver reigned supreme,
And golden coin, did men then join,
For wealth beyond their dreams.

Chorus
To gold lang syne my friends,
To gold lang syne,
We raise our silver goblets high
To days of gold lang syne

Through intervening centuries
Were hatched the Fiat plans,
To relegate the one true wealth
To ore beneath the sands.

Chorus
For gold lang syne my friends,
For gold lang syne,
So hoist a toast to golden friends
And days of gold lang syne

Then ventured we, upon this page,
And loudly did proclaim.
That Fiat money soon would cease,
To be the Master's game

Chorus
To gold lang syne my friends,
To gold lang syne,
And now we toast, our Forum host
And days of gold lang syne

Put golden coins upon the shelf,
And silver bars so fine.
Protect your wealth, and drink the health,
OF - DAYS - OF - GOLD, LANG, SYNE!

Thanks to The Scot for searching out the original lyrics

Copyright PeterAsher 28 Dec.99
el St.One
(01/01/2000; 01:03:42 MDT - Msg ID: 21956)
2000
To All

Happy New Year

Happy New Decade

Happy New Century

Happy New Mellennium

Happy Happy Happy Happy Happy Happy to be here for a go at another year.

Wishing all a healthy and prosperous year............el
Peter Asher
(01/01/2000; 02:36:26 MDT - Msg ID: 21957)
Saturday is a business day in Islam
http://greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002Aj2So this is the first workday test

>>>>> Reporting straight from the Utah Joint Information Center - I am here with Senator Bennett who has announced
that the Pakistan Stock Market has crashed. His source is an independant daily Pakistani newspaper, "The
Islamabad." No further word is available at this time.

-- Jennifer Bunker (Salt Lake City, Utah) (Jen@bunkergroup.com), January 01, 2000
Peter Asher
(01/01/2000; 02:42:03 MDT - Msg ID: 21958)
Bumps in the road
http://greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002ArS-- meg davis (meg9999@aol.com), January 01, 2000

Did anyone else happen to see this? On Fox News tonight, right after the rollover CST, the anchor man and
woman (stationed at Time Square) were yucking it up about the Y2K success. It was a never ending litany; all is
Y2K AOK; the world is 100% compliant. They were incorporating little corporate interest stories in their
coverage...taking us to Sprint to see the people waiting for bug reports. They even brought the camera in tight for
the view of an engineers drummming fingers (bored, with no glitch calls coming in). It's amazing how it's all
blatantly directed to influence the viewer to form a pre-determined opinion. They cut to another reporter standing
by a cash machine. "Banks are OK; no major glitches" was this little sub-story. He promptly puts in his ATM
card, punches in his ID, hits "yes" to answer the "will you pay a dollar for this transaction" question and waits for
the money....nothing. "Oops! It wants my ID again" he says, and then he starts the process over. Still no money.
He quickly starts at the beginning for the third time, punching and answering without the fanfare. The machine starts
to make that...whirring "I'm going to send you money now noise". And, the anchors at Time Square cut in to say,
"we can hear the money coming out now". But....no money. At this point, they were clearly embarrassed and I
was laughing my rear end off. It was too funny. Without wasting a single moment "puff" he was gone; and we were
left with the Time Square anchor team making a flustered comment like..."he'll probably call and get mad at his
bank tommorrow morning." Boy do I wish we had more "live" TV; it's so much more fun than the taped stuff!

Peter Asher
(01/01/2000; 02:45:38 MDT - Msg ID: 21959)
Getting bumpier
Airport communications, SW Iowa - repost from TB2000

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread


http://www.freerepublic.com/forum/a386d8277152f.htm News/Current Events Breaking News News Keywords:
Y2K, IOWA Source: KCCI-TV Des Moines, IA Published: 12-31-99 Posted on 12/31/1999 20:28:39 PST by
CampaignWatch KCCI-TV in Des Moines reports that two dozen airports in SW Iowa lost all communication
ability at 0 GMT, this evening.

Officials from Iowa's Department of Transportation and the FFA are swiftly investigating the source of the
Y2K-related glitch.

Some of the airports effected include Council Bluffs, Red Oak, Shenandoah, and Creston.

-- beckie (sunshine_horses@yahoo.com), January 01, 2000
Simply Me
(01/01/2000; 03:39:35 MDT - Msg ID: 21960)
The Best of 2000 to One and All!
My computer is up and running fine. Ye-ea-ah!
Thanks for the reports on Y2k around the world! Glad to see so many still on line! Loved the story about the reporter at the ATM machine!

Still filling up bottles of water. You never know when all that spit and bailing wire is going to fall apart. Perpetual paranoid that I am (trust the system and you'll get screwed someday...maybe not today...maybe not tomorrow...but), I may begin to relax a little when my 70 year old mother gets her Social Security automatically deposited Social Security payment this month, I can fill my gas tank with no trouble January 14th, and the shelves of the local grocery store are still well stocked January 30th.

By the way, the smaller grocery stores were looking a little bare January 31st. And water, toilet paper, batteries, and gas cans were in short supply at the local SuperWalmart. Looks like Nashvillians prefer to weather their storms (natural or otherwise) at home rather than Red Cross shelters. That's why I love this place.

So far so good!
Golden Parachutes: Got mine and I'm keepin' it. Get yours.
simply me

SteveH
(01/01/2000; 05:35:23 MDT - Msg ID: 21961)
Nickle62
Thanks,

I am not sure what 'opions' I discussed you are referring too. My only post of the day was to Peter and Golden Truth.

But from your question, it would seem that ORO is on top of the options for pay and retention scheme.

My take on all the wealth being created currently is the following:

Test the wealth effect by asking, what would happen if but 10% of these folks cashed out and bought gold? Let me see how well I do an OROian? 10% of market cap of Nasdaq and NYSE and ASE and Canadian Markets and Euro markets is (this is a guess) $10 trillion (more?). Take $10T and multiply times .10, which equals $1T. Take $1T and buy gold. At current market price of gold (rounded to nearest $100) of $300, divide $300 into $1T. That number equals 3.3333 billion ounces of gold that (theoretically) $1T could buy. 3.3333 billion ounces equals approx. 104,000 tons (using 32,000 ounces per ton) of gold. Since that is approx. 26,000 tons short of the entire worlds supply of gold, I would say that were these folks interested in buying up that much gold the price would rise slightly. If you take the price of gold as it was in the early 70's and for the sake of argument say that it was 1/2 of its current value at or around $150 and you apply knowledge that total market capitalization at the time was $500 billion and there was only 110K tons of gold around at the time (annual growth of gold supply is about 2 to 2.5 percent) then one assumes that just 10% of those folks bought gold or $50 billion worth, that would mean they could have bought 10K tons of gold. In other words, just using simple assumptions it would appear that in 1973 10% of world stock market cap could by 10k tons of gold and today it could buy 10.4 times more. Either my assumptions are way off, gold is dead, or things will get mighty interesting with gold sometime in the future, to the tune of at least a 10 X increase in value or at least $3000 per ounce. If we move our comparison to the 60's with today, that factor could be more than 30 times or $9000 per ounce.

BTW, my computer date is 1/1/00 and I didn't have to touch it.

Let's see of the banks open on Monday and if the IRS looses our records (here is hoping on the latter).
Leigh
(01/01/2000; 06:10:34 MDT - Msg ID: 21962)
We're Wise to Be Prepared
http://www.the-moneychanger.com/html/not_here.htmlTo anyone who's feeling like a gullible fool this morning: Please read this article. I've posted it before, but it is a great lesson about why it's wise to buy gold and to prepare for any eventuality. It has never been far from my mind since I read it a year ago, and I think the lesson it teaches will be borne out in the coming year.
Number Six
(01/01/2000; 06:20:28 MDT - Msg ID: 21963)
@Canuck and y2k
Yep - thanks for the words, pretty uneventful here in sunny Denver, working on a y2k project we cut over the United Airlines system with no drama at all.

As for y2k...

Please remember that it is an ongoing process - it may well be a death of a thousand cuts.

So far we are all encouraged, but it dismays me when people who perhaps really should know better dismiss it as a hoax.

Wordwide over 1 trillion dollars have been spent. If this is a hoax then I have been vastly overpaid for the last year!

This is no hoax. The markets open Monday/Tuesday. Let's see how the international payments system does. How clearing and settlement work.

Let's monitor chemical plants, refineries, shipping, pipelines, ports, oil platforms. Let's see how they are doing with oil in Nigeria, Iran, Iraq, Mexico, Venezuela, Saudi Arabia.

Let's see how trucking, rail, JIT deliveries do.

Dick Mills [electricity] has gone on record as saying that he expects power problems to peak two weeks into 2000. Last night I monitored UPI, AP and Reuters for the duration and saw nothing about any power problems in the USA. Yet on the timebomb 2000 board we have had reports of sporadic outages in at least ten different states. Also getting reports in about nuke glitches in Japan, BP having problems with oil in Egypt, ATM problems in England etc.

Many pipelines in the USA have been shut down.

Russia and the UK are on Reuters claiming to be TOTALLY bug-free.

Come on, pull the other one, it has bells on :o)

The fat lady is only just gargling IMHO. The news is great so far, but please don't go dumping your preps just yet. For all we know USS Titanic may have hit the berg and stripped a long gash of metal from it's hull, only no-one noticed because they were too busy looking at the fireworks up above.

TO RECAP

Midnight can be viewed as stage one of the effects of y2k.

Unfortunately some information may not be available from relatively closed societies such as china for weeks. Russia exists across 12 of the 24 time zones. It was good news that reactors in the first 2 time zones appear unaffected so far. Of critical impotance will be the embedded chips in their gas delivery systems. They are major suppliers to Germany etc. of fuel.

The second phase will begin next week when businesses and gov't agencies that are shut down now start up.

The third phase will play out as any effects on supply lines that will be reflected in company earnings in the 1st quarter.

The news so far is very encouraging, but it's not over by any stretch of the imagination.

I'm giving it at least another 3-6 months to see what develops.



Number Six
(01/01/2000; 06:23:49 MDT - Msg ID: 21964)
Great post from tb2k...
Until we see Medicare, Medicaid, Food Stamps, I.R.S., to name a few, operating with precision and dependability, we are very vulnerable to an economic nightmare. Government accounts for a huge segment of employment in this country. Add to this the incredible amounts of money that is issued into circulation in the form of benefits and such, and the truly amazing unanswered questions as to where the U.S. is at this point remain unanswered.
I have viewed my preps as not only "meal insurance" against interruptions in the supply chain, but as an economic hedge against rising prices in the months ahead. I cannot believe I am alone in thinking this way. Interest rates are going to march upward; housing may well take a hit. Mortgage brokers will be doodling on pads of paper as they realize there is less and less business(to name but one example of an industry vulnerable to rising interest rates).

Most of the really important problems, e.g. Def. Dept., pipelines that were shut down (and may be pesky to restart), will be kept from public view as a matter of national security.

And what about the many computer viruses that may be running around, looking for infrastructure to disrupt? Seems there are MANY more things yet unknown to hoist a victory flag over this country and y2k. (The only victory so far is preventing massive public panic;well, there is the additional victory of propaganda over a national audience--YECH!)

2 very alarming things to me are: 1)The overall complacency of our nation(not going totally unnoticed by folks like China and Sadam) and, 2) HOW EASY IT IS TO STILL MAKE PRUDENCE TO APPEAR LIKE FOOLISHNESS! An extra comment on this 2nd point is the incredible amount of folks reporting they feel foolish and embarrassed. If you really want to feel/experience both of these emotions, then chuck your preps. and begin running around trying to get folks who prepared for NOTHING, to accept you back into their "fold of foolishness". Then, when fallout begins to become apparent, you will realize the true meaning of foolish, embarrassed, and UNPREPARED!

Just as the coverage of y2k was so incredibly shallow and simplistic in the press for the past few YEARS, so too is the thinking that we are over the worst of y2k. Just cuz my T.V. works, doesn't mean it is "all-clear!". And one night of CNN pics. of lights on all over the world hardly gets me feeling even remotely confident that things will not be "so bad". (This line of reasoning wouldn't work on a 6 year old child.)

The most unfortunate side-effect of y2k roll-over so far (IMHO) is the "innoculation effect" that is occurring among some who prepped. How willing will they prepare or stay prepared for the unforeseen yet not on this nation's radar screen?

In closing, I will add that this nation is in and will remain in a window of vulnerability for some time. Just as a cancer patient never knew the day, time and hour that a tumor began to form within themselves, so too this nation appears to be generally clueless as to our vulnerabilities to attack and outright breakdowns in necessary infrastructure that are now present. When rollover occurred, every unremediated line of code became a cancer cell in this country's economy. Whether the Nation's "immune system" of bug busters can heal all of these conditions, before they grow into a sizeable tumor remains a HUGE question, at least to me.

I therefore will remain ready to "roll with the punches". Old habits are hard to break: Why let CNN and the "crowd of fools" do your thinking for you?

-- (He Who) Rolls with Punches (JoeZi@aol.com), January 01, 2000.

Cavan Man
(01/01/2000; 07:04:40 MDT - Msg ID: 21965)
HELLO ET
I know the place is Westport well; caught the brown bottle flu there a couple of times at least. Next time you're in the neighborhood give me a shout http://www.tetranet.net/cavansales.

Happy New Year
Cavan Man
(01/01/2000; 07:21:51 MDT - Msg ID: 21966)
Dear Golden Truth
The very best reason to buy gold now is becasue of the inflation which is hot and getting hotter although we're told NOT! In 30 days if there are no Y2K related disruptions to the economy, watch for the FED to begin telling us about inflation and raising rates. That is their next big problem unless the unexpected happens.

In some private email I asked The Stranger if, in his opinion, was buying gold today like buying IBM when it hit $40, remember that? His reply unequivocally; YES! He pointed out there is much more leverage in stocks but given the lack of solid fundamentals supporting the major indices combined with the vulnerable hedge book position of so many miners, I can't bring myself to take a chance on mining company equities.

As to our friend FOA; to me, what he repeatedly says here and the core of his thesis makes too much common sense. If you go a step further and accept the fact that our other friend ORO (and others not mentioned, sorry)has taken the time (I don't have) and applied the intellect (also, don't have) to poke holes in the FOA/Another THOUGHTS and has concluded in agreement (I believe you do ORO) with FOA/Another, then, I think more patience is required on your part.

Besides, everytime you get negative that is a bullish signal for me! (haha). Take care this year friend.
Canuck
(01/01/2000; 07:47:50 MDT - Msg ID: 21967)
Number Six
Good morning, 9:30 eastern.

I have scanned the forums, yes, you are correct. There are dozens of little 'cuts' emerging; the bleeding MAY start.

I watched that 'goobtube' all day yesterday, was dumbfounded by the superficial take, the fact that every major city had fireworks bothered me. I said to the girlfriend, "Why does every city have explosives and dynamite ... seems ironic?" My 12 year son blurted, "Dad, they all look (the fireworks) like Desert Storm."

Still haven't heard or seen a single 'bit' from M-E or Venezuala.(sp?) Keep us posted Sir Number Six; you ARE the
(oil) man.

Safe New Years to all.

Thanks for the advice Leigh.

My fishing advice to my son when he gets one on the line; don't give him any slack buddy, let your guard down for one second and he's gone.
FOA
(01/01/2000; 08:24:33 MDT - Msg ID: 21968)
Comment
Good day everyone!
Looks like the world will have a chance to move on with life without any of these Y2K problems. Good! There will be enough monetary action to follow and understand without the
added impact of computer control problems.
Jeff (of USAGOLD) good job keeping the system up. And while I'm at it, good job to all the other thousands of dedicated computer professionals who made the turn over work.
Michael, TownCrier, ORO and everyone, our golden century begins today. Preordained to be in our financial future by the planers of tomorrow. I'll do some thinking ,writing and make replies later.
Thanks ALL FOA
elevator guy
(01/01/2000; 08:31:25 MDT - Msg ID: 21969)
//Calling Michael Kosares, come in, Michael, over//
Happy New Year to you, our gracious host. "Live long and prosper".

Thank you for your forum, and all the blessing it has been to me.

The most signifigant development in my life, from this site, has been that my eyes have been opened, from many posters, as to just how hollow and bankrupt our fiat money system is. This knoledge will prepare me as we head into a year that will likely see a major, albeit possibly gradual, correction in the stock indices. The real kiker for me was when one poster, (I cant remember his name) said that the stock markets have been growing by huge percentages, but the growth of our economy has only been a couple of a percent. This is a very good argument, to support the existence of gravity!

On the tube, we watched celebbrations from around the world, including the Pepsi Center, in Denver. Were you there to catch Neil Diamond sing? Didnt see you in the audience!!!

Best Regards, and best wishes for the new year.
elevator guy
(01/01/2000; 08:41:05 MDT - Msg ID: 21970)
Pakistani Stock Exchange, Y2K?
IT was reported here earlier this morning, that the Karachi Exchange had crashed. I assume this means an electronic glitch, and not the value of the indices themselves.

After doing a Yahoo seach, loaded the FASCOM page, and all the info is from December 30!!

Does anyone know if this is typical updating for that site?
Two days behind? Something would seem amiss here.

Anyone?
elevator guy
(01/01/2000; 08:49:22 MDT - Msg ID: 21971)
@ Peter Asher, msg id # 21959
I attempted to call the Council Bluffs Airport, in Iowa, and although it rang, no one picked up. Of course, they could just be super busy, but-

This would lend credence to the greenspun report of communication loss.

Council Bluffs Airport- 712-328-4682

Dont everybody call at once!
elevator guy
(01/01/2000; 08:55:34 MDT - Msg ID: 21972)
Last post before I take a walk, really, I promise!
One thing that does not seem to have made it past the rollover is Jim Lord's website!!!!!!

Anyone else notice this? Maybe the server is busy with Polly chat!
Journeyman
(01/01/2000; 09:23:35 MDT - Msg ID: 21973)
One of those thousand (tiny) cuts . . .
Hmm! My old 486 (running Windows 98) & checked out as "compliant" thinks it's Jan. 4, 1980. It knew what the date was when I hit the sack last night.

Regards, J.
Number Six
(01/01/2000; 09:59:35 MDT - Msg ID: 21974)
elevator guy @pak stock exchange @canuck
This is not quite true, no crash - an urban legend!

Should be fun and games watching the worlds banks talk to each other next week...

we have the problem of corrupt data sloshing around - this will need to be contained and isolated quick should it rear it's ugly head...

clearing and settlement will also need to be working at 100% - no errors allowed...

we'll see...

Canuck

Good advice for your Son! My best to you and yours!

Oil looks to be heading south as of now - however it's very early days, again, we'll see...
The Scot
(01/01/2000; 10:07:22 MDT - Msg ID: 21975)
Thanksgiving
Today I am thankul that the world seems to have met it's current problem and may have overcome it.

I am also very thankful to have learned so much from the great minds that share their knowledge here at this esteemed site and to our host who makes this all possible.

I am very proud of those who prepared for the unknown and did all they could to insure the safety and well being of their family in spite of the harassement of friends and neighbors. You did the right thing.

I am especially proud of the single mothers and military wives who in some cases had to do this on their own.

This event has shown to us the power we have to communicate together via this medium to help and encourage oneanother.

I still believe the year 2000 will present problems for many around the world. Let us continue to share knowledge and try to uphold the courage and character worthy of "Knights of the Table of Truth".

Happy New Year to all, God Bless. The Scot
beesting
(01/01/2000; 10:11:50 MDT - Msg ID: 21976)
Officially in the U.S. it's January 1, 19,100.
http://abc.net.au:80/news/newslink/nat/newsnat-1jan2000-92.htmFor a good laugh, check it out.....beesting.
USAGOLD
(01/01/2000; 10:35:52 MDT - Msg ID: 21977)
To mhChuck and all....The "One Thousand Ton Gap"
I remember Farfel lamenting the fact that the gold producers did not have the moxy to pull together as a cartel to keep gold off the market and thus buoy the price. Then when the cartellization (different source; same effect) occurred via the Washington Agreement, I was surprised that no one, not even Farfel, recognized it for what it was -- a signed agreement to keep gold off the market every bit as important as the OPEC Agreement -- in fact, a cartel. The price move from $255 to $330 which apparently many of our speculators missed was fueled by rampant fear among gold's detractors and unmitigated enthusiasm among gold's advocates responding to the appearance of that cartel.

When the gas came out of our mini-balloon, gold still garnered a roughly 15% return over the three month period from September to present -- that's 60% on an annualized basis. The commentators at CNBC cannot stop bubbling and gurgling over the 20% return on the DJIA through 1999, but noticeably failed to give gold credit for a substantially better performance. This despite the fact that major gold firms also spend millions advertising on their network.

Who caught that gold spike? Many. Including a large number of mega-Centennial clients who followed our simple formulation of buying on the dips -- no matter how catastrophic the opposing mainstream press and Wall Street's gold haters makes them appear. If you didn't catch the spike, or as a speculator you took losses in gold over the course of 1999, it was because your strategy (as a speculator) is flawed, not because of any inherent problem with gold itself. By the way, of the "many" who caught the spike, not one has called to sell!

The way to capitalize on gold, from my point of view, has always been to purchase the physical in a steady program and hold it as a long term hedge against various economic/political events that might injure the overall portfolio. (I have always thought that options, futures, loan agreements and the like played into the hands of the oppposition and anyone who has discussed the subject with me knows how I feel about it.)

For the life of me, I cannot understand these tirades against gold that it somehow kept one speculator or another from making a profit on internet stocks (for example). I have never suggested or have even come close to suggesting that 100% of one's portfolio should be in gold. In fact, I think the 10% to 30% formulation I've recommended based on your assessment (not mine) of the world economic/political situation is prudent beyond challenge. What an individual does with the other 70% is their business, not gold's (or mine for that matter). If you neglected to ride the internet crazy horse, that's your problem not gold's. I never been able to understand these strange connections, then again I've never been a gold speculator.

Instead, I remain steadfast in my opinion of gold as the ultimate arbiter in the currency wars foisted upon us by our various national governments. In keeping with that, I continue to recommend long term gold accumulation as a form of sound and reliable money which serves as the ultimate savings vehicle and, unlike the dollar, has none of the attendant liablilities and reciprocal obligations. I believe that anyone who owns it under this rubric need not wait for price performance to gain some satisfaction, that satisfaction comes now in form of peace of mind and the sure knowledge you have done everything you can to protect your family (and yourself) from potential systemic failure. (I will return to this subject further down.)

Now...onto something of a forecast for Gold2000..........

Back to the Washington Agreement:

In 2000, I think the fundamentals have changed in gold's favor. There is an inherent gap between gold supply and demand of over 1000 tons. That gap in years past has been filled by Forward Selling/Gold Carry Trade programs and Official Sector dishoarding. Both depend upon central bank co-operation for their sustenance. That rug has been pulled out from under the bullion banks in a very public show of disfavor by the central banks via the Washington Agreement. Keep in mind that when the Euro central banks came together on this agreement, they knew that it would jeopardize those gold loan positions at some of their own member banks, so they had to have done it with some larger end in mind.

The drop in gold from $330 back to the $275 level had to do with the bullion banks scrambling and doing everything in their power to keep gold down while they unravelled the mess at Ashanti, Cambior and others that did not become public. Many mining companies are still in a cold sweat over this and can only hope that the bullion banks are successful in buying enough time to unravel the mess. They may not have the time. That is the message of gold's return to the $290 level. I see it as the secong leg in a long term breakout (perhaps the Elliott Wave Three) that won't materialize overnight but occur over an extended period of time (assuming there is no stock market crash.)

I think the fundamentals are going to play a much more important role in gold's pricing next year than they have in the past decade with the central banks out of the supply picture. That one thousand ton gap will become an issue. Any of the anti-gold crowd that wants to stop a price rise runs the risk of pushing the price to a level that would generate huge physical purchases that probably cannot be fulfilled. At the mining companies, I would advise playing along with your bullion bank counterparties but buy the physical whenever you can (as Goldfields has done) because you might not be able to rely on your favorite bullion bank when the chips are down. (Just ask the people over at Ashanti) As a matter of fact, they tend to dig into your asset structure when things go bad and then offer you "more time" as a salve to arrest the bleeding. Of course, the next step, should the price continue higher, will be more bleeding, but let's not talk about that.

At the end of the year, we were in the market for a substantial number of gold coins at the behest of a client and not one supplier could make immediate delivery. (The transaction was not completed for reasons I can't go into here.) And when you consider the amount of gold that is supposedly transacted daily, our needs would have to be considered small. We have heard repeated stories of the lack of large amounts of bullion available for purchase among the big players and this despite the appearance of significant bullion from Kuwait, Holland, Jordan, Britain and others. When these various hoards come on the market, forget the source, they disappear into the black hole of physical short covering. These hoards have not sent the price reeling downwards. They've only acted as a temporary suppressant psychologically, then disappeared.

In essence, I see this up move at the end of the year, not as Y2K related upon reflection, but the fundamentals coming into play. Many are asking the same question I am: How is this 1000 ton gap going to be filled and at what price? We know about 300 will come from Euro banks according to the agreement. Where will the other 700 come from with the official sector and the carry trade essentially shut down, or at least substantially subdued? I believe it will have to come out of the ground and I think that will occur at prices that ratchet every higher as the year progresses, though we could have something of a down draft at the beginning of the year.

Once in Goldconda:

mhChuck makes the point that Mr. Greenspan and Wall Street have essentially pulled off the New Paradigm and there is nothing to stop the current Era of Good Feelings from extending to infinity. He goes on to list to list a series of governmental policies that flaunt the power government seems to exert over the economy these days without even the hint of a consequence. But, mh, history is replete with examples of even the mightiest empires turning to salt in what seems to be the blink of an eye. One day things are fine; the next not so fine. How does this happen? It would not be trite to say that in each instance destruction of the currency was involved, however, I would say it goes much deeper than that.

The ancient Greeks dealt with this phenomena often in their tragic literature -- the counterpoint of power and failure. Human arrogance was always rewarded with a reminder from the gods as to who was really in control. Even the mightiest king or emperor, kingdom or empire could fall as easily, quickly and completely as the lowliest citizen -- a victim of "The Fates". It is not you or me who will bring down the New Paradigm, or even the acts of the greatest economic and political thinkers of our era. It will fall by its own arrogance.... on Hubris, as the Greeks called it -- the vain act of contemptuously assuming the mantle of the gods.

And I say this not because I "want" it to happen. I say it because I believe it "will" happen -- no matter how much I do to prevent it, to speak out against it, or to warn against its eventuality. All I can do is prepare for it by adding to my gold holdings and then going about living my own life in the best manner possible. In this way, I act on my beliefs and I am happier for it. (And I still have plenty left to invest in internet stocks if I want to.)

"Golconda, now a ruin, was a city in southeastern India where, according to legend, eveyone who passed through got rich. A similar legend attached to Wall Street between the wars." From "Once in Golconda" by John Brooks 1969

I might add that a similar legend attached to Wall Street after the end of the Cold War....

More some other time.....MK
Nightrider
(01/01/2000; 10:44:18 MDT - Msg ID: 21978)
Remebering Stanger
As many of you readers will remember, when, the topic of Y2K was the rage in this room The level headed Stranger was a Voice of reason and Confort to many of us Its, a shame, that his voice of reason can no longer be heard.
Peter Asher
(01/01/2000; 11:38:30 MDT - Msg ID: 21979)
A message on the Libertarian newsletter:
Subject: Increase in firewall alerts

I'm personally experiencing an increase in probes and port scans
on our firewalls in the last 90 minutes.

Lots of telnet and other port probes from arab and canadian ip's.



RAP
(01/01/2000; 11:58:33 MDT - Msg ID: 21980)
One more cut
I went to my local W.D. today and the MAC - ATM had a sign on it-- "OUT OF ORDER", seems it worked yesterday!
Happy new year to all.
Netking
(01/01/2000; 12:09:29 MDT - Msg ID: 21981)
Financial Lessons of History
http://www.gold-eagle.com/gold_digest_00/baron010100.htmlInteresting read above friends...

As we head into the new year, going boldly where no man has gone before it's a good time to reflect.
Gold will have it's place in the sun this year. The Dow should be a "Down" by about 30% by March 31st and gold should be heading north by then. White metals & oil will head south for a while shortly(sorry Sir number 6!).


Cavan Man
(01/01/2000; 12:16:09 MDT - Msg ID: 21982)
USAGOLD
I think your point about hubris is well taken. I see it evidenced most everywhere I look.
Goldy Locks Guy
(01/01/2000; 12:24:20 MDT - Msg ID: 21983)
Leigh...or someone, Can you explain this?



>>>>>. Housewives spend their day waiting in lines at gas stations to fill up at $16.50 a gallon -- for regular. Latecomers at grocery stores feel lucky to buy bread for $15 a loaf & hamburger for $24 a pound. Grocery store shelves are nearly empty. Banks nation-wide begin to call in loans. The five largest US insurance companies announce they will not honour requests to cash in policies "until further notice.">>>>>

Leigh, I have always wondered exactly what is meant by the Banks calling in loans....what does this mean? I've got a couple of credit card debts that i've been putting off paying because they are low interest rate and because I didn't want to spend my cash.

Besides that point, I called my local bank and asked the manager if there was a situation when the issuing bank of the CC would have the right to force payment in full of the account. He said no unless the account was in default or something.

Anyway, do any of you guys know if this is accurate? I suppose I should trust the Bank Manager, but I don't.

Thanks......goldilocks guy
koan
(01/01/2000; 12:27:48 MDT - Msg ID: 21984)
Stranger
Happy new year everyone - here's to you Stranger. You were the best this forum ever had.
Leigh
(01/01/2000; 12:40:39 MDT - Msg ID: 21985)
Goldy Locks Guy
Happy New Year, GLG! I don't really know the answer to your question. Perhaps a banking-savvy knight will be able to help you.

Thank you, Scot, and Happy New Year to you, too.
DIRECTOR
(01/01/2000; 12:52:39 MDT - Msg ID: 21986)
To All
Do any of you fine people know if The Wall Street Underground has a website? And if they do, what the Link is for it. Thanks in advance for any help on this.
Canuck
(01/01/2000; 13:20:16 MDT - Msg ID: 21987)
Is Y2K over?
A mining story that might have parallels with Y2K.

In the fall of '80 and the winter of '81 I worked in the bowels of the earth in a mining town in Northern Ontario. My partner was a robust little native, no more than 150 lbs. who ate nails for breakfast and raw
meat at night.

Our job was to 'drive raises'. A raise is a little tunnel, about 6' x 6' rising at a predetermined angle following a gold vein. A vein is a highly rich gold ore deposit that can run through granite like a knife through a pound of butter.

Each day my partner and I would climb up the 'raise' to the end of our little tunnel to meet the 'face' of the previous days 'blast'. Our job each day was to drill out a pattern of holes 6' x 6' x 8' to blast out a new cube of rich gold ore. We would follow the vein until some geologist genius figured the most concentrated
area had been reached and then a 'stope' team would come in. A 'stope' is a cavern, sometimes many miles under the earth, where high grade ore has been removed. No need to drill and blast granite, its the gold we were looking for.

The drilling pattern for the cube in the raise is precise. I'm sure a dynamite expert or some genius in physics thought up the pattern. The 24 holes drilled started in the dead centre, in a dense cluster and as the holes moved away from the middle they moved further apart. At the outside perimeter the holes might be 2 feet apart whereas the centre holes were inches apart. The one whole in the middle was bored out to be about 3 inches in diameter; all others were about 1 inch. Each hole, except the giant centre was filled with dynamite and a blasting cap. The half a dozen or so holes surrounding Mr.Big had fuses timed for a 7 minute burn. The holes surrounding those were timed a second or two longer. As we move away from the middle each fuse is a second or two longer than the previous. The engineering behind the whole thing is as follows. The very centre holes blow first; it implodes onto the large bored hole creating a large hole maybe 6 inches in diameter. The next explosion implodes on a larger hole therefore the hole can be drilled further away. By the time a 4 foot hole has been blown out, elasped time maybe 10 seconds, the outside holes are blowing away 2 foot by 2 foot by 8 foot chunks of granite and gold weighing many, many tonnes. The noise is deafening, beyond explaining and extremely dangerous. The individual explosions can be heard miles away because the air and space is contained. My favorite thing to do was to light the main 'starter' fuse and wait, play chicken. I would wait a minute, a minute and a half and then run as if the devil himself was chasing me. A real intelligent thing to do, but hell, when you are 19 years old flirting with the devil was fun. I would race down the 'raise', jump on the little train/locomotive thing and drive like a madman. When I was a half -mile or so away I would light up a cigarette and wait. On the first mind-altering boom I would inhale a huge drag and puff a cloud of smoke in the air and shine my head-held light into it. The force of the explosion was so powerful the positive pressure would move the cloud of smoke exactly one foot away. The ensuing vacuum would then pull the cloud back to its original
position. Twenty-three times the cloud would bounce back and forth; it was eerie.

The point of this extremely long winded tale.

I go back to the analogy painted by Number Six earlier; the birth of the cancer cell and the spread of it.
The 'rollover' was the birth of the cell and we wait for the spread of the disease.

The fuse has been lit, the first explosion will take time, a small fracture will ensue and then another and then another. Once the process has been started it will multiply, the cross-defaults, the calamities, the
dominoes and the explosions. I cannot believe Y2K is done. Someone said 10% of computers have been exposed to the rollover; banks, business and government is still an unknown. What will Monday and new week bring?

I am pleased beyond belief than the 'clock rollover' played little havoc with hydro and telephony, I am estatic that water is still available. I am relieved that millions, as Mr. McIntosh suggested, did not die with the rollover. I thank my God, and your God , and every other God we are okay today.

I am not thoroughly convinced its over, I stand on guard, I hope you as well.
Jon
(01/01/2000; 13:41:54 MDT - Msg ID: 21988)
Happy New Year Stranger
I miss your comments. Hope all is well with you and yours. Had a big laugh the other day when someone showed me Weiss' latest Y2k newsletter. He recommends shorting EWJ and I immediately thought of you. I've just about doubled my money on EWS. I believe your EWJ will out perform my EWS and I may switch. Any thoughts on this pls e-mail me
Johmin@msnbc.com
Gandalf the White
(01/01/2000; 14:05:41 MDT - Msg ID: 21989)
Canuck's Story #21987
The Hobbits LOVED your story from twenty years ago, BUT have one question --- Do you mean to say that your partner stayed at the "hot" end of the raise to watch the fireworks while you took the ride down the adit a mile + away ? WOWSERS, he was a tough miner!! -- Another question, any misfires ? -- BTW, Wish I had a scanner to be able to post the pictures of how square my raises were from the good ol'e days. -- Especially the one with the streak of yellow stuff down the side. --- Good ol'e Quartz Hill !!
<;-)
Peter Asher
(01/01/2000; 14:27:54 MDT - Msg ID: 21990)
Goldy Locks Guy (1/1/00; 12:24:20MDT - Msg ID:21983)
Many mortgages have clauses that stipulate payment if the Value of the property drops below the balance owed.

Also, many unsecured loans along wtith some mortages, have a clause that requires payoff if the borrowers credit worthiness deteriorates. Most people don't read the fine print or consider the consequences of the clauses, believing the liability won't occur. --- As in the case of Ashanti Mines!
THX-1138
(01/01/2000; 14:28:11 MDT - Msg ID: 21991)
Y2K bit spy satelites
http://www.drudgereport.com/matt.htmXXXXX DRUDGE REPORT XXXXX SAT 01/01/00 14:00:09 ET XXXXX

PENTAGON: SPY SATELLITE SYSTEM IN Y2K FAILURE, DATA LOST FOR HOURS; WHITE HOUSE TOLD DURING CELEBRATION

The Pentagon experienced one "significant" Y2K failure on New Year's Eve, Deputy Defense Secretary John Hamre said on Saturday.

"We did have one significant problem, one that I had wished we hadn't had, but we did... One of our intelligence systems, a satellite- based intelligence
system, experienced some Y2K failures last night shortly after the rollover of Greenwich Mean Time."

Hamre revealed that for a period of 2 hours, officials at the Pentagon Officials lost their ability to monitor all data from the spy satellite system.

"We were not able to process the information that the satellites were sending to us," Hamre told reporters.

And on the morning after the night before, the system was still "operating at less than our full peacetime level of activity," Hamre said.

MORE...

"The satellites were always under positive control," Hamre explained. "At no time were we ever without positive control over the space assets.

"Our problem actually was here on the ground, in the processing station. We were able to adopt backup procedures, which had indeed been planned and
rehearsed, and they are in place right now as we're working through the final details."

Word that the Y2K bug had left the Pentagon temporarily blinded, reached the White House at the height of New Year's Eve celebrations, the DRUDGE REPORT
has learned.

Shortly after 9 pm ET on Friday, the White House was informed of the satellite data jam, according to one well-placed source.

However, White House officials publicly maintained throughout out the night that there had been no "serious" Y2K events or disruptions.

MORE...

"I won't be able to speak much to the details of it because of the sensitive nature," Deputy Secretary John Hamre said of the intelligence breakdown.

"I am not sure that we will ever be able to give you a full report of what happened."

Hamre added: "It was only for a matter of a few hours when we were not able to process information. We are now. And we'll be back to normal operations very
soon."

END.
FOA
(01/01/2000; 14:40:22 MDT - Msg ID: 21992)
Comment
Cavan Man (12/30/99; 6:43:30MDT - Msg ID:21838)
Hello FOA and, Many Thanks
Please consider this:
I am 42. Will I live to see it and perhaps enjoy the knowledge that I made the right decision???????????

Cavan Man,
42? Oh boy, I didn't know you were so old! Well, at that age one should be careful with your body. Get plenty of rest, eat well and take your vitamins. If lucky, one could live another 40 or 50 years! (big smile)
Seriously, it was so long ago that I passed that age I lost the records. And for the record, I know I'll see this gold change. So, all in all, you don't have to live long enough to see the next gold bull, "you just have to outlive me"!! Ha Ha (huge great big smile!)

Happy new year CMan.
FOA
(01/01/2000; 14:42:33 MDT - Msg ID: 21993)
Comment
Golden Truth (12/31/99; 15:09:49MDT - Msg ID:21912)
Paranoid Thinking Runs Amuck Here!
Now a year later i still have an enormous amount of respect for your knowledge about Gold. Yet, I still respectfully say, the World markets are just to big and to unpredictable for one person to know with any certainty.------------------

Hello Golden Truth,
Reading all of your post tells me the (non physical) gold markets have been rough on you. I can understand your feelings if you can grasp what groups we are talking to.

All of Another's Thoughts and my comments are directed toward "physical gold owners and by extension "physical gold advocates". These people have read all of these ongoing posts (some have been involved privately long before the current "gold forums stage") and know the thinking is
strategic as it applies to a moving, evolving political target! Each group of posts are but a snapshot in time as it applies to this changing chess game. Yet, the end results remains the same, the destruction of our present pricing system for gold, a huge increase in the dollar price of physical gold, the eventual use of gold a Euro reserve settlement currency along with the new free market that must evolve with it.

"Physical Gold Advocates", such as I (and readers) have brought gold from the high $360s into the low $280s because of this ongoing timeline of events. A timeline that is now quickly being depleted as the Euro builds it's position in the world. I submit, we are not hurting in any comparable
way as our gold holdings are in a good large proportion to our total assets. And certainly our asset values have not been impacted as the gold derivatives players have (gold stocks included). When behind the stage power plays are in progress, the possible short term outcome is presented. Yet, it is presented with the knowledge that readers will think bullion, not derivatives. As such, if the chess game moves into another stage, no hard loses are taken by anyone.

ALL:
The historical record of physical gold alone is enough to justify a real gold holding. I add that the record for mining shares and the other leveraged derivatives are lacking in their long term comparison. These items are as new and peculiar to the modern investment scene as is the current dollar "off the gold standard"! Players often tout these paper investments to be as good as gold, yet they are truly only as good as the dollar marketplace for gold! Still, I own some gold shares (gold), but only in a small proportion.

We conclude that the coming bull market in gold will be unlike anything before it. Today, the leverage is in physical gold, not paper gold. This latter day track record of derivatives, gold stock options, gold options, gold stocks, etc. all clearly demonstrate this changing function. The horrendous ongoing, long term loses, built up by these paper bull traders is evident. With each downturn, they search for greater and greater leverage, in a attempt to return to "even". All the while, the bullion buyer slowly amasses a large "highly leveraged" position, just by channelling his would be trading loses into paid up physical and rare gold coins.

One day, the dollar paper gold markets will be driven into "Force Majeure", during a transition from the current dollar reserve system. With each political announcement, the stress on the London market will grow. We know this position and understand it well. Yet, no one can guess when the
last bullion delivery will spell the end for paper credibility. I only offer the month by month level of stress and how it may impact bullion.
As for this Y2K item. I fully acknowledged it potential for impact on the dollar. Yet, in my posts, I offered my feelings that it would not be severe. Clearly, we have larger items to address that this.

More later. FOA

Mr Gresham
(01/01/2000; 15:59:47 MDT - Msg ID: 21994)
Hoot of the Century (Which One?)
http://stand77.com/wwwboard/board.htmlThe Y2k Debunkers' website, devoted to hounding and harassing and jamming the TB2000 website, can't display their posting dates correctly. They show 1/01/100.

Happy New Year, all. Now we can get on down to basics! Let's see if anyone will join in.
USAGOLD
(01/01/2000; 16:24:52 MDT - Msg ID: 21995)
Once in Golconda...
"The days (of August, 1929) are cool and dry; Goldconda's climate lacks the usual seasonal sniff of Hell. Not only do the regulars stay in town; necomers have arrived in great numbers. These are men and women who are sacrificing their own vacations, or else have simply chucked their jobs, to spend their days sitting, or more likely standing, in the brokerage customers' rooms watching the quotation board report the glorious news, and to share in the beneifts. They arrive early to read the brokerage houses 'morning letters' informing them confidently which stocks will rise how much that particular day, which will be 'taken in hand' by a pool at what hour, which companies have favorable news to come out shortly. By Stock Exchange opening time, all along Wall and Nassau, Broad and Broadway and Pine, the customers' rooms are jammed -- there is standing room only and perhaps not even that, there is a premium on positions from which the quote board can be seen. Still, they all are sure it is worthwhile being there, right on the scene; they feel themselves part of something tremendous, and perhaps, too, they feel their physical presence on Wall Street makes them insiders, gives them some slight advantage over those who are maintaining vigil elsewhere -- the barber or chauffeur or cab driver whose ear is cocked for a tip his important client might let fall, even the important man himself who has given up his vacation not in substance but only in spirit, and, sacrificing a seat in the sun, is glued all day to one in an office in Bar Harbor or Newport or Southampton or in a Catskill Mountain hotel. Brokerage house branches have suddenly made their appearance at every important resort, and the wires between them and their home offices hum all summer long."

To be continued.....

Once in Golconda
by John Brooks, 1969
Mr Gresham
(01/01/2000; 16:28:07 MDT - Msg ID: 21996)
TB2000 Forum
http://hv.greenspun.com/bboard/q-and-a.tcl?topic=TimeBomb%202000%20%28Y2000%29P.S. Don't miss it today -- it is really rich! Probably for another two weeks or so, also, if you want to wrap up your y2k story with the full roster of bugs that are being outed.

Also SangersReview.com (no "www") has a good ongoing filter of harder news, and checks out the rumors pretty well.
Al Fulchino
(01/01/2000; 17:48:22 MDT - Msg ID: 21997)
No reason to doubt ourselves


Many have awakened to wonder why they planned for y2k. I am not one of them. People who purchase gold and / or purchase food and supplies were indeed the smart ones. They are not all doom and gloomers, instead they are optimists. They are usually people of perception. They are usually people with decent morals. They are the neighbors I want around me. There were indeed consequences if the y2k bug was not worked on. Those who think this through do understand this. In fact, those who laughed at y2k and the people who prepared should be kissing all the rear ends of those who sounded any alarm at all. They should be thanking the corporate executives who decided to spend millions on this issue. Those same executives, who said fixing it WAS important, kept the stock value of their respective companies and the profitability of the companies in the black. I say thank you to all of those who cared. Instead it is our turn to laugh at the naysayers if we so choose.

I now have a very respectable financial security blanket, based on my gold and silver purchases, around my family and me. I have food and many other items that will serve useful purposes when I so choose. I also have an interesting perspective as a retailer of a much sought after resource as some of you here know.
This past week I got to observe the wise make final preparations, as well as the "newly concerned" ( formerly known as naysayers make those just in case purchases. In their faces, I saw doubt inside with a smile on the outside. They didn't need the extra stop at my stations. They chuckled about how silly y2k was and how nothing was going to happen, BUT they came anyway. They would normally be doing something else. They came and bought. They went home and told their wives to buy a bit extra. Deep inside they too wondered. My sales were up 50% for the last two weeks, day in and day out they came. They came and filled tanks that hadn't seen a full tank in years, ones that had holes in them and leaked all over my lot. They came with shopping carts filled with gas cans. I got to see all the people who would be dangerous to me if a crisis were to have developed.

So I thank those who warned. I thank those who prepared. I thank those who worked on a fix. And I caution that we take note that this is only half time. There are still weeks in front of us that may indicate some problems have not shown themselves yet.

PS. By the way, we just gave away a canal. Celebration anyone?
Golden Truth
(01/01/2000; 18:17:00 MDT - Msg ID: 21998)
TO F.O.A
Hi F.O.A, thanks for being so very candid, and taking the time to respond to me! One thing i would like to say right off the bat, is that "i am" only a physical GOLD holder. I bought physical @ $290/oz almost a year ago after reading "your" posts and Anothers posts on GOLD for Oil. I then bought more in the $280-270 range and due to all the ongoing negativity we saw in the GOLD market in the summer of 1999! I stood by helplessly and watched the price nosedive to the $253 range.
I could of cried every single day! I do remember you saying that one would need "intestinal fortitude" or strength, because at that time, it was "thought" the P.O.G was going down to $200/oz, remember that? You know, in hind sight you were right, it probally would have, if it wasn't for the suprise announcement. A.K.A the "Washington Agreement"

I,am sorry if i've been hard on you, but its because i believe in you so much! I've also convinced others to believe in you! and they also only have purchased physical GOLD. Let me share this with you, firstly my Uncle@ 25oz's, next two guys i work with 10oz's each, and one is looking to buy alot more! He also thanked me for getting him into GOLD WOW eh! Now lastly myself, wait for it, a whole 38oz's.
For a total of 83oz's of pure 24k GOLD. So you see F.O.A your words carry alot of weight and in GOLD yet. Whether you know it or not, alot of people due really look up to you in this New GOLD market.

Also in reviewing "Anothers" posts i've begun to wonder or notice that his focus was mostly on "OIL for GOLD" in the beginning. Where as now we tend to focus on the "EURO and GOLD". Which for me is alot more complicated, but i never give up trying to understand it all!

To make a long story short, what is going on in the OIL for GOLD realm these days? Is it as Another said it was some 2 years ago in the book "IN THE FOOTSTEPS OF GIANTS" or is it back to business as usual?
Sorry for being hard on you, but owning GOLD and having someone telling you that it is priced way below its true value and at any minute or day it all could come undone.
Is the equivalent of a very beautiful Woman that is classy, refined, educated, well traveled and smart saying "You can have me, but you must always do just one more thing" before the big day! Very frustrating indeed, but usally worth it?
I feel this is the point at which alot of male GOLD owners are at, i,am sure you can feel my frustration also F.O.A
(Big Smile) :-)
God bless you and i trust the Holidays and Santa was good to you!

G.T




USAGOLD
(01/01/2000; 18:25:37 MDT - Msg ID: 21999)
Once in Golconda
"Many of those now crowding Wall Street have burned their bridges. They have thrown over their jobs on reaching some predetermined goal, a paper net worth of $50,000 or $100,000 or $200,000; they have bought expensive houses and mink coats for themselves or their wives, and look forward to lives of leisure and affluence spent at this easy and entertaining game. Moreover, in their short time on Wall Street they have come to feel a sense of belonging there; the scars on Morgan's (from an anarchist bombing) are 'their' scars and the grave of Hamilton in Trinity Churchyard is 'theirs.' They have a new life and, if they wish, they can even partake of the very symbol of belonging. The most change-resistant institutions, the urban club, has gone democratic on Wall Street; luncheon clubs, most of them no more than six months old, are everywhere, ranging from fancy cafes to one-arm counters in bare rooms, and membership is just a matter of knowing somebody -- anybody -- and paying a fee.
At lunch hour the streets of the district are jammed from building line to building line. Even at the height of the morning and afternoon business hours the streets are full of pedestrians, talking, gossiping, shouting to make themselves heard over the din of the new office building construction going on everywhere. But at noon the crowds on the streets grow so thick that no car can pass, and the constructions sounds are stilled for the workmen's lunch break. A visitor from England, charmed by the silence broken only by talk and footfalls, is reminded of Venice. He finds the atmosphere 'savagely exciting,' and as an outsider watching the performance of a rite he does not understand, he feels loneliness and a certain alarm. He is not reassured when his American friend and guide breaks into a cool explanation of Wall Street and the American business to say, abruptly and cryptically, 'All the same, I don't really believe it.'"
Peter Asher
(01/01/2000; 19:08:18 MDT - Msg ID: 22000)
Al Fulchino (01/01/00; 17:48:22MDT - Msg ID:21997)
As much as we would have liked to have you for a (Almost) neighbor, I'm glad you did't invest in closing up shop and moving the whole kit and kabbodle out here. That would have been a bit much considering how it all fell out.

Robin was just saying that alot of things she's been putting off doing for 20 years, got done because of the high necessity level. She also pointed out that if food prices shoot up we'll all have made a good investment.

Not an Ill wind, was it?



USAGOLD
(01/01/2000; 19:57:16 MDT - Msg ID: 22001)
Once in Golconda...
"All through the days and long into the evenings, the talk, talk, talk goes on. There are tales of fortunes just made and of fortunes about to be made -- above all talk of fortunes. There is not talk of panic; the spring crisis is in the past now, brokers' loans are soaring faster than ever but that is considered healthy now, there is no money squeeze and call money has settled back to a reasonable 6 or 7 percent. The market averages stand 34 percent above the March low and 76 percent above early 1928. When on the ninth of the month (August,1929), the New York Federal Reserve raises its rate to 6 per cent nobody pays much attention; the Fed is a figure of fun now. There is constant talk about the new investment trusts, Blue Ridge and Alleghany, Shenandoah and United Corporation and hundreds more, that are the latest thing in stocks, a billion a half dollars worth of new ones put on the market since January; paper companies with staffs of only half a dozen people, existing merely to hold and trade in the stocks of other companies, most of them elaborately designed to 'move fast' by the application of 'leverage' to their structure, they are considered flimsy and over-speculative by some, but why should they be? Weren't Alleghany and United sponsored by that pillar of conservativism, J.P. Morgan & Company, and hasn't Alleghany gone up from its February offering price of 20 to 56, United from its January offering price of 25 to 73? There is talk about John J. Raskob's article in that month's 'Ladies Home Journal' entitled 'Everybody Ought To Be Rich,' in which he explains how savings of $15 a month wisely invested in stocks will do the trick in twenty years, and talk about whose shares it lists, has just declared a 'stock dividend' to its members -- one fourth of a seat to each holder of one. There are jokes about well-fed, broad-beamed Exchange members needing a seat and a quarter each, these days.

Money is king -- but there is something else. It is a high, wild time of riotous spirits and belief in magic rather than cold calculation, a time of Dionysius rather than Apollo. People speak of 'luck' and 'the breaks' more than of earnings and dividends. They have given up their month at the lakes and beaches not in the puritanical spirit of 'business first' or 'come labor on,' but in the hedonistic spirit of living more fully and not missing life's chances. It is almost as if they believed the market existed for taking chances not on money but on happiness."
USAGOLD
(01/01/2000; 20:07:21 MDT - Msg ID: 22002)
Series of posts....
The "Once in Golconda" posts below are extracted from the book of the same name published in 1969 by Harper & Row and written by John Brooks. For some reason my end notes did not end up on the board.

My purpose is to bring to light the extraordinary parallels between the cultural and market phenomena of 1929 and the present. Manias, it seems, have similar characteristics no matter the era. It's like deja vu all over again.

To be continued.....
Number Six
(01/01/2000; 20:14:41 MDT - Msg ID: 22003)
This post was pretty much addressed to me as one of the prime gold advocates on TB2K
Those thinking y2k 'is over' have no idea what they are talking about. Here's one reason why.
Several months ago (mid-November) I attended a financial conference as a presentor for our start-up company and happened to meet Robert J.(Bob) Leuver. Bob is not a well known figure but was the number 2 man at the Treasury dept under Reagan (he was head of the Bureau of Printing and Engraving). Anyway, it was clear that he is well connected to this day. His testimony to Congress is not uncommon and he *often* consults with central bankers, especially in South and Central America.

His area of greatest expertise is obviously banking. He did not expect bank runs before the end of the year. He felt that the American banking system was in very good shape overall.

Here is his one word assessment of the banking sector in South and Central America: toast. According to *his assessment* - all the banks of South and Central America are toast and are going down hard. He stated this as fact, without hedging. No inuendo. Just a simple statement. "All of those banks there who say they have even begun to get ready, and that's not many, are 'not reporting accurately' (not his words for what they are doing - I softened them). Their financial system is going to collapse."

I emphasize that this is his assessment because, like any human being, he could be wrong.

It is interesting that he believes the big money center banks will be *better* off. (Contrary to Gary North). Why? Because Citicorp, for example, has it's own office in the foreign city. They can sever all ties with the national banks and still do business. That alone would collapse the economy there, he affirmed, but since it's collapsing already, the nations will be grateful that Citibank in, for example, Buenos Aires, keeps its doors open. (I suspect that the angry people will look for a 'foreign devil' scapegoat to blame and so burn down the Citibank office, but that's just *my* speculation.) He thinks xxxxxx Bank (a large regional US bank), for example, will be in horrible shape because they have a lot of money loaned in those countries but no way to collect it except through the national bank. Each transaction they do in those countries is totally dependent on a functioning national bank. Ooops!

He does not think we will be able to reliably get *anything* from South or Central America next year and, for some reason, mentioned car parts a couple times. (But that won't affect us, right pollies?)

And here's one for you Andy: The biggest buyers of the British Gold in the previous to last sale were the Chinese. They bought almost all of it. The Europeans did not like that and that was one of the reasons they decided to curtail the sales of CB gold. Robert J. Leuver, formerly the #2 man at the Treasury, recommends the purchase of gold. Hmmmm, it seems Andy is in good company.

Now, what does the potential collapse of these banks mean? The reader can draw his or her own conclusions. My assessment is that, if true, this will be substantially bigger than the "Baht crisis" which, as you may recall, initiated the Asian crisis and nearly caused a worldwide financial meltdown. (Which of you can honestly say you even knew what a "Baht" was before that crisis?)

Pollies are gloating, "no bank has collapsed yet". Stupid pollies. Someone should buy them a clue.

And perhaps those 'embarrassed' at having prepped should buy a clue as well. (Lots of hunger during the Great Depression - your preps may yet serve you exceedingly well.)

Further, take a look at the SEC filings for any major bank. Exposure in Latin America is *huge* (much bigger than Russia or CIS). What will the impact be? The reader may draw whatever conclusions seem reasonable.

Here's another tidbit. A friend of mine recently started a new hedge fund. It's a small fund - only about $100 million. He is clearing through xxxxxxx brokerage. When he 'signed up' he was asked, "How much leverage do you want? Two times?" He paused. "Four times?" Pause. "Ten times?" (His pause was due to shock.) He took 'some' leverage. My point is, the whole system is leveraged far beyond what most people would guess even in their *wildest* speculation. This, my friends, is why y2k did, and *still does* scare the caca out of the Fed. They are trying to drown their sorrows in liquidity (but may soon need to turn to booze.) The liquidity injection has of course made the situation worse - much worse. The Fed has brought us to the edge of a very high cliff. Now, in the new millenium, we are ready to step forward.

The market has been on a wild rampage. It may continue for a few more days, but I speculate that the life of this bull is measured in days, not months. Once it goes there will be no stopping it. The unwinding will be unlike anything ever before witnessed on this planet. I expect the system to effectively seize up, not from y2k glitches, but simply because there is such an indescribable dislocation in place that a controlled return to 'normalcy' is impossible. Greenspan has not allowed the market to purge itself of excesses in what would be a painful but relatively controlled manner. The infusion of capital beginning in the Fall of '98 was politically, not economically motivated. This infusion has not only continued unabated but has accelerated sharply through the end of this past year. (The Fed is very afraid, but not of power outages!) My point: don't put that cash stash of yours into a terminally ill bull. I think his rage is the result of a large brain tumor.

Now, if banks in Latin America do fail, don't expect it to happen in one day and don't expect it to hit Reuters by Monday afternoon (or for weeks/months/ever). I'm certain, however, that by noon on Monday the pollies will be claiming that the banking system is 'fine'. Stupid pollies.

As for my own expectations, Gary North would classify me as an optimist because I have in my portfolio the most digital of all assets: puts (S&P 500, LSZ series). The purchase of these was 'optimistic' because it posits the survival of enough infrastructure that being correct has meaning. I need power, the exchanges to function, a reasonably intact banking system and the ability to buy something with any $'s I may receive. So far so good.

P.S. I had a can of hash for lunch. Yummy!

-- Me (me@me.me), January 01, 2000
Goldsun
(01/01/2000; 20:21:08 MDT - Msg ID: 22004)
Euro Roars Into New Year
http://www.ducati.com/MH900e/astride outrageous new Ducati motorbike.
Ducati is selling this wild limited production model in a wild new way. You place your order on the web, even though the bike is delivered to the nearest dealer. And the price will be the same everywhere in the world -- 15,000 euros!
Rock and EuRoll!
Goldsun
RAP
(01/01/2000; 20:29:49 MDT - Msg ID: 22005)
Goldsun
True inflation:
I bought my first Ducatti in 1966 for $1250, a slight increase in price?
Black Blade
(01/01/2000; 20:31:29 MDT - Msg ID: 22006)
Good to see everyone alive and kickin'
Just blew into town and thought that I would poke my head in here. Well now we made it through the roll-over. Hopefully no major problems on monday when everyone fires up for the new year and no major problems from embedded systems develop. I see that Holtzman has signed up! Now I have my work cut out for me. I have over a weeks worth of reading to catch up on. All in all, things don't look too bad. Happy new years all!
SteveH
(01/01/2000; 20:33:07 MDT - Msg ID: 22007)
Protecting gold
Upon reading this you may conclude that this has nothing to do with gold. Au contraire. It has everything to do with it. Where the word gun exists, substitute the word gold. For example, register guns, register gold, loss of rights to guns, loss of rights to gold (gold seizure). You see my point?

After a few days of reading I have come to the following observations about our Second Amendment Rights. If you boil down the issue to its most basic premise or what is called a priori (that which is the essence of the issue), the following comes to mind:

-- Second Amendment is an individual right for the people to keep and bear arms, including CCW (carrying concealed weapons) in all locations.

-- This right applies to voting age persons.

-- Gun registration is ineffective and unconstitutional.

-- Severe penalties for child access are not necessary and unconstitutional, including misdemeanor and felony penalties.

-- Purpose of right to bear arms is because of British and early-American common and natural rights and their experience with governments who have attempted to remove these rights before attempting the removal of further rights.

-- Founding fathers saw fit to make sure this didn't happen by including the already existing natural and individual right to keep and bear arms in the Bill of Rights.

-- Children should be educated and trained as to the proper use of firearms in order to protect this most valuable of all rights, as it ensures that future generations of Americans will not usurp for convenience or expediency this right.

-- The lack of a Supreme Court ruling on the individual right nature of the Second Amendment and judges and weapons boards who bow to the public health aspect of loss of life and limb versus strictly protecting the Second Amendment is causing serious harm to the right.

-- The greatest enemy to the Second Amendment and to the American people is the attitude that the Second Amendment should have no cost in lives. The Public Health aspect of the Second Amendment and its perceived wanton loss of life from having a free and open right to keep and bear arms is becoming prevalent such that some naysayers would rather have zero loss of life than the individual and uninfringed right to keep and bear arms. That is NOT to say that the liberty interest of the Second Amendment should cost any lives, rather the American people must establish the liberty right above that of the cost in lives, while working on ways to reduce loss of life and limb, while NOT infringing at all on the Second Amendment individual right to bear arms. This is critical: there is a segment of our society that believes the Second has no place as long as there is loss of life. This is a most dangerous position, as its ultimate effect would be to guarantee the ultimate loss of many greater lives. The founding fathers knew that Arms had a cost to society but also knew that the liberty right of bearing of arms far outweighed that cost. This is a complete paradigm shift from current thinking as it places proper perspective on where the individual right to bear arms should be. To put this in perspective, automobiles cause great loss of life and limb and yet the Press no longer reports but exceptional losses, people accept the cost in lives, while government and drivers do try to be safer and reduce loss of life and limb. Do we remove the right to drive from people? Only when they are irresponsible or drunken. AND, the right to Drive is not a Constitutionally guaranteed right as the Second Amendment right to bear arms is. Again, the emphasis of loss of life and limb from guns needs to be placed second place to the right to bear arms. Otherwise, erosion of that most important right will continue. Put simply, today's anti-gun person has forgotten the reason they have the right to be anti-gun and to say so is because of the very existence of the Second Amendment. They are in a very dangerous downward spiral that will not stop with the Second Amendment. This and all rights in the Bill of Rights need be jealously protected.

-- America is a formidable country because of the armed nature of each of its members. The totality of armament in the hands of all citizens makes this country great and protects it from those who wish to destroy the country from within or without. That is the exact meaning of the Militia part in the Second Amendment. In other words, you can not have an armed populace that stands ready to defend its rights, without the uninfringed right to bear arms. AND, that right has, does, and will cost innocent lives. Yes, non-infinging ways to reduce loss of life is essential, but should never be allowed to stand in the way of the Second Amendment. Unfortunatly, some of our leaders, judges, and law-enforcement persons have forgotten or refuse to recognize this, and that is how we find ourselves with more and more infringement, more and more bad press, more and more misunderstanding of what it is that makes America great. It is time for all American's to decide if their liberty is important and come to terms with the above.

-- The Second Amendment should not be allowed to be whittled away at by regulations, rulings, and restrictions. In so doing, the chances of other rights being whittled away at are equally imminent. No, the only proper way to change the Amendment is by a new Amendment. Otherwise it should be hands off.

-- The Courts find that the legislature, who is elected by the people, make laws that are constitutional, making the burden of proving a law or regulation is not constitutional that much harder. In order to rectify this situation, more people need to file formal complaints against those would choose not defend the Second Amendment. In addition, more people need to elect officials who support their views of the Second Amendment.

-- Any official using the color of law to restrict or oppress the Second Amendment through regulation, restrictions, or rulings are guilty in some way of a violation of at least one Civil Rights violation. To view this differently, would a citizen stand to have their right to freedom of religion reduced by having to register their religous preference? What is so different about the Second Amendment? Is it that gun registration reduces the cost of lives? I firmly don't believe it does. Does gun registration infringe on the Second Amendment? You bet it does.

-- Anti-gun proponents are using the risk to children to appeal and disfavor the Second Amendment. The Press has picked up on this is a big way. The Press has become one-sided on this and refuses to show the positive liberty aspect of the Second Amendment. This is tantamount to brainwashing, as the Press is known to have great influence on people. To choose only one side of an issue, to choose only to report shootings, especially those of or by children is to miss a whole other positive aspect of the liberty aspect of the Second Amendment. In fact, the Press receives an F for being patriotic, as they have forgotten or fail to mention the whole purpose of the Second Amendment. Death of children is tragic; so is trying to take away civil liberties. The Press needs to find a way to be constructive and patriotic. They must protect the Second Amendment by first understanding its true purpose, educating people to that purpose then find constructive ways to reduce loss to life and limb but in a fashion that in no way destroys the very right that allows them the freedom to speak their minds. It is naive to think that the liberty of the keeping and bearing arms in favor of a strong nation should come secondary to the social cost of same. Again, not that the social cost can and should be reduced but let the Press and the people not become so naive or complacent to realize this.

-- People who have not experienced crime do not understand that law enforcement is there more to deter crime but can not stop it nor can they save everyone. Often, persons must protect themselves until help arrives. If that help is slow in coming, then people are on their own. It is a natural right of people to protect themselves equally, force against force. Since our society chooses to be armed, then armed the citizens should be, if they so choose. To believe removing guns from the peoples hands will only result in removing guns from good peoples hands.

-- Anyone who has been arrested soley for possessing a gun for self-protection oddly could be considered political criminals in that they are the victim of a laws that have breached the Second Amendment. In proportion as the these crimes increase, the Second Amendment becomes further eroded. By right, no restriction of the right to keep and bear arms should have ever been permitted. That this is so is a testimony to erosion already having taken place. That is not to say that the Second Amendment can not have restriction or rules, but these need to be made in according with the individual right that it is, just as criminals are guaranteed their right to trial, their to counsel. It isn't popular but is is still a right.

-- Concealed carry and open carry are both manifestations of the right to bear arms. Concealed carry is currently the more accepted, as open carry of weapons often arouses undo suspicion and delay by biased arrests. Yet, concealed carry is the most contraversial as persons with hidden guns are often considered acting like criminals, when they are in fact merely excercising a natural right that existed even prior to its listing in the individual Bill of Rights to the US Constitution.

-- Concealed weapons boards do not have a Constitutional right to deny law-abiding citizens concealed weapons permits. Law-abiding citizens have the right to bear concealed weapons, but may choose not to. Their choice, not the boards.
FOA
(01/01/2000; 20:34:38 MDT - Msg ID: 22008)
Comment
mhchuck (12/31/99; 19:13:55MDT - Msg ID:21928)
Just Another Squashed Bug.----------------
----and----------
mhchuck (12/31/99; 19:22:25MDT - Msg ID:21931)
Do We Have Free markets?
Yuk, Yuk, what an industry, if the price of the item they are producing rises...they all go bankrupt. Please come and get me, I'm ready for the nuthouse.---------------------

Hello and welcome mhchuck,

Well, if you have come this far down the gold trail, we might as well finish the hike.
The end of this is closer than many think. My dad always said don't worry about the big bully in town. There is always someone bigger and tougher than him wait for the chance to ?????
The same is true in the money power game. I never said that the Euro was not going to be a tough "dude". He is and he will work the dollar over with the help of gold. We are only pointing out (to the average person) that the timeline of the dollar is ending and the transition will be sudden and harsh on dollar asset holders. Truly, gold will not be an "innocent" bystander in this fight. It's historic power to break empires will certainly come into full use.
Again, bullion will be the survivor with the most leverage in this battle. Yes, the gold mines will still have valuable reserves and be in full operation as this all unfolds. It's only the equity holdings of these "businesses" (not all, just most of them) that will be ransacked as the gold marketplace is up-ended.

FOA
FOA
(01/01/2000; 20:36:19 MDT - Msg ID: 22009)
Comment
Golden Truth (01/01/00; 18:17:00MDT - Msg ID:21998)
TO F.O.A---------------

Golden Truth,

No, G.T. I am the one who thanks you for telling us what you think and how you feel. And doing so without using a sword to try and cut my head off (as some have done)! Truly, all the success, wealth and social standings are lost if we as people cannot clearly air our thoughts without physical
and verbal violence.
No one can walk this gold trail without a modern, updated map. And no one can read this map without a good understanding of the road signs that daily events create. Further, human understanding is developed by allowing ourselves to weigh "reason", by viewing these new events
as others see them. Not just accepting them in the light of past performance.
Things change, life evolves and so too do the reasons and motives for gold. In this respect, oil influence has played a major roll in the evolution of our gold markets. Not to mention the birth and success of the Euro. There will be much more on this later.

Thanks FOA
Number Six
(01/01/2000; 20:36:32 MDT - Msg ID: 22010)
New Duck!!!
Whoa! I like it, I like it...

As a confirmed Ducatisti this has piqued my interest again, the Europeans really are at the cutting age of bike design now, especially the orgasmic new Aprilias and pretty much anything coming out of Italy.

Reminds me of the old Halewood replicas, and the early BMW R90's...

Way to go Ducati, way to go!

Wonder if they'll take e-gold? :o)
canamami
(01/01/2000; 20:39:05 MDT - Msg ID: 22011)
Y2K, the Stranger, Happy New Year
Y2K was substantially a bust, at least up to now. My government's Y2K Co-ordinator asked us not to check out our phones at midnight. Why? So many people checked their phones for dial-tone in New Zealand, the system crashed not from Y2K, but from those who worried about Y2K. (i.e., the worriers overloaded the system by checking for dial-tones). Also, several cousins have "lost" their New Year's holidays because the government put them "on call" in case there were emergencies. My cousins are now convinced Y2K was a scam thought up by computer people looking for $800 a day consulting fees (said contracts continuing for several more months).

For fans of the Stranger (of whom I am one), it appears his views on Y2K have been vindicated. (The Stranger still posts concerning gold elsewhere on the internet, for those who may wish to follow his views on the topic).

Happy New Year to all!
JCTex
(01/01/2000; 20:59:08 MDT - Msg ID: 22012)
FOA: end is closer than many think
I may frame that and use it as a mantra. I, personally, do not see how the Comex price can do anything but go down. To begin with, WHO wants to buy on a market that cannot deliver on anything except more manipulation. You and Another have that one figured out.
You mentioned your dad's statment about a bigger bully: I am mostly a lurker, but nearly entered MK's last contest in order to enter "The Washington Agreement" in ALL 5 categories. Any truth to the rumor that the Saudis gave the CBs an ultimatum concerning gold sales?
canamami
(01/01/2000; 21:08:25 MDT - Msg ID: 22013)
Question re Remedies for US Breach of Contract
This is open to the entire Forum, though it may be of particular interest to FOA.

Is it possible to distinguish between pre-August 1971 Bretton Woods/gold-backed dollars and post-1971 dollars? It would seem that only those dollars which existed prior to August 1971 represent a breach of contract by the US. Further, even on a purely moral basis, given that the rest of the world accepted US dollars after the 1971 breach of contract, would such acceptance constitute a waiver of the breach, thereby nullifying even a moral claim to US gold? Moreover, it appears that by the early 1960's the world knew that the dollars outstanding exceeded the gold backing, yet the world continued to use the dollars? Again, the world accepted the US dollars knowing there was realistically no gold backing, thereby nullifying the moral claim.

Does not the continued prominence of the US dollar reflect value to US currency which stems from more than mere "gold backing" or "acceptance for oil settlement"?

(Kindly note I am not diminishing the possible importance of the Euro as a competitor to the dollar, or that at some point the huge overhang of foreign-held US dollars and the trade deficit will have an impact. I submit the Y2K non-event may lead to an outflow of dollars from the US market as the world recognizes no further need to hold dollars in the US as a Y2K technological safe haven, and this may trigger the long-overdue equity correction/crash - perhaps a NASDAQ crash and a major S&P/Dow correction.)
FOA
(01/01/2000; 21:19:45 MDT - Msg ID: 22014)
Comment
USAGOLD (01/01/00; 20:07:21MDT - Msg ID:22002)
Series of posts....

Hello USAGOLD,
I have really enjoyed your recount of the Golconda writings. How true to modern life it is.

Philosophically thinking about our present situation; the current run up in the stock market is a perfect end to a long play. This mad rush to buy anything at any price is indicative if a financial order run amuck. I am struck at how the same process is repeated again and again by our Fed,
each time with greater intensity. Starting with the 1982 Mexican default and the Dow at 700+/-, the federal reserve pushes money into the system. Right into this present day, each and every possible threat to the dollar system is addressed with a more intense cash flood. Now the flood
becomes outright and open with little consideration of the eventual repercussions.
Yet, the entire population accepts this illusion as real wealth for the long term. Truly, a mass of deluded opinions ripe for reality.

Further,

I could not agree more with your #21977! In present time, the Washington Agreement has turned the "Thousand ton Gap" into a ticking time bomb. Even before the agreement, stocks of gold were being drawn down. I have often stated that this gap was being filled by private gold holders
exchanging old line physical for derivatives. Because this process was backed by the CBs, there partial withdrawal from the business has set off a mad scramble in the BB camp. Far from the past official leasing announcements and sales, guarantees were hidden from view. This loss is the real
story behind the market facade. The recent small official announcements to lend by other countries indicates that we are at the end of private stock supplies. I expect that the "gap" will now work it's magic in short order.
How this will end in a pricing format is completely uncertain to many. The world has never had to wait out a transition from paper into physical. Usually, it's been the other way around (the dollar in 71). We watch for physical to move as paper becomes frozen. We shall see.

Thanks FOA

koan
(01/01/2000; 22:20:34 MDT - Msg ID: 22015)
Where does Stranger post?
Hi Canamami, can you tell me where the Stranger posts? Thanks.
Number Six
(01/01/2000; 22:28:23 MDT - Msg ID: 22016)
koan - GE
But I've just been banned for posting on the Gold / Oil (hello FOA :o) ) "relationship"....

Apparently Vronsky believes there is no relationship...

!!!!!!!
canamami
(01/01/2000; 22:36:25 MDT - Msg ID: 22017)
The gold "subculture" - Reply to Number Six, koan
It seems that there is some similarity between gold affinciandos and old-fashioned, first-part-of-the-century leftists - the Stalinists expel the Trotskyites, who in turn start to expel each other and splinter into sub-groups over disputes of some sort - i.e., the International Socialists v. the Trotskyite League, etc. All the while, the internet/tech investors get rich. O, to redo my investments of the last 18 months!!!
Al Fulchino
(01/01/2000; 22:37:55 MDT - Msg ID: 22018)
Thank you Peter.
Peter Asher (01/01/00; 19:08:18MDT - Msg ID:22000)

Today my wife and daughter and I were driving to the gym. It was an unusally warm upper 40's sunny day here in NH. My wife turned to me and said," This must be what it is like in Oregon this time of year." After I had visited Oregon this summer, I waited patiently for the wisdom on what to do. I really liked Oregon as did my daughter. I view the decision to stay here as being good for now. And as you say it was not an ill wind at all. I am grateful for what the year has brought. And as Robin says, it made me do a lot that I have put off.

You and Robin would be good neighbors.
Goldsun
(01/01/2000; 22:38:09 MDT - Msg ID: 22019)
Y2K Relief Selloff
Canamami
I agree with your suggested withdrawal of foreign money from US equities due to perception of Y2K as a nonevent. Which could have the benefit of producing a market crash before the effects of Y2K are felt.
Interesting to see if fed starts sponging up its Y2K liquidity spill. Delay might indicate they don't believe it's over either.
Goldsun
FOA
(01/01/2000; 22:49:45 MDT - Msg ID: 22020)
Reply
canamami (01/01/00; 21:08:25MDT - Msg ID:22013)
Question re Remedies for US Breach of Contract
This is open to the entire Forum, though it may be of particular interest to FOA.

Hello Canamami,
Your thoughts:
--------Is it possible to distinguish between pre-August 1971 Bretton Woods/gold-backed dollars and post-1971 dollars? It would seem that only those dollars which existed prior to August 1971 represent a breach of contract by the US. ---------

I have to put your items in context. Why would it be important to separate the pre and post gold backed dollars? That was not the thrust of the logic presented. The point was that foreign entities would take the US to task in trying to reclaim their gold at $42 per dollar. Simple international contract law does not allow the same contract to be honoured today and not yesterday?? Our present dollars have not changed in legal interpretation from their beginning. Only the Treasury committed an outright default by not supplying gold back then. Truly, the government should have reissued a new currency at the time of default.
Today, any return to backing the dollar with gold would open up a can of worms for the US. Especially in light of the success of the German and Swiss WW2 payments. Again, the whole reason for pointing this out is to highlight the political repercussions from backing the dollar with gold. Many suggest such an avenue and we point out that a new currency would have to be printed to avoid this. It's just another reason why an argument for backing the dollar with gold is impossible and dollar assets are at risk. The US gold stocks valued at any price will not save the dollar.


------Further, even on a purely moral basis, given that the rest of the world accepted US dollars after the 1971 breach of contract, would such acceptance constitute a waiver of the breach, thereby nullifying even a moral claim to US gold? ------------

Would the US risk such a move using this light argument as a loophole? I doubt it and so do a lot of others.

--------Moreover, it appears that by the early 1960's the world knew that the dollars outstanding exceeded the gold backing, yet the world continued to use the dollars? Again, the world accepted the US dollars knowing there was realistically no gold backing, thereby nullifying the moral
claim.---------

So, in the same light, if the world stopped paying off dollar debts they could not pay, does this action nullify the moral claim that everyone should pay dollar debts? Further, if you buy a junk bond that is trading without payments, does your purchase relinquish the issuers obligation to pay you any interest? This logic does not work in your presentation or mine as offered.

-------Does not the continued prominence of the US dollar reflect value to US currency which stems from more than mere "gold backing" or "acceptance for oil settlement"?---------

I ask you, does not the high level of the US stock market reflect it's prominence rather than mere earnings or rational P/E ratios? Truly, the mind in a crowd thinks the common thought, no? Again, Western views are skewered by group acceptance of the contract that "bookkeeping entries" are representing real wealth. It's a fragile view that can be fractured from the competition of a less leveraged alternative. The Euro!


------(Kindly note I am not diminishing the possible importance of the Euro as a competitor to the dollar, or that at some point the huge overhang of foreign held US dollars and the trade deficit will have an impact. ---------

It is impossible for the production of any country to support it's currency if it's currency always flows "out" in a trade deficit. In this country, the negative effects of a reversal of this long term trend will bring on a dollar currency crisis that runs the price of gold well before local price inflation. This is the primary reason why recent investment profits will never transition into gold before it overtakes the illusion of these realized gains. This is the focus of our "reasoning" and push for the purchase of
gold "before the fact". Gold will run well before price inflation is evident (in a large degree). And before resource stocks create an up-trend based on this performance. All in conjunction with a severe downturn in local equity markets that will overwhelm all forms of paper investments (gold stocks included).
Yes, we may see minor runs in these areas prior to the crisis, but these moves will not be connected with the major bull market in gold that is coming.

Thanks FOA
Number Six
(01/01/2000; 22:49:50 MDT - Msg ID: 22021)
@Canamami - splinter groups....:o)
LOL, yeah good one. Well i feel I'm in good company with farfel, the stranger, chester and a whole bunch of others.

But somebody please reassure me, there IS a relationship between oil and gold, ***isn't there???***

LOL!
FOA
(01/01/2000; 22:50:45 MDT - Msg ID: 22022)
Reply
JCTex (01/01/00; 20:59:08MDT - Msg ID:22012)
FOA: end is closer than many think
Any truth to the rumor that the Saudis gave the CBs an ultimatum concerning gold sales?

Hello JCTex,
You must not have read the Hall Of Fame posts by Aristotle and others?

FOA
FOA
(01/01/2000; 23:16:07 MDT - Msg ID: 22023)
Comment
canamami (01/01/00; 22:36:25MDT - Msg ID:22017)
The gold "subculture" - Reply to Number Six, koan

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

In the future we will read of the paper gold "subculture" that invested mostly in gold derivatives instead of gold. Even with the leverage of mining shares clearly working against them, this group will be questioned as to why they stayed the course. I suspect that they will eventually be buying gold at ever increasing prices, kicking and screaming all the while. Eventually enjoying the benefit of the only way to beat this dollar manipulated marketplace. Physical gold.
I never thought that I would see the day when investors brought into a business that tried to sell it's product (gold) down?? And defended their action with more suggestions to buy! Then when someone suggested to change their investment mix to buy mostly the product (gold) and less the business (mining),,,,,a move I add that would drive the product (gold) price up,,,,,,,,,,,,,that logic is
attacked with pitchfork and fire?????????? Indeed, this logic does belong in a "subculture".

Be back later FOA

Note: ORO, I'm still working on a reply to you.

SHIFTY
(01/01/2000; 23:35:08 MDT - Msg ID: 22024)
gold closed mon. 1/3/00
I just noticed on kitco,that gold is closed on monday.
Is this new or did I just not notice it the other day?
SHIFTY
(01/02/2000; 00:10:00 MDT - Msg ID: 22025)
gold closed 1/3/00
I did not know that gold was closed on mon.
Is this new or did I just not notice it the other day.??
SHIFTY
(01/02/2000; 00:34:38 MDT - Msg ID: 22026)
monday gold
I just did not notice that gold was closed on monday.
Too much y2k prep.

I would do it all again. It let me see just how tuff it can to be 100% self-sufficient.
Number Six
(01/02/2000; 00:59:26 MDT - Msg ID: 22027)
@Shifty
Yes, all markets are open in the USA on Tuesday, though I believe Monday elsewhere, especially the far east/Oz...

I wonder if money will flow out of US equities as Canamami predicts, remember also that a lot of folks did not cash out last week because of the tax hit - this week they may decide to bail.

If there are any y2k-related bank glitches, the bailing could turn into a stampede for the exits... maybe :o)
Number Six
(01/02/2000; 01:11:34 MDT - Msg ID: 22028)
Interesting post on tb2k...
Even though 10% of the world is experiencing minor glitches randomly in the basic infrastructure now, it should be noted carefully by all IT professionals and computer experts that the other 90% of the system hasn't yet been fired up in real-time testing. As people will go back to work on Monday fire up those systems and then we will soon see what kind of interconnectivity problems surface as the whole system is then put into full operation. If we start seeing snowball effects happening over the next few weeks we wil soon know how far the system can cope without collasping on itself.


The small glitches that we think are 'minor problems' now can easily at any time start escalating through the infrastructure, so its a waiting game to see how many of these glitches will surface. If there is enough of those little tiny glitches or outages happening all at once this can clog up or collaspe the infrastructure and grind it to a halt, but only time will tell if the glitches start increasing in their accelerations or remain at a stable level that the system and the programmers are able to cope with, for this is the big hidden danger of the y2k issue now.

I am sure there will be an increase in the amount of glitching when the other 90% of the code is put into operation when people go back to business as usual and with those systems that couldn't get their embeds upgraded because not enough time, in the meantime last minute fixing is probably being done during the holidays to try to turn back the glitch bomb before people go to work. We must also take into account that this is where the "non-compliant or incompleted systems" around the world start to play the part in provoking a interconnecting glitch snowball effect for nearly half the world's computer systems did not make it to the deadline of 31st Dec 1999 and so technicians hope to try to fix things in 2000 after the glitching starts for the danger is far from over, if the glitches snowball, it may outdo the number of technicians and programmers to fix it, it's just the beginning, wait and see.

Now it all depends if there is enough glitching to outdo the number of programmers patching the systems up, this will be quie interesting. The bomb has gone off, but it hasn't quite detonated fully yet, its a Year 2000 Timebomb, not a Day 2000 Timebomb. So many think that because everything in the basic infrastructure is still operational so far with only minor glitches that this y2k bomb is only a fizzler.

We will know if the infrastructure stands once it starts going into full real-time testing, we can't know if the system is going to pass the test until the whole thing is tested. Before we celebrate thining the y2k bug has been beaten, not everything was put in full operation on New Year's celebrations, because we see the power and phones still working or basic utils, this don't mean that the whole system has jumped the hurdle over y2k.

TO SUM UP
=========

The immediate effects of y2k are not really immediate but over time, its a timebomb, not a daybomb. Not until the whole system is put into full real-time operation will be begin to know of the ramifications of y2k over the next few weeks. y2k is not a day event, its a year event, possibly even longer. Pollies can gloat all they like about the rollover event, for it dosen't matter to the billions of glitches and unfixed systems around the world, they don't take day events. If there are problems with embeds, they might take a while to show up. The non comp ones though would probably crash as soon as they are fired up. But the y2k in the software code plus the billions of glitches will prob slowly detonate over time.

Journeyman
(01/02/2000; 02:19:24 MDT - Msg ID: 22029)
Argentine banks declare holiday???
Unverified rumor, repeat, RUMOR!!!!

A cobol programmer friend of mine, now in upper management of a company that services Fortune 500 Co.s (and others), was on Y2K watch over the weekend. He reports things as largely uneventful.

HOWEVER, he reported that the Argentine banks had declared a bank holiday, as there were massive bank runs. I have done a cursory search of the web, using the Drudge site only, but can't verify this story so far.

Anyone else heard about runs on Argentine banks????

Regards,
Journeyman
Mr Gresham
(01/02/2000; 02:30:24 MDT - Msg ID: 22030)
FOA -- 30k?
FOA

This was first scribbled while reading Holtzman's latest. Still raw; I can't seem to get all the paragraphs to lead to one another, (it's still new imagery for me), written at different times, and it's late, I'm tired. I'll get it out now or it may languish for weeks�

He wrote: "There seems to be some misunderstanding about what would happen were the world were to universally abandon euros, dollars, yen and pounds and adopt a literal gold standard. Contrary to the hopes of many, the purchasing power of an ounce of gold in such a circumstance would not change much at all. It's not that the relatively fixed number of above-ground ounces would be rationed out to replace all the paper money and bank deposits. Not at all. Instead, things would simply be repriced in terms of units of gold mass. "

For all my appreciation of Holtzman's wit and wisdom � and I could have written a LONG appreciation � he seems vulnerable here while deflating a common truism among Goldhearts.

The disappearance of one entire class of "money" would leave the field open to, yes, repricing in gold units, but that class of gold units would then be able to buy all things presently being traded in fiats, probably at a very low gold price giving a substantial premium to gold holders. (How would velocity affect exchange value?) But that won't happen, at least for now.

The question is: Exactly what IS the money supply?

The money supply is made up of the things including gold, bank balances, and pieces of colored paper, that various groups of people are willing to labor for and sell their belongings for. Currencies of various types are great pools of trust among particular (national) groups with some overlap between groups accepting the same currency. Most persons living in the world develop a connection primarily to one currency, and accept others only with the intention of converting them to their primary "squeeze".

Things that have value as money exist as great pools (I'm picturing different-colored puddles meeting on a sidewalk) bumping each other, mixing, pushing, contending for the "non-money" goods of the world. They are pools of confidence, and their value rises en masse as the estimation of their overall purchasing power rises, and diminishes as the money-printing agency creates more of that currency and is discovered doing so.

If the world grants dollars-as-a-whole the right to buy, say 50% of the world's good and services, a single dollar depreciated by money supply inflation will buy less of that share, but the aggregate of dollars should (what is it � cetis paribus? All other things remaining equal) still buy the same 50% share. The other moneys of the world as a whole have been allocated among them in the contending marketplace of public confidence the other 50%.

A fiat currency is backed not by its government, which has NOTHING to give but other paper, but by its citizens� willingness to work and sell for it. Residents of other nations may form an estimation of the worth of the currency pool of a nation, and want to hold some of it, usually for their own reasons of hedging the untrustworthiness of their own currency. A dual loyalty is a survival skill in many places. (You get a little taste of that as a tourist if you ever encountered moneychangers near borders of nations with exchange-controlled currencies: Poland-USSR, Cote d�Ivoire-Ghana-Togo).

When USAmericans find they must develop that dual loyalty, then the dollar will shake. The value of the dollar pool externally has come less from the goods and services USAmericans are willing to provide to others, but from the collection of different branches of that pool outside the US for local purposes. The chief attribute earning trust within and without the US has been the perception that creation of dollars has not been grossly abused, until now. When and how the recent splurge in dollar creation is noticed is the denouement we shall watch.

How much money is contending for non-money? If you removed � or devalued � one class of money, then others should grow in their powers to bid for non-money goods. Right now, the EC is attempting to create a class of money that combines the prior value of all DMs, francs, etc., and represents the pool of currency that existed in Europe. That fiat currency purchased goods before and it shall in the future. It represents a pool of shared value for which people will deliver their services.

The Europeans therefore possess TWO pools of value: their fiat currency and their gold reserves. It is not necessary and would do them no good to back their currency with gold. It would do them no good to nullify the value of one entire class of present value (fiat) that people now respect and will work for. It would not add very much to the value of the gold reserve, and would only cut the amount of goods and services that Europeans could bid for. At the same time, bringing the gold out into open spending would inflate prices unnecessarily. They see it as wealth storage, FOA says. It also turns out to be a wise use of Gresham's Law, encouraging the use of a wisely-managed ("I only have to run faster than you," said the Euro to the Dollar) fiat currency in trade, and keeping the gold slightly off-stage (or well-displayed in the bank window as in the old wildcat banking days in US) for effect in earning world respect. Kind of trying to blend the best of 19th & 20th centuries.

Gold, at this point, sits on the edge of the bench as a possible substitute, but it doesn't yet have much of a share of goods and services that expect to sell themselves for gold. Instead, gold gets bought and sold for dollars. Dollars brought gold to the party, but will gold leave with someone else?

It is the _overall_ loss of credibility of a class of money that would open the way for gold (or the other fiats) to encroach upon its share. That loss would never likely be total, but it might be surprisingly large.

The question of gold rising to $30,000 led me to explore the question: "How much 'money� is contending for 'non-money�?

The hydraulics behind FOA's assertion come in two stages, as (was it Canamami?) once asked: Is it 300 to 3000 based on price inflation of "things-in-general" going up by 10 times? And then another 10 times from other factors.

I think FOA is saying the first 10 times, even preceding the inflation of "things-in-general", will be a special case (one-time) as externally-held dollars with "nowhere to go" in fear of being cut off from buying ANYTHING, will quickly bid for gold just to get _something_ that dollars can still buy and get them out of nervous pockets. It is really hard to believe in such a run, without seeing the dollar figures now in advance of it, and thinking about other exits for those dollars. But gold would certainly be the foremost candidate.

Most of us would settle for protection against inflation of things in general, in a time of crisis. And that is something we assume gold would give us, whether the inflation increment turns out to be 2x or 10x. FOA says the dollar supply is out there for the 10x inflation of things in general (?), but is the same pool of dollars being "counted twice", once to go into things in general and the other into gold as a default crisis insurance?

I would like to pick this up at another time, because now I seem to recall figures like those this article seeks have passed under our gaze before, and perhaps a better figure-filer than I will be kind enough to bring them back up. Plus, this is still new material to me, having MY questions clear for the first time, and I would probably waste both of our time to go farther into it tonight. I'm grateful to be in a group (class?) where we can explore together without having to appear to be "know-it-alls."

WAC (Wide Awake Club)
(01/02/2000; 03:01:09 MDT - Msg ID: 22031)
Which direction for the � - Euro or $
http://www.telegraph.co.uk/et?ac=002254602319209&rtmo=pb1lBhpe&atmo=99999999&pg=/et/99/12/31/wnaf31.htmlHappy New Year All. I'm not sure if this article as already been posted. It's the first public suggestion I've found (in a reputable newspaper)of the suggestion of the UK joining the US $.
Mr Gresham
(01/02/2000; 03:03:45 MDT - Msg ID: 22032)
Argentina
No sign of Argentina troubles on Yahoo or Buenos Aires news, Journeyman.

WAC -- Welcome back!

g'nite
Canuck
(01/02/2000; 06:37:06 MDT - Msg ID: 22033)
Question
The information this week-end has been most interesting.

I have a question regarding Y2K.

If Y2K is over, we sense there will be an exodus from USD and an ensuing market correction/crash.

If Y2K is not over, there will be fear/panic and there will
be a market correction/crash.

Is this to say that regardless of the Y2K outcome there will be a correction/crash?
Canuck
(01/02/2000; 06:40:53 MDT - Msg ID: 22034)
Question #2
CNN, in a 3 second update yesterday, declared," Kuwait rolled over fine."

I still haven't heard/see a 'bit' on middle east or Venezuala(sp)?

Anyone?
overton
(01/02/2000; 06:49:28 MDT - Msg ID: 22035)
Canuck ********* black gold report report
http://www.kitcomm.com/comments/gold/2000q1/2000_01/1000102.041417.sharefine.htmsee sharefins 04:14 this morning kitco
Canuck
(01/02/2000; 06:51:40 MDT - Msg ID: 22036)
Oil Report ?
Giant Gulf oil producers exterminate Y2K bug

]DUBAI, Jan 1 (Reuters) - After months of preparation for possible Y2K] ]mayhem in a strategic region that sits on nearly half of the world's oil reserves,] giant Gulf producers appear to have squashed the dreaded millennium
computer bug.

Shipping and oil officials said on Saturday that it was business as usual in the Gulf, where wells were pumping crude for supply to the West and Asia after fears that the millennium bug could wreak havoc.

OPEC kingpin Saudi Arabia -- the world's biggest oil producer and exporter -- moved quickly after the turn of the century to reassure its customers that oil was flowing.

State oil giant Saudi Aramco reported that production, export terminals, refineries and pipelines in the kingdom were running smoothly. Shipping sources said they had so far heard no reports of any disruptions in oil exports.

``Everything is working normal now and it was during the rollover,'' said an official with one of the region's biggest shipping agents. ``It has all been under control since yesterday early morning until now. There has been no stoppage.''

Concern had been growing in huge markets such as the United States that the Y2K bug could undermine crucial supplies from the strategic Gulf. U.S. Energy Secretary Bill Richardson underscored worries when he said he would be speaking to the oil ministers of Venezuela, Mexico, Saudi Arabia, Canada and the head of the International Energy Agency to discuss Y2K conditions.

Saudi Arabia had said it was ready to replace any oil supplies that my be disrupted because of Y2K computer problems.

PRODUCERS REPORT NO PROBLEMS

But key Middle East producers faced no serious problems in their huge oil and gas fields, export terminals and refineries.

Big OPEC players such as Iran, Kuwait, the United Arab Emirates (UAE), Libya and Algeria escaped any Y2K disruptions to exports to huge markets in the West and Asia, shipping sources and officials said.

Egypt said supplies from the Red Sea to the Mediterranean along its Suez Canal and SUMED pipeline suffered no disruption. In Ankara, Turkey said it had put back the date on the monitoring system on ,the Iraqi pipeline that delivers oil to the Meditanerrean to 1995 to circumvent
the bug.

Many questions had been raised in the countdown to the turn of the century amid the global Y2K hysteria. Would Iran's energy industry, for instance, escape the possible wrath of Y2K because the country's computer systems are older?

``The loading of tankers at Iran's ports is continuing on schedule and without interruption,'' the official Iranian news agency IRNA quoted Mohammad Saadatvand, Oil Ministry representative at the state Y2K headquarters, as saying.
Saadatvand said operations were also normal at refineries and other oil installations.

Gulf states which belong to the Organisation of the Petroleum Exporting Countries were especially sensitive to any damage to oil exports that could undermine the delicate balance of supply and demand in the world market.

After all, 1999 was the year when OPEC returned to the world oil stage spotlight with a production cut deal that has doubled prices and given the cartel renewed prestige after years of quota violations.

Even smaller, non-OPEC producers in the Gulf said they managed to exterminate the Y2K bug and safeguard oil exports that are their economic lifeblood.

``Everything is fine in production and the oil fields. There are no problems,'' Nabil al-Qawsi, an official at the oil ministry in Yemen, told Reuters.
Canuck
(01/02/2000; 07:00:56 MDT - Msg ID: 22037)
Embedded chips date sensitive; maybe not??
Copied from elsewhere
---------------------------
After the rollover I put my brain in gear, rather than relying on the "experts" as I have done to now about what goes in the embeds. I'm not a hardware guy, but I went back and thought about my only hardware project from 20 years ago in university (back when memory was expensive).
Any thing that is in hardware that deals in time is going to use counters to determine when time has elapsed. They are not going to use dates because you have to use more memory to store it and then convert it to a number to do the calculations and then more memory to convert the number back to a date. So they'll count seconds or days. The point of storing a date calculation is know when a certain amount of time has passed. If you use counters (even thousands of seconds for many days) it is the simplest, cheapest, and bug free way to do that - regardless of date. Now some of the more fancy hardware that is newer may have some date functions for things like maintenance (since memory is not a problem now) that has been arbitrarily decided to be done at month ends rather than on a fixed interval, but my guess are those are very few and between.

End of story.

IT and database are a different matter altogether and we will see those effects start at the end of the first day, first week (a few) and end of the first month (many) because those systmes will now be calculating things based on days transpired which will now calculate to negative days (so we should get interesting usage billing and interest billings). Similarly penalties won't be applied because the number of days in the calculation will be negative so the penalty period would not have expired yet.

Overall I think these will be minor problems too as I don't think too many functions will be affected (they'll be things like extra negative intererst, no penalties, billing for execessive negative usage, etc.)

Yourdon, I'm surprised you fell for this in such a grand way, you're supposed to be one the "experts" who investigated all this. Why Mr. CEO said all his teams were being sent home was because his clients along with all the other companies with embeds found out the above and realized that the "consultants" were swindling them by just investigating and investigating and investigating but actually doing very little else. I'm willing to bet that 99.999% of all embeds are like what I describe above. That's why the world could tollerate a 0.001% hiccup in the number of embeds out there and not blink at all.
Hipplebeck
(01/02/2000; 07:50:46 MDT - Msg ID: 22038)
freedom
In Times square, streets were locked down, dogs were sniffing, people being searched, military style police everywhere. No alcohol, no packages, etc.
In Red square people were firing pop bottle rockets out of their empty champaigne bottles.
Bonedaddy
(01/02/2000; 08:10:10 MDT - Msg ID: 22039)
Steve H, on protecting GOLD
Steve, thank you for yesterdays post. As a society, I think we have difficulty seeing how interconnencted our rights an responsibilities truly are. Over the course of time, rights not asserted or claimed are certainly lost. Personal arms have not changed much since since the turn of
the last century. But, many of the American people have since sold their birthright for porridge.
As citizens, we have been allured by dreams of safe, cushy retirements on 401k dollars and medicare. If our "benefactors" had truly cared for us, they would have provided a tax free means for us to take delivery of physical GOLD. (A gold backed 401-k? Who holds the gold?)
Bottom line, there are as many criminals in government "service" as there are in society. The same holds true for organized religion. (Was it Descartes who said, "Steal a little and they throw you in jail, steal a lot and they make you king"?) For this reason collective rights will always be subject to corruption. The only true rights flow to the individual. The blood of Christ was shed for the one person who would believe. But any person may choose to be that "one". Therefore, let us stand together, as individuals, and assert our rights. And take possession of physical gold while we can still do so openly.
The one caveat: the individual must act responsibly at all times. The price for any mistakes must rest soley with that one individual. Costs cannot be shared with the crowd.
Bonedaddy
(01/02/2000; 08:20:17 MDT - Msg ID: 22040)
Hipplebeck
Beautiful logic, man! No wonder they call it Times "Square".
USAGOLD
(01/02/2000; 09:04:15 MDT - Msg ID: 22041)
The Stranger
I have asked The Stranger to retake his seat at this noble table and he has accepted. I have done this not only because of the public requests posted here, but also because of the strength of his contributions in the past which I feel warrant handling this situation differently from similar situations in the past. The other reason for reinstating The Stranger's code is the stature of some of the posters requesting his return through private correspondence -- posters who I know have a high regard for the rules of this Forum and maintaining its integrity. I want to thank those who publicly spoke in The Stranger's behalf in this hall for the concern displayed and the class with which the requests were made. The advice, be assured, has been taken in the spirit it was given. I also want to thank those who spoke in behalf of the integrity of this Forum and its rules both publicly and in private correspondence. Please be assured that the rules stand as published now and in the future. I personally have enjoyed The Stranger's presence here and welcome him back whole-heartedly. It will be good to once again hear his voice in this hall.

Stranger, please take your seat, Sir, and thank you for graciously accepting my invitation to return. I look forward to your contributions, and I know I speak for many when I say that we have missed your participation.

Let the discussion continue.....MK
The Stranger
(01/02/2000; 09:07:50 MDT - Msg ID: 22042)
Test
Test
Mr Gresham
(01/02/2000; 09:18:17 MDT - Msg ID: 22043)
Stranger
Good for you both, and for us all. I look forward to making a valuable new acquaintance.
rsjacksr
(01/02/2000; 09:23:29 MDT - Msg ID: 22044)
y2k and Brainless management
This not the time to become complacentHappy New Year to everyone.

From my previous post, you should know that I'm not a doomer.
I don't believe we'll lose water, sewage or any of the essentials in a well serviced areas.
But here's what I do know��.. If companies have handled the y2k problem in the same manner as related to me by friends �� we are in for a rough ride. And you won't know that until the problems can work their way through the system. At minimum, the next couple of weeks. So don't be in a hurry to breath a sigh of relief. The game hasn't even yet started.

------- canamami (01/01/00; 20:39:05MDT - Msg ID:22011)

Also, several cousins have "lost" their New Year's holidays because the government put them "on call" in case there were emergencies. My cousins are now convinced Y2K was a scam thought up by computer people looking for $800 a day consulting fees (said contracts continuing for several more months). -------

I'm glad their systems stayed up. But the night is young and the proof is in the pudding. It take time for problems to work their way thru the system. Associates of mind have been put on "call" for the MONTHS OF DECEMBER AND JANUARY.

-------- Journeyman (01/02/00; 02:19:24MDT - Msg ID:22029)

A COBOL programmer friend of mine, now in upper management of a company that services Fortune 500 Cos (and others), was on Y2K watch over the weekend. He reports things as largely uneventful. --------

Lucky him.
My friends were put on call Friday and some have disappeared into the black hole of system crashes ever since. Some have been gone for more than twenty four hours. The problem, as related to me, is largely companies that did little or nothing. This includes hiring temps to write code and then not test it. Brainless management. LOL (lots of luck). Take care.
Canuck
(01/02/2000; 10:00:37 MDT - Msg ID: 22045)
I relieve my post for awhile; talk to you soon.
Y2K : The Non-Event

I send this to anyone feeling duped.

Look's like Y2K will come and go with very few problems. This is a good thing, a very good thing. I'm glad we will avoid the catastrophic scenarios painted by the extreme 'doomers'.

I took painstaking measures to protect my family amd myself from any harm. It was my job. It was obvious to me to take a position of safety than to take a position of risk. I have too many canned goods and way too
much macaroni in the house but I don't care. It will be used. In the next few weeks I will 'unwind' this position and carry on.

The U.S.A. also has its 'line of credit' extended too far so I foresee an 'unwinding' in the financial arena as well. We may well see volatility in the markets but this will not affect me much because in line with my 'position of safety' I liquidated all equities Dec. 31. I don't think I can stomach the stock markets any more.
It has turned into a guessing game.

Today I sit a free man with few worries; I have my wife, my children, my home and my insurance. That insurance, my friends, is a yellow metal extremely undervalued today but ready to battle any bug.

When the next 'rollover' occurs, I will play it EXACTLY the same way.

P.S. : Cheap firewood and generator for sale!!
Phos
(01/02/2000; 10:21:18 MDT - Msg ID: 22046)
Canuck (1/2/00; 6:37:06MDT - Msg ID:22033)
First, I would like to thank MK for The Stranger's return. The more good discussion here, the more I learn. That is a bit selfish I suppose, but I like to learn and I have learned much (and forgotten a lot of it!) from this site. I have been dragging myself to the computer over the holidays despite having the flu (Sydney?) so as not to miss anything.

Canuck raises an interesting point. Will there be a market correction? What I have been reading elsewhere suggests money has been sitting on the sidelines waiting for Y2K to pass and, now, that money should come rushing into the market driving it to new heights but possibly not for long. I would like to hear the opinions of some of the sages here on what may transpire.

I would think the FED will have a large impact on where the markets go from here. Are they going to start reducing the huge money supply bubble they created in the latter months of 1999? Are they going to raise interest rates in February to rein in potential inflation? I think the ball is very firmly in Mr. Greenspan's court and what he does with it will affect us all this year. Seeing that it is an election year, the politicians are going to want some input to the process, I would assume. They would not want the economy tanking due to a major market correction brought on by higher interest rates. And, of course, Y2K has not shown much yet but it may still. Let's see what happens over the next month or so.

May I wish a very happy New Year to our host and fellow round table members. The best for 2000 (especially gold).
USAGOLD
(01/02/2000; 11:13:43 MDT - Msg ID: 22047)
Once in Golconda, Continued.....Flannel Throated Fanatics
"On the seventeenth the Ile de France and the Berengaria depart on transatlantic trips, the former eastward and the latter westward, each fully equipped for speculations with floating brokerage offices; when the Berengaria arrives in New York six days later, passengers tell of how every day the office on the promenade deck has been so mobbed that quotations had to be passed by word of mouth to passengers who couldn't get near enough. The same week, there is much favorable comment on a new book, "Wall Street and Washington", by the renowned Princeton economic authority Joseph S. Lawrence, in which he scores off the Federal Reserve for its insolent meddling with Wall Street ("an innocent community" mercilessly persecuted by "flannel-throated fanatics" in Congress) and suggests that anyone who favors stronger regulation of the stock market is undoubtedly an all-around bluenose and probably an advocate of Prohibition to boot. This is the kind of talk the tape-watchers dote on, and when it comes from a cloistered professor, so much the better. As the month draws to a close and the Stock Exchange decides to forgo its usual Saturday session and declare a full three-day holiday over the Labor Day weekend, there is further cause for jubilation. There are rumors, cited even in the Times, of many large pools being formed to buoy the market during the autumn, and it is said that a single brokerage firm has received invitations to join no fewer than five of them; meanwhile four important railroad stocks, Santa Fe, Union Pacific, Chesapeake & Ohio, and Norfolk & Western, are all near the magic price of 300 in what appears to be a race. Nobody doubts that they will all reach it; the only question is which will reach it first.

So, assuming one can get a hold of a reservation -- the railroads and the Trimotor airliner to Boston are overlooked -- one can take that three-day weekend with fears for the future. And yet -- can one really believe it."

From Once in Golconda by John Brooks, 1969

To be continued....
FOA
(01/02/2000; 11:36:40 MDT - Msg ID: 22048)
Reply
Mr Gresham (01/02/00; 02:30:24MDT - Msg ID:22030)
FOA -- 30k?

++++++++++++++++++
Good stuff Gresham! Re-read your post for a refresh then come here. This is something we can air out. I'll just rummage around some and see if any of this hits home. Will place some of your post comments inline where usable.

Two additional observations came into play years ago when this whole timeline was being worked out. One of them:

---A major flaw in the fiat system was in selling people the idea that money need not be wealth.--

This is something Martin Armstrong pushed a great deal in his pronouncements. I made an open post to him on this forum because his position was in direct conflict to human nature. Lo and behold his personal clandestine actions later proved out my point. Truly, most modern thinkers don't trust
contract fiat money and understand "things" much better. Only they try to hide their perceived weakness. Indeed, he quietly owned a bunch of gold!

Onward:

In real life, everything is our wealth and simultaneously our money. Houses, cars, furniture, pots
pans, you name it, it's all tradable in a duel format as money. In fact real things were what people traded in the beginning. Modern economist love to regress this function and use the term "barter" in a way that "dirties" it in the eyes of modern educated man. The use of things as money has always been the natural way people trade and the most understandable method to compare value by applying an "efforts to acquire" worth to unlike items.
Advancements in our infrastructure brought on the need to use contract wealth (receipts for delivery) as a means to trade efficiently. (You know, the old receipts for gold in the vault story bankers started.) Over time we lost the grasp that by using money to buy and sell real wealth we
were still just trading real wealth as in the beginnings. Only now we are using money to denominate the trade. Again, modern economists contradict the facts by trying to convince us we are really trading dollars, not the wealth they represent. As if I buy a house from you, I get the house and you get the dollars as the end trade. In reality you have only taken what the dollars can buy, "real wealth", not the subjective paper value. I could have just as easily given you ten cars for the house and we both would know exactly where we stood.

So, in a larger sense the entire world economy is in effect trading "things wealth" for "things wealth". The nation state's moneys have nothing to do with how rich we are. Today, the grand illusion of paper money has evolved into -------we equate our life savings with how much we can
buy, not how much we have------. The concept holds little reason for most people to worry as long as the world works. But, if the world changes, our savings are suddenly not what our wealth really is!

Further:

The second flaw arrives in the form of: --------"currency inflation slowly transforms fait money into a futures contract"-------
In a broad sense, IF the money supply is created in "lock step" with the ability of the economy to produce, everyone could take their money and buy a "newly made" item the first day,,,,,,, And the persons that received those paper dollars could turn around and buy another "newly made" item the next day and so on. In time, more and more items would come into ownership and there possible supply on the resale marketplace would increase. But, as the money supply was only fixed to the new production ability these increases in real goods, the increase supply of "owned" goods in the
marketplace would drive up the value of paper money.

This would not be a problem except that our money makers decided to name this affect "deflation" as the paper value of goods in existence fell as the money value rose in direct converse fashion. This process would not effect anyone if it was a known effect that everyone planned for. But bankers and governments never plan for it nor do they want it.

So, along the way path to money inflation, someone decided that the money supply should increase in somewhat matched step, not only with the production of new goods, but rather with the total supply of owned goods. This was accepted as good economic practice and it's application
ordained an ever increasing world money supply to match the perceived world wealth in existence. Our constant building money supply is always viewed as a good thing. Indeed it is even a major component of all relative tools that measure our economy. An illusion that says "if our money is
increasing, our economic system is growing". Again, at the very least, this guaranteed that the value of money would not "increase" on it own (hence the need for a "return" on cash in the form of interest) and the money denominated value of "goods" would not deflate. But, perceptions changed
and the process evolved further.

In time, the perceived purchasing power (and worth) of dollars was extended to include what goods could be produced and therefore brought in the future. Not just today's production plus the existing supply of owned things, but also future delivery from a perceived infinite economic
production base. This is where they justified the long term, massive debt build-up that has leveraged our economy far into the future. And done so on a scale unknown to mankind.

In effect, the world has accepted a money supply that created a money supply in gross excess of the worlds present things. Truly, this present reserve system does not price our real wealth of today, rather it prices our "perceived" wealth today as if it is produced or purchased today. Yet,
this "real trade" for "real wealth" cannot happen until far in the future. This is the fundamental reason why dollar inflation on a massive scale has not produced a matched price for wealth owned today. People hold the ideal that any amount of US debt is as good as "real wealth in the bank", also known as "money in the bank". All the while lacking the grasp of any tools to measure just how far out of reality "existing debt money" is in relation to what it can buy, in mass.

-------------Your words:----They see it as wealth storage, FOA says. It also turns out to be a wise use of Gresham's Law, encouraging the use of a wisely-managed ("I only have to run faster than you," said the Euro to the Dollar) fiat currency in trade, and keeping the gold slightly off-stage
(or well-displayed in the bank window as in the old wildcat banking days in US) for effect in earning world respect. Kind of trying to blend the best of 19th & 20th centuries. ---

Our present financial structure and debt leverage was built on a platform that said " " "the dollar would always be credible as a "contract money" far into the future. Lost in this credibility is the risk that any move from world dollar use would force this contract into a bookkeeping change that revalued the dollar in present tense. In other words, a huge price inflation that matched the dollar to
current goods and production. Such a change has happened to other currencies and peoples all through history as money power moves from nation to nation. Only never before was it done when gold had not "marked to the market" the currency value loss on a regular, ongoing basis before the fact. Today, this transition of real wealth buying power from a single reserve system to another will force the dollar price of gold to soar to levels, we cannot understand. From this stance we can understandy why many have viewed gold as a riskless holding that will be revalued. If it was part of
your mix, the transition would always make up for any return lost from not holding other assets. Indeed, it is the very untimate in a super leveraged investment. No other currency today could expect a 1,000% to 10,000% rise in value against the dollar, none.

Now, if one can look closely we understand the need for gold in the background of a new reserve currency. Only gold has the ability to carry the load of this perceived wealth transfer without a catastrophic loss of world economic process. And do so in a format as common as any stock of treasury bill asset. Gold at $10,000+ will be as common as Yahoo at $400+. Just like a US treasury bill at $10,000 face, one ounce will be just another "money in the bank"!

-------Your words again: -----Most of us would settle for protection against inflation of things in general, in a time of crisis. And that is something we assume gold would give us, whether the inflation increment turns out to be 2x or 10x. FOA says the dollar supply is out there for the 10x
inflation of things in general (?), but is the same pool of dollars being "counted twice", once to go into things in general and the other into gold as a default crisis insurance?--------------

My friend, count it at least once+ for the present and ten times+ for the future. This will match the lost future buying power of dollars held in savings today. Then you will know where the real dollar value of gold in transition lies.

Thanks FOA
Jon
(01/02/2000; 11:39:25 MDT - Msg ID: 22049)
Welcome back, Stranger
Happy new year to you and yours. I've been tracking your EWJ, which is doing alot better than my EWS [which has doubled in value for me]. Do you think I should switch? Again, glad to see you're back.
FOA
(01/02/2000; 11:39:33 MDT - Msg ID: 22050)
Welcome!
Welcome back Stranger. There are two sides on every trail.

FOA
Cavan Man
(01/02/2000; 12:40:44 MDT - Msg ID: 22051)
WELCOME STRANGER
Whew! Glad you are back. I maintain your views and FOA are of different origins yet complimentary! A great treasure is found (here) again. God bless and thank you.
Aristotle
(01/02/2000; 13:07:43 MDT - Msg ID: 22052)
A New Year's Resolution -- Allow yourself to own more Gold
Happy New Year to everyone, as we leave the 1900's to the historians!

Most Americans are justifiably proud of their country due to its history and prominent role in the world scene. However, this tends to lend itself to an Americentric perception that the world revolves around America, that America's problems are necessarily the world's problems, while the world's problems are deemed to be nothing of consequence--reported on the evening news inconveniently between sports and weather. Being an American is an end unto itself. But if we do pause to give a thought to the greater world, it is only that they should strive to accomodate our preferred easy existence. At the very least, they should conduct their foreign affaris so as to be no burden to our consciences--limiting their visible levels of suffering at the hands of want...want for adequate nourishment, for quality shelter, for safety from violence at the hands of others.

Living in a land where these common necessities are found in abundance, it is too convenient to suspend the disbelief that the entire world shares and rejoices in our own good fortune. Thus deluded by our own fantasy, we are like the person sitting at the kitchen table as they play Monopoly with their family. Although this game and its rules are distinctly limited in both time and space, playing this game dictates our decisions, actions, and emotions--the real world is forgotten while we remain at the table. The dishes in the sink need to be washed. The car needs to be filled with fuel. The snow on the driveway needs to be shovelled away. The bills need to be paid and envelopes mailed. All of these real-world concerns are dismissed as we 'Pass "Go" and Collect $200,' as we 'Take a Ride on the Reading Railroad,' as we build houses on Baltic Avenue, or clutch our hair as we land on a Boardwalk replete with commercial development.

It does not matter however long we may play at Monopoly, nor does it matter how well we fare in the game; the real world still exists, and in the real world the car still needs to receive fuel, the snow must be cleared away, and bills must be paid.

Now imagine, if you can, the clever player who is not so absorbed by this game that he may yet still see the truth of the wider world, and in doing so properly recognize the limited value of his Monopoly money beyond the scope of this game. Imagine this player to be playing the game well enough that he is in a position of wealth--having acquired one-sided money, 2x3" squares of property, little green plastic houses, and little red plastic hotels.

Now imagine that there were an extra space on the gameboard (called USAGOLD next to 'Free Parking'?) where players with awareness of the real world could exchange some of their game-wealth for wealth that endures in function beyond the scope of the game. It wouldn't surprise you to see this special space on the gameboard being being rigorously used by the wisest of the participants (the parents) while the kids remain content to see their piles of one-sided money grow and grow, and their lines of green plastic houses get ever longer. We would see the wise parent maintain only enough Monopoly money and Monopoly 'investments' to remain viable in the game so that they might continue to utilize that special space to accumulate enduring wealth for use in the real world.

The fact of the matter is, regardless of how competitive the game of Monopoly becomes, the necessities of real life will remain, and they won't be satisfied by Monopoly money...even though you might (at this time) manage to bribe your son or daughter to shovel the snow for a crisp, one-sided, orange $500 Monopoly note.

So it is with playing the good game called American Life. Regardless of how blinded we become in the American competition to keep up with the Smiths and Joneses, the problems and necessities of the real world remain and will be resolved whether we choose to take notice or not. Just as our son or daughter will one day acquire the wisdom to refuse the one-sided $500 enticement to shovel the snow, so too will the lines become more distinct between what is fine within the American game, but increasingly unacceptible for international settlement.

Make a New Year's resolution to have a greater world view. Be intelligent, light on your feet (adaptive), and aware of the distinction and growing separation between popular perception and universal reality. Prepare (through wise choice of assets) to live as well in the greater world as you have lived within this thriving but distinctly American game. Eventually the kitchen table must be cleared away for the next meal, Monopoly money doesn't play very well at the Main St. Bank, and it doesn't play very well at the Bank for International Settlements, either.

Gold. Get you some. Dress yourself for a good seat at any table in the world. ---Aristotle
The Stranger
(01/02/2000; 13:13:05 MDT - Msg ID: 22053)
Test
Test
TheStranger
(01/02/2000; 13:30:24 MDT - Msg ID: 22054)
TEST TEST TEST
Technical Problems. Thanks.
TheStranger
(01/02/2000; 13:55:35 MDT - Msg ID: 22055)
Hello
Hello
TheStranger
(01/02/2000; 13:59:56 MDT - Msg ID: 22056)
I Thank The Members of the Forum and Apologize to FOA
I wish to apologize to FOA for the very derogatory remark I made about him last month. I recognize that such behavior violates the important rules by which we comport ourselves here at the Forum. To all, I am sorry I have not
always exercised the best judgement in expressing my views. I will try to do better in the future.

I am aware of everything that was posted about me during my absence. Out of humility, I will not present here a list of all those who deserve my gratitude. However, I want to say to everyone who argued publicly for my return that I know who you are, and I will not soon forget the kindnesses
you have expressed. "No man is a failure who has friends."
TheStranger
(01/02/2000; 14:08:27 MDT - Msg ID: 22057)
Inflation Update
1. In addition to Fed Ex, three more shippers
announced either "fuel surcharges" or just
plain rate increases last week. They are TWA, AMR and UPS.

2. New claims for unemployment benefits in the
U.S. dropped last week to a level below 300,000,
which indicates businesses are scrambling to find
workers."The only way for employers to get skilled
workers for job openings is by stealing them from other
companies," said Wells Fargo's chief economist, Sung Won
Sohn. "So we are seeing more and more employees willing
to jump ship to get wage hikes."

3. Major U.S. steel producers now are in the
process of raising their prices 8-20% on cold roll steel.

4. The top performing stock in the Dow Jones
Industrial average for 1999 was not Home Depot, Microsoft,
Intel, Hewlett Packard or IBM. It was Alcoa,
reflecting increasing prices for industrial metals which
continued throughout the year.

*****

I have posted many times in the past year about why the argument for gold does not rest on such transitory boogeyman events as Y2k. What it does rest upon is the historically significant reinflation of all currencies which has been taking place since the Asian Contagion. This process is now
well-entrenched and is irreversible in any short term sense.

Anybody who bought gold because of Y2k would be
well-advised to stay the course in my opinion. You
may have bought for the wrong reason, but that doesn't
mean you own the wrong thing. What is happening in oil,
aluminum, copper, etc. is coming to gold soon enough. You
can depend on it.
TheStranger
(01/02/2000; 14:12:38 MDT - Msg ID: 22058)
Jim Grant on ABC's "This Week"
In an Interview on ABC's "This Week", Jim Grant said this morning, "Never before have corporate values been quite near where they are now. This is an extraordinary moment in American financial history and a dangerous one."
USAGOLD
(01/02/2000; 14:16:18 MDT - Msg ID: 22059)
Once in Golconda.....More Parallels: Soaring Averages a Rousing Spectacle/Decay Underneath
"When the crash finally came, it came with a kind of surrealistic slowness -- so gradually that, on the one hand, it was possible to live through a good part of it without realizing that it was happening, and, on the other hand, it was possible to believe that one had experienced and survived it when in fact it had no more than just begun.
The market did not all crash at once. Large segments of it had been depressed for a year or more. The 1929 boom was, in fact, quite a narrow and selective one. It was a boom of the handful of stocks that figured in the daily calculation of the Dow-Jones and New York Times indexes, and that was why those well-publicized indexes were at record highs. It was also a boom of the most actively traded stocks bearing the names of the most celebrated companies, the stocks mentioned daily by the newspapers and millions of times daily by the board-room habitues -- and that was why it was constantly talked about. But it was emphatically not a boom of dozens of secondary stocks in which perhaps as many investors were interested.

As a matter of fact, a good part of the stock market had been more less depressed all through 1929.

The soaring of the averages made a rousing spectacle. Yet the highest September, 1929, price of Celanese was 66; its high in 1927 had been 118. The September high of Cluett, Peabody was 46; its high in 1928 had been 110. The September high of Consolidated Cigar was 62; its high in 1928 had been 100. The September high of Freeport sulphur was 43; its 1928 high, 105. The September high of New York Shipbuilding was 27; its 1925 high, 88. The September high of Pepsi-Cola was 10; its 1928 high, 19. The September high of Philip Morris was 12; its 1927 high,41. The list, even if confined to well-known stocks, could be extended to astonishing length. The motor stocks, in particular, were in a virtual industry-wide depression. Studebaker, Hudson, Hupp and Graham-Paige, at that peak of the most celebrated stock boom in history, were down from their previous highs by 22, 25, 43 and 55 percent respectively. And even General Motors, the very bellwether of the boom all through the decade, was down over 10 percent. The persistence of the idea that all stocks were going through the roof in the autumn of 1929 is a monument to the power of popular myth."
Mr Gresham
(01/02/2000; 14:17:31 MDT - Msg ID: 22060)
FOA
Wow! First read amazing. Like walking between rows of trees in a great forest, going through those sentences was. Tangible, it felt like I was holding something in my hands the whole way.

This must be the process of undoing a lifetime of propaganda, to see things so simply again?

I'll start in on another read, if my 3-year-old calling me allows me to deflect her for another half-hour (unlikely :) but my slow absorption rate could take a couple more reads today at two-hour intervals anyway.

I used to get this in school, when something finally jumped out at me out of geometry or calculus from a favorite teacher who loved teaching.

oops gotta go, wife back, sunny day, you know the next moves!
TheStranger
(01/02/2000; 14:25:15 MDT - Msg ID: 22061)
"Get Real"
Cheryl Strauss-Einhorn, "Barrons"'long time commodities bear has begun to change her tune. Towit, from today's "Barron's":

"The new millennium should begin well for most industrial commodity markets. Bloated inventories have largely been drawn down amid capacity closures and, more recently, re-emerging Asian demand.

"Against this positive backdrop, there is growing evidence that, for the first time since 1996, the world could be largely recession-free. We may experience synchronous economic growth in 2000 as all the major regions of
the world pull in the same direction at roughly the same time.

Yet given the length and strength of the current business cycle in places likethe U.S., which accounts for 28% of global output, such robust economic
activity could stretch manufacturing limitations, causing inflation to rise as stocks of essential raw materials continue to fall.

The result is an environment potentially ill-suited for financial assets, such as stocks and bonds, which perform best when economic conditions are poor
and the potential for improvement is highest. Commodity prices, which tend to rise in periods of high activity given their direct exposure to the physical economy, should on the other hand find such an environment quite hospitable."

Strangers Note: A lot of people read Strauss-Einhorn. She is interviewed almost daily on CNBC. Who knows, perhaps inflationists will start being invited to parties again!
Leigh
(01/02/2000; 14:37:26 MDT - Msg ID: 22062)
Stranger
Hi, Stranger! Did you see this post on Kitco this morning?

Sunday Jan 02 2000 10:34
yellowcab (barron's commodities columnist chick to hatch!)
einhorn is scheduled to pop, on maternity leave till july. YEAH! HAPPY NEW YEAR!

Perhaps hormonal fluctuations are causing Ms. Eichorn to behave in an uncharacteristic way.
TheStranger
(01/02/2000; 14:40:09 MDT - Msg ID: 22063)
Jon
Thanks for asking me about this Jon, but I am afraid I haven't got a good answer for you. I have bought gold and Japan in the last 18 months because I thought both were at or near major important long term historical bottoms. I still believe I was right. I, as yet, see no reason to sell either one. To show you how dumb I am, though, I actually visited Singapore at the very bottom of their stock market in 1998 to check out the opportunity there. It is without a doubt one of the most wonderful countries in the world and has an economy which just about anybody could envy. Yet, coward that I am, I failed to buy a single share there, while you obviously did not. Bravo!

We actually have had an occasional poster from Singapore here at the Forum. I do not recall his handle, but, hopefully, he will see this conversation and share his thoughts on the market there. Meantime, I wish you all the best, whatever you decide!
TheStranger
(01/02/2000; 14:47:33 MDT - Msg ID: 22064)
Leigh and Michael
Leigh - Hello, dear person. No, I did not see that at Kitco,
but, if it is true, then Hooray for hormones!

Michael - Thanks for everything. It is great to be back among people I care about.
Cavan Man
(01/02/2000; 15:34:05 MDT - Msg ID: 22065)
Cavan Man 22051
complement: 2.the amount or number needed to fill or complete 3. an entirety; complete set 4. something added to complete a whole; either of two parts that complete each other.

I meant to say FOA and Stranger complement one another not, compliment; although in due course I hope they will do that as well.

It requires a leap of faith (which I have made) to agree with FOA. Regarding Stranger, his analysis is of course more conventional and RIGHT ON THE MONEY!

I hope the case for gold becomes as clear to all as it has become for me thanks to these two fine minds.
canamami
(01/02/2000; 16:15:03 MDT - Msg ID: 22066)
Thx MK, FOA, the Stranger - USAGOLD Rules Again!
I would like to thank MK for maintaining this excellent site and inviting the Stranger back, FOA for welcoming the Stranger back and thereby impliedly accepting the Stranger's apology, and the Stranger for apologizing to FOA and agreeing to return. This generally seems to be a friendlier site among the gold internet sites (one gets a sense of the personality of the posters here), and the analysis is almost always of good quality and often of excellent quality. This has always been my first choice for posting on general issues concerning gold, and now my comfort level with the site is greatly restored.

I'm presently fighting off a (not-Y2K) bug, but will aim to reply to to FOA before Tuesday, and perhaps post and repost on some other points.

RAP
(01/02/2000; 16:40:32 MDT - Msg ID: 22067)
Fed Funds
http://www.bloomberg.com/markets/rates.htmlCan anyone tell me why the Fed Funds are down to 1.5%?
Is this important, or is it just due to low volume?
TheStranger
(01/02/2000; 16:56:46 MDT - Msg ID: 22068)
RAP
Don't pay attention to those numbers for a few days. End of year book squaring always creates a momentary anomaly, and, with Y2k this time, who knows what they mean.
Netking
(01/02/2000; 17:04:19 MDT - Msg ID: 22069)
Bill Gates; Y2K Comment
http://dailynews.yahoo.com/h/nm/20000102/bs/yk_gates_2.html"...Bill Gates, chief executive of software giant Microsoft Corp. (NasdaqNM:MSFT - news), said he expected some relatively minor year 2000 computer glitches to crop up in the coming weeks, even though no major disaster followed the changeover to the new year..."
Chicken man
(01/02/2000; 17:10:12 MDT - Msg ID: 22070)
How come the BIS plays with REAL gold chits
http://www.bis.org/Go to the annual reports.....notice that even the dividend to the "members" is figured in gold francs.....and this is at gold valued @ $209/oz.....why aren't they playing with bank numbers like all the rest of the banks...?
Netking
(01/02/2000; 17:23:10 MDT - Msg ID: 22071)
NYSE sets Circuit Breakers for First-Quarter 2000
http://dailynews.yahoo.com/h/nm/20000102/bs/bonds_outlook_1.htmlNYSE Sets Circuit Breakers for First-Quarter 2000;
Traders returning to the floor of the New York Stock Exchange Monday will have a new set of circuit-breaker and trading-collar trigger levels, effective throughout the first quarter of 2000. Circuit-breakers suspend trading for declines in the Dow Jones industrial average of 10 percent, 20 percent and 30 percent. As the Dow has escalated sharply since the circuit breakers were first implemented in April 1998, the circuit-breaker levels have risen as well.
Beginning Monday, a 1,100-point drop in the Dow before 2
p.m. will halt trading for one hour; for 30 minutes if the
drop occurs between 2 p.m. and 2:30 p.m.; and will have no effect if at 2:30p.m. or later. In the fourth quarter of 1999, a drop of 1,060 was necessary before trading was halted.
A 2,250-point drop in the Dow before 1 p.m. will halt
trading for two hours; for one hour if between 1 p.m. and 2 p.m.; and for the remainder of the day if at 2 p.m. or
later. In the fourth quarter, the level was set at 2,150.
A 3,350-point drop will halt trading for the remainder of
the day regardless of when the decline occurs. That's up from 3,200 in the fourth quarter.
The NYSE also imposes trading collars, which restrict some
computer-driven trading. Those will be triggered when the Dow moves 220 points or more above or below its closing value on the previous trading day and removed when the Dow is above or below the prior day's close by 110 points.
When circuit breakers were first imposed following the market crash of October 1997, trading was suspended for a half-hour if the Dow dropped 350 points and for one hour if the index fell 550 points. Under the old rules, the market would close for the day if the 350 level was reached at 3:30 p.m. or if the 550 level was hit at 3 p.m.
AEL
(01/02/2000; 17:40:14 MDT - Msg ID: 22072)
2 January 2000: all clear!

It is now 2 January 2000 and obviously there have been ZERO
infrastructure disruptions, to everyone's relief, including mine. The
euphoria is so great, and my own gratitude so profound, that my
emotions are tempting me to think of this thing as over and done
with. This in spite of the fact that none of the most credible Y2K
analysts expected dramatic "show-stoppers" on 1 January, at least not
in the U.S. I almost believed them: I thought that there was at least
a small risk of a disastrous "big bang" on the Big Day, and that
there was a moderate risk of a handful (or more) of local or regional
disruptions and breakdowns, including possibly some pretty serious
ones (e.g. no heat in the north for a week, in January, is "pretty
serious").

Hence, I must admit that the *total* absence of infrastructure
problems worldwide -- power, water, sewage, etc. -- was a surprise. I
was certainly not alone in this. I think it even took most of the
optimists by surprise. My expectation of infrastructure problems was
one of the main reasons that I prepared and encouraged others to do
so -- in the event that we were affected by that "handful". The other
major reason was as an inflation hedge, and the jury will be out on
that for many months yet. The other (minor) reason was that I thought
that catastrophic infrastructure breakdown, precipitating still
more-catastrophic domino effects, was a small possibility, and I
thought that that was also worth preparing for, provided the preps
were of a "can-always-use-it-anyway" nature. And I still think that
maintaining such a low- or no-cost insurance program is a good idea.

Obviously, none of the infrastructure disruptions came to pass...
Thank Whoever... and it now seems that the embedded chips issue --
one of the biggest single wildcards, and the aspect of the problem
that would have led to dramatic infrastructure problems -- was vastly
overstated. (... just as it now seems that my basement tunafish
larder is vastly overstocked..... ;) )

But that does not mean that 600+ billion bucks (largely for software
remediation) were spent on nothing. Nor does it say much, necessarily,
about the success of that remediation. Most of the vulnerable software
was not even running over the weekend, and most of it does not control
stuff in which errors would become evident overnight, anyway.

The Gartner Group, one of the largest non-governmental groups
monitoring the Y2K phenomenon from the start, predicted that less
than 10% of all Y2K-related failures would occur during the first two
weeks of January; that might be about right. I am reminded of the
words of Dale Way (the IEEE Y2K guy; see further quotes below): "the
rollover fallacy [the expectation of dramatic disruptions on Jan 1]
has so skewed the dialog and the public consciousness that society
has been forced to focus on the 5% of the Y2K crisis that is least
dangerous and easiest to deal with and obscured from clear view the
other 95% of the problem that has the potential to do great damage to
the economic and social order." ... And the words of programmer Lane
Core (see excerpt below): "I spent ten weeks and more writing essays
to explain why obvious, spectacular failures at The Rollover were not
the real issue. The experts I cite and quote most frequently all
agree, and have for quite some time, that it was unlikely there would
be obvious, spectacular failures at The Rollover, by and large, and
that they weren't the real issue anyway."

With the infrastructure holding everywhere, the true doomsday scenarios
are, thankfully, moot; those scenarios were predicated on serious
infrastructure problems, which were in turn predicated on major embedded
chips problems. But millions of computer systems were idled over the
weekend and have yet to demonstrate functionality. There are potential
glitches in end-week, end-month and end-quarter back-office computer
runs, etc., with impacts that might not be evident for weeks or months.
Lots of question-marks loom ahead: banking, stock markets, oil, trains,
international financial settlements, enterprise computer systems in
general (the systems that run the big organizations), the postal
service, government programs, the IRS and etcetera.

Mainframe programmer Cory Hamasaki seems to have called the embedded
problem correctly on the day before the rollover: "The embedded problem,
if it is a problem, will happen fast and will be flashy. We'll know in a
week or two. It's the enterprise systems that will fail over months,
corrupt databases, kill organizations, put people out of work..." (see
below).

For now, I am thankful that the software remediation and fix-on-failure
efforts will proceed without being hobbled by infrastructure problems.
And I am hoping that the government and IT experts were half as wrong
about the software problem as they were about the embeddeds problem (...
and as wrong as I was about the availability of tunafish...)

To follow: some pertinent clippings.

-- Alan

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

(These are comments from Dale Way that I sent out to most of you in
November; pardon if this is repeated, but I think his comments are worth
a review for understanding where we are right now..................)

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001jnW

Dale Way, IEEE Y2K Committee Chairman

.....

BOTH the Chicken Littles and the Pollyannas ARE WRONG.

The Chicken Littles, who most often exhibit the hand-wringing/ embedded
chip/ physical control systems/ "we could lose power and everything!"/
utilities/ hazardous material plants/ Bhopal & Chernobyl trajectory are
wrong because they do not understand the basic mechanism necessary to
force a Y2K error and what relatively minimal opportunities in those
systems for those mechanisms to play out. They are wrong because they
have no concept of the nature of those systems and how, and under what
value and incentive systems, the overall, often life-critical systems
(the ones containing all the embedded components and subsystems) were
ENGINEERED to withstand regular failures of almost all of its parts at
one time or another without ceasing to function. They do not understand,
on top of these other advantages, how well these systems are understood
by their care- givers. How much simpler they are in comparison to those
systems we must be concerned about. Those that the Pollyannas cannot
see.

The Pollyannas are in denial not because they do not see threats that
are not really there, but because they do not understand and appreciate
the massive size and complexity of software-intensive, intensely
interconnected/interdependent/data sharing enterprise management systems
normally associated with accounting and administrative functions. They
do not understand how prevalent and long-lasting are the opportunities
for Y2K errors to emerge in systems here and how much more difficult and
time-consuming it will be to track them down and neutralize them. They
do not understand how resistant these systems are to remediation,
especially fundamentally flawed, "compliance-based" traditional invasive
software remediation that pushes its most difficult problems out into
the beleaguered testing phase. Pollyannas do not understand how little
these systems are really understood by their caregivers and how
ill-disciplined, how CRAFT and occasionally ART-based are the doings
here, having been carried on under a decades-long succession of trendy,
fashion-based technologies and methodologies however competently (or
not) executed by an equally long succession of different maintenance
teams.

But before the Chicken Littles (and everybody else) run over to the
other side of the boat, the accounting/administrative computing side,
threatening to tip it over in to despair, take great comfort from the
fact that most of these "errors" will not be very destructive, or that
destructive to things that really matter. We can, to a large extent,
isolate and contain, or compensate for in other ways, most of the
errors, including just slowing things down to the rate we can manage.
Some transactions will get kicked out, some systems will stop, but only
more frequently than they do now, not stop as if they have never stopped
before; most non-trivial systems fail regularly already. Plus, as I have
indicated, the problems will tend to correct themselves when the
vulnerability windows of systems close as all their data representations
clear the century boundary and inhabit only the 2000 side. Accounting
systems do not DIRECTLY threaten life and limb. We have more flexibility
in dealing with their short comings.

Do not think of me as a Pollyanna (more precisely a mealy-mouthed
apologist) because I know the electrical system is going to function
very close to, if not totally, normally through and beyond the rollover.
And don't think of me as a Chicken Little because I see the weakness in
the administrative computing infrastructure. I am a bell-curve centrist.
The extremists on both end are wrong. As Will Rodgers said "It's not
what we don't know that hurts us, it's what we know that ain't so."

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

http://www.kiyoinc.com/WRP134.HTM

cory hamasaki's DC Y2K Weather Report

December 31, 1999 - 0 Full days to go. - WRP134

..... "The embedded problem, if it is a problem, will happen fast and
will be flashy. We'll know in a week or two. It's the enterprise
systems that will fail over months, corrupt databases, kill
organizations, put people out of work. I'm worried about the big old
systems. Some big systems run daily but most are weekly, monthly,
quarterly, or annual jobs.... The poor fools at the various public
"Year 2000 monitoring sites" don't understand what goes on in the big
computer centers...."

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

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002Bld

Thousands of crisis teams are in place right now, in medium and large
businesses, overseeing their companies' information systems as they test
the transition of vital business systems. How are they doing? To judge
from the wire services, no one has bothered to ask. The country's
railroad network shut down last night, for safety. Did it come up again?
No one is saying. And of great concern, a huge number of oil and gas
pipelines, highly susceptible to the embedded chip problem, also shut
down to avoid trouble. Are they running again? How strange that no one
seems to know or care.

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

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002AzH

There hasn't been but less than 24-hours pass since the rollover (at the
most). Date calculations require date RANGES in most cases - there needs
to be at least a few days' space here. I'm going to be interested in
seeing how business systems deal with this once they are back online and
start making calculations involving "today" and "previous dates". Just
rolling a computer clock over to 2000 won't necessarily cause a problem
until some program decides to calculate a value based on the current
year and some previous year. Your PC games won't likely fail, nor will
your e- mail. Lets see what happens to all the payroll, order processing
and other business type systems when they hit their next calculation
interval. That's where we'll start seeing errors. -- Bruce
(broeser@ccgnv.net), January 01, 2000.

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

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002Arq

Until we see Medicare, Medicaid, Food Stamps, I.R.S., to name a few,
operating with precision and dependability, we are very vulnerable to an
economic nightmare. Government accounts for a huge segment of employment
in this country. Add to this the incredible amounts of money that is
issued into circulation in the form of benefits and such, and the truly
amazing unanswered questions as to where the U.S. is at this point
remain unanswered. I have viewed my preps as not only "meal insurance"
against interruptions in the supply chain, but as an economic hedge
against rising prices in the months ahead. I cannot believe I am alone
in thinking this way. Interest rates are going to march upward; housing
may well take a hit. Mortgage brokers will be doodling on pads of paper
as they realize there is less and less business(to name but one example
of an industry vulnerable to rising interest rates).

Most of the really important problems, e.g. Def. Dept., pipelines that
were shut down (and may be pesky to restart), will be kept from public
view as a matter of national security.

And what about the many computer viruses that may be running around,
looking for infrastructure to disrupt? Seems there are MANY more things
yet unknown to hoist a victory flag over this country and y2k. (The only
victory so far is preventing massive public panic; well, there is the
additional victory of propaganda over a national audience--YECH!)

Two very alarming things to me are: 1) The overall complacency of our
nation (not going totally unnoticed by folks like China and Sadam) and,
2) HOW EASY IT IS TO STILL MAKE PRUDENCE TO APPEAR LIKE FOOLISHNESS! An
extra comment on this 2nd point is the incredible amount of folks
reporting they feel foolish and embarrassed. If you really want to
feel/experience both of these emotions, then chuck your preps and begin
running around trying to get folks who prepared for NOTHING, to accept
you back into their "fold of foolishness". Then, when fallout begins to
become apparent, you will realize the true meaning of foolish,
embarrassed, and UNPREPARED!

Just as the coverage of y2k was so incredibly shallow and simplistic in
the press for the past few YEARS, so too is the thinking that we are
over the worst of y2k. Just cuz my T.V. works, doesn't mean it is
"all-clear!". And one night of CNN pics. of lights on all over the world
hardly gets me feeling even remotely confident that things will not be
"so bad". (This line of reasoning wouldn't work on a 6 year old child.)

The most unfortunate side-effect of y2k roll-over so far (IMHO) is the
"innoculation effect" that is occurring among some who prepped. How
willing will they prepare or stay prepared for the unforeseen yet not on
this nation's radar screen?

In closing, I will add that this nation is in and will remain in a
window of vulnerability for some time. Just as a cancer patient never
knew the day, time and hour that a tumor began to form within
themselves, so too this nation appears to be generally clueless as to
our vulnerabilities to attack and outright breakdowns in necessary
infrastructure that are now present. When rollover occurred, every
unremediated line of code became a cancer cell in this country's
economy. Whether the Nation's "immune system" of bug busters can heal
all of these conditions, before they grow into a sizeable tumor remains
a HUGE question, at least to me.

I therefore will remain ready to "roll with the punches". Old habits are
hard to break: Why let CNN and the "crowd of fools" do your thinking for
you?

-- (He Who) Rolls with Punches (JoeZi@aol.com), January 01, 2000.

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

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002B9C

So, where was I wrong?

Did I say we'd have obvious, spectacular failures at The Rollover?

No.

What's Wrong with the Way the World Thinks about Y2K --
http://users.sgi.net/~elcore/whatswrong1.htm

Indeed, I spent ten weeks and more writing essays to explain why
obvious, spectacular failures at The Rollover were not the real issue.
The experts I cite and quote most frequently all agree, and have for
quite some time, that it was unlikely there would be obvious,
spectacular failures at The Rollover, by and large, and that they
weren't the real issue anyway.

Since there were no obvious, spectacular failures at The Rollover, I'm
wondering exactly how it is that I (and they) have been wrong. Except,
of course, in the minds of those who never cared what I have really
thought or written, but who wanted to lump me in with the Collapse of
Civilization Crowd. And in the minds of Doomers who thought that they
were right just because Pollyannas were wrong.

As far as I can see, things are proceeding so far as I have thought they
would. And as I have been writing about for many months. You'll say I'm
backpedalling, but I'm not. I have maintained this position publicly for
months: but you don't know that, because you don't care what I think or
write, or you deliberately chose to not understand or to distort.
(Indeed, one of my motivations for getting it all on record in the last
three months of 1999 was that I knew the Pollyannas would try to distort
what I had been saying.)

I am more optimistic now than I was six months ago, not because there
were no obvious, spectacular failures at The Rollover, but because there
haven't been serious, widespread deleterious effects on business and
commerce from errors in the past three months. What happens over the
next month will be determinative of the future course of events.

-- Lane Core Jr. (elcore@sgi.net), January 01, 2000

http://users.sgi.net/~elcore/whatswrong1.htm

What's Wrong with the Way the World Thinks about Y2K --

Essays in the WWwtWtWTaY2K Series

1. A Modest Endeavor
2. Y2K is Not a Crisis
3. Y2K is a Chronic Situation
4. Y2K is Not a Bug
5. Y2K is Not a Bug (continued)
6. Whispering "Fire" in a Theater Ablaze (US Senate version)
7. Whispering "Fire" in a Theater Ablaze (White House version)
8. Whispering "Fire" in a Theater Ablaze (mainstream media version)
9. Bits and Pieces, Odds and Ends
10. What Will the Future Bring?

AEL
(01/02/2000; 17:47:24 MDT - Msg ID: 22073)
more y2k clippings, fyi...
http://dailynews.yahoo.com/h/nm/19991229/ts/yk_impact_1.html

Wednesday December 29 3:27 PM ET

Y2K Impact to Be Largely Hidden at First - Expert

WASHINGTON (Reuters) - The full impact of the year 2000 computer
glitch will be largely hidden until mid- to late January, the head of
a U.N.-sponsored Y2K data clearinghouse said on Wednesday.

``By the third week in January, we'll be able to really tell what the
overall impact is,'' said Bruce McConnell, head of the International
Y2K Cooperation Center, which is funded by the World Bank.

Meanwhile, mistakes may pile up, cause ``lots of inconveniences,''
erode productivity and possibly disrupt world trade, McConnell told
reporters.

Separately, the U.S. Federal Emergency Management Agency said it had
begun an unprecedented effort to prepare for every conceivable Y2K
emergency, up to and including a meltdown at a nuclear plant.

``Any emergency that could happen, any emergency,'' Robert Adamcik,
deputy associate director for response and recovery, said when asked
what FEMA was prepared to handle in a worst-case scenario.
``Explosions somewhere, widespread power outages somewhere ...
nuclear plant meltdowns.''

FEMA -- which coordinates the federal response to any emergency that
overwhelms local and state governments -- said it had deployed
liaison personnel from its Washington headquarters to each of the 50
states and the five U.S. territories.

Preparations Are Described

In addition, each of FEMA's 10 regional offices has been activated
and a state ``mutual aid assistance team'' has been set up, Bruce
Baughman, chief of operations for response and recovery, told a news
conference.

McConnell predicted ``few if any'' immediate ``serious disruptions''
anywhere in the world in vital services such as electricity and
telecommunications when computer clocks roll into 2000 on Saturday.

This confidence reflects the way that such systems work rather than
the completion of steps needed to make sure computers involved
recognize the new year and process the date correctly.

``The computers that control electricity and telecommunications
perform management functions for the most part,'' McConnell said.
``And so even if there is a Y2K problem, it doesn't cause the power
to go out or the phones to go out.''

Instead, he said, Y2K glitches may quietly accumulate in the
``back-office'' systems that handle administrative tasks for
governments and organizations, including accounting, billing and
keeping track of personnel.

``We have never gone through a global event like this in which all
the world is affected by one thing at the same time, something that
has the potential to disrupt commerce,'' McConnell said.

``And so it has the potential, but it's hard to know how big that
potential really is going to be.''

``MANY'' ERRORS, ``MODERATE'' IMPACT?

He has predicted ``many'' Y2K errors but only a ``moderate'' impact.

``The reason that I say that it will be moderate is that the problems
that will be run into will happen slowly over a period of days and
weeks and that people will find ways to work around them. And so
there won't be a chain reaction of effects,'' he said.

McConnell formerly served as chief of information policy and
technology at the White House Office of Management and Budget. The
organization he now heads was set up in February under the auspices
of the United Nations. It has been working with about 170 countries
to cushion the impact of Y2K.

The problem is a design flaw that, left uncorrected, may cause
computers to recognize only the last two digits of the year in a date
and assume that the first two are ``1'' and ''9.'' On Jan. 1,
machines that have not been fixed may interpret the year 2000 as 1900
and possibly crash or not work properly.

McConnell cited cases of Y2K glitches that have already prompted
dunning notices on bills supposedly 100 years overdue and calls for
people to report for jury duty in 1900.

Initially, many of an organization's internal glitches may go
unreported to the public, McConnell said. But he said he expected to
see some early problems.

``There will be some systems that just refuse to work or that produce
incorrect data ... in business and accounting applications,'' he
said.

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

http://www.abcnews.go.com/wire/US/ap20000101_914.html

01/01/2000 17:16:00 ET

Despite early smooth sailing, experts say the bug will still bite

NEW YORK (AP) _ After the 21st century dawned without a crippling Y2K
catastrophe, some people branded the millennium bug an exaggerated
threat, a huge angst-washed waste of money that got mounds more
attention than it deserved.

Not so fast, the experts said Saturday.

Tens of millions of the world's business systems have yet to reboot. And
why should anyone be surprised that the computers guiding the globe's
vital power, telecommunications and air traffic infrastructure didn't
fail?

Their software was the focus of the most diligent millennium bug removal
efforts. Experts never expected anything but a few failures in such
systems.

"Throughout the world I think you'll find that almost a trillion dollars
was spent on Y2K work. There ought to be some results," said Ian Hugo, a
British information technologist who helped write his country's Y2K
standards.

"The more cautionary news is that only 10 percent of the world's systems
went to the gym last night. Ninety percent of them weren't exercising,"
noted Howard Rubin, a leading Y2K expert in the United States who was
nevertheless amazed at how well the world did.

Institutions including the CIA and U.S. State Department had said the
Year 2000 computer problem might spawn major blackouts or phone outages
in countries including Russia, Ukraine and Indonesia.

None of that appears to have happened so far, though a slew of glitches
_ from merely nagging to worrisome _ were reported.

snip

"Things are looking very good," said Bruce McConnell, director of the
World Bank-funded International Y2K Cooperation Center. "This is
consistent with, although on the bright side, of our prediction of few
if any serious disruptions."

He cautioned, though, that it's too early to declare victory.

Most of the world's business systems don't go back on line until Monday
or Tuesday after extended holidays _ some of them intended to give banks
and stock markets extra time to fix any bug errors that have cropped up.

Chile, for example, told the Y2K center that two-thirds of its computer
won't go back on line until Monday.

"It is very, very premature at this point in time to declare victory,"
said Peter de Jager, a Canadian Y2K pioneer: "We expected the
infrastructure to be OK, but wait until next week to start drawing
conclusions about how successful or unsuccessful we've been."

Unready at this point to celebrate was Tony DeRosa, of Spencerport,
N.Y., who has paid attention to the pundits who say many glitches won't
show up for days or even weeks.

"It's like a baseball game, we're only in the third or fourth inning
maybe," he said. "I don't think we're out of the woods." DeRosa stocked
up on MREs (Meals Ready to Eat) for his family of four and filled four
55-gallon drums with tap water.

snip

Holzer listed the two main reasons for his cooperative's hard Y2K work
and contingency planning.

"One, we had a responsibility to fulfill, and, two, the fear that we
were going to get sued," he said. "The lawyers were just lining up to go
after people if there were any problems."

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

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002B3o

The First Post-Rollover BD Report (01/01/2000)

It's understandable that relief over the unexpectedly low reports of
utility system outages around the world is leading to premature
declarations of victory by doomers and pollies alike. Understandable,
but wrong.

Don't get me wrong. I am thrilled so far. I love the idea that those who
mocked Y2K and didn't prepare aren't in the "dark" today, scared and
desperate. My family is so much the safer as a result.

I am thrilled that -- so far -- terrorism has been nearly non-existent
and that the nukes did stay in their silos. Let's leave the near and
far-future (years) for another thread.

OTOH, regular posters know that I have been saying for months that I had
become more optimistic about power and telecom. Rollover for utilities
is not a "wrong prediction" on my part. Note that I will feel better
still even about utilities after 01/07/2000 when the post-mortem is more
complete -- and I note that Rick Cowles, who ALSO expected a calm
rollover, anticipates potential (not definite, but potential) power
problems later even than that (ditto Dick Mills).

So I am not surprised by the result so far EXCEPT by the unexpected
DEGREE of grid calm.

Read that again -- the notion that I (can only speak for myself)
predicted a grid collapse as the basis for a doomer expectation was
already wrong months ago. And, yet, I continued in the face of that
expectation (and continue) to come in at a 8.5 for Y2K impacts. Why?

The primary reason is that serious Y2K defaults will take weeks or
months to emerge (funny how some bubbly obscures sensible analysis on
this board). "Or not". But the point is, it will take until May before
we can either wrap this up as a wonderful polly victory AND/OR determine
the severity of the impacts to come. There will be defaults. Whether
those defaults will add up to a "3" or a "8.5" can't be determined on
01/01/2000.

To a few specifics:

--- Banking and markets.

We know almost nada at this point. It will take days, weeks and/or
months to determine whether the system has been corrupted. If banking
goes down, TEOTWAWKI will be just as sure as if utilities had gone down,
though it is obviously nicer to endure a terrible depression and
worldwide chaos when the lights are on (or, at least, "on" if you can
pay your bills).

--- The rest of the embeddeds

Oil, air traffic, chemical, water/sewage, agriculture, medical, etc.
Again, we know almost nothing so far since some of these systems are
just now coming up today and degradation in systems will take days,
weeks or months to reveal long-term impacts. I am confident that our
insiders (rc, gecko, etc) have NEVER had a stake in a disaster. If the
inside dope from these sectors proves positive over the coming days,
they will report it and it will be awesome. But we don't know yet.

Ditto military systems.

While the surprising absence of utility downs might be encouraging,
embeddeds vary significantly by sector. If we see a consistent and
unexpected type failure in a given sector that has not yet "reported",
we will be in the deep stuff for that sector.

--- Government applications

The jury remains out on Medicare, IRS, USPS and a range of other
applications that drastically affect the lives of tens of millions of
people and entire industries. Consequently, gauging the impact of their
relative remediation is a task for the coming weeks and months.

--- Business applications

The fact my lights stayed on doesn't help me determine the status of
50,000 enterprise mainframes around the world ("hey, Fred, the lights
are on, you can go home now and stop FOFing the iron") nor the viability
of millions of SMEs who have chosen to FOF [Fix On Failure]. Does big
iron "matter"? Were the SMEs smarter than "me"? Mebbe. Mebbe NOT. Again,
time will tell. If "not", will the effect on the supply chain be
minimal, significant or disastrous? Stay tuned.

DO I really have to go on?

What we have apparently learned so far is that utility folks like Malcom
Taylor and Rick Cowles were correct that the advanced grids would handle
rollover. Great. But that's about ALL we have learned. As for Russia et
al? Keep watching the news for a week or two, as I've said all along.

If the same holds for telecom (I haven't seen any first-hand reports),
that will be somewhat more surprising to me, since many doomer and polly
analysts have been predicting problems there right up to yesterday.
Again, great.

As for how the "forum" is behaving, I can't say I'm surprised one way or
the other. Most are playing to "type" -- a mix of trolling, blaming
"Ed", claiming "victory" or feeling like they were "duped".

Hang in there, folks. The home team (that's all of us) had a good first
inning. Now, let's keep playing while the rest of the game unfolds.

-- BigDog (BigDog@duffer.com), January 01, 2000

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

http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002Bwq

Let's Put An End To The Hidden Error Debate ....

Look, I'm still expecting an 8.5.

But let's find some common ground about Y2K glitches that are "hidden"
within organizations.

First, no organization with any brains reports problems externally that
can be solved internally. That's not conspiracy - it's simply sensible
business.

Of course, many, if not most, Y2K impacts internally will be minor. They
will be fixed without fanfare.

An unknown percentage may be moderate to critical. These will either be
fixed; a work-around will be designed and the bug will be fixed later or
leave this world when the system is replaced sometime in the future; or,
if the impact brings down a critical system, the red alert will be
sounded and enormous energy will be applied to the problem.

To be sure, we don't know whether or if the accumulated load of minor
problems will swamp support operations at a given point. We debated this
without resolution on this forum last year. Milage will vary for many,
many reasons. If problems swamp support, we don't know at what point
they will become visible to customers and the world. Nor do we know at
what point, for a given operation, failure means business failure.

The same is true for the "red alert" situations, though their dynamic is
obviously more intense, acute and immediate.

It will take days, weeks, months or "never" for Y2K problems to be made
visible to US, consumer-users. By visible, I mean that business failures
are occurring that affect the customer (or supply-chain partners, who
are also customers). If business failures do not occur visibly, Y2K is a
"victory" for all of us even if there were billions of Y2K glitches
behind the scenes.

Moreover, it is obvious for a host of political and legal reasons that
some organizations will never report a business failure as "Y2K" while
others may report non-Y2K failures as Y2K failures - ironically, this
may be safer legally, given legislation passed last year by Congress.

In sum, we're in for a period of weirdness while we WAIT to see Y2K's
world impact (no, kids, 01/01/2000 wasn't the end of the "wait", just
the optimistic beginning).

Meanwhile, let's not expect entities to report hidden glitches. Let's
not assume that the absence of reporting means "bad" things are
happening behind the scenes. Let's not assume that the absence of
visible failures on 01/02/2000 means "good" things are happening behind
the scenes.

We've spent two to five years preparing for Y2K. Unlike "Joanne", yes,
we are now IN the window of impact. But even the fiercest pollies
(Koskinen at al) are looking for weeks of impacts. They expect minor
impacts. I expect major impacts.

Still hope they're right and I'm wrong. And still don't know more about
THAT than I did 12/31/1999.

-- BigDog (BigDog@duffer.com), January 02, 2000
RAP
(01/02/2000; 17:51:59 MDT - Msg ID: 22074)
Crash chart
http://www.futuresfax.com/tops/stkcom1.gifComparison of 1929 vs 1999/2000.
Looks serious to me.
SteveH
(01/02/2000; 18:15:11 MDT - Msg ID: 22075)
LT bond
L.T. bond is taking it in the gut tonight. Yield is up big-time.

Feb. gold down $2.8
Peter Asher
(01/02/2000; 18:17:34 MDT - Msg ID: 22076)
Steve
Also down 6.90 for the S&P is heavy for this hour
Netking
(01/02/2000; 18:27:33 MDT - Msg ID: 22077)
Crash Chart
Sir Rap(22074), watch that space!...serious action promised by March.
FOA
(01/02/2000; 18:34:26 MDT - Msg ID: 22078)
Comment
TheStranger ( Msg ID:22056)

Thanks Stranger, that's all in the past now.
The future is before us.

------------------------------------------------------------
Mr Gresham (1/2/00; 14:17:31MDT - Msg ID:22060)

Thanks Mr. G..
My #22048 was a hard complicated piece to produce. After reading it again I saw many spelling and english usage mistakes. But I hope it offered a springboard for concept. I'll write it again more clearly if you want.

This perception is the basic foundation that has fuelled the drive for a new reserve currency. Even if this only amounted to an establishment of another like the dollar (without the lineage of debt for baggage). Understand the reasoning in this and we can clearly see where the dollar was going without any political leverage to change the US course. A world wide hyperinflation that would impact every economic aspect of world trade. Today, that same inflation results will be contained by devaluing the dollar in gold with another reserve currency available for use in international settlement and reserve holdings. Instead of a world-wide event, the effects will be mostly felt only in
countries that have little gold and no Euroland trade reserves. Yes, the US has some gold, but this limited amount is frozen from effective use by the "duality" of the dollar. Today, the dollar is a citizen of two worlds even as the gold that must back it belongs "politically" to the a single
American people. There can be no clean resolution of this as we can't print a new money and we can't back the one we have.

Granted, this transition will amount to a financial paper deflation and goods price hyperinflation in some of the largest economies (US, Japan, Canada, Australia, etc.), but the majority of the worlds population will be somewhat shielded.
I am jumping way ahead of the fact here and should wait for political motives to set gold on this new trend line. But, I feel many here will understand this now. We shall see.

Thanks FOA

Note: This week is going to be big. I bet gold ends the week with a gain and the dollar is hit.
Al Fulchino
(01/02/2000; 18:49:09 MDT - Msg ID: 22079)
Welcome back,Stranger.
Good to have you back
mhchuck
(01/02/2000; 19:52:49 MDT - Msg ID: 22080)
USAGOLD
Thanks for your response, and your assessment of the factors likely to effect the gold market. Given your years of experience in the trade, your bullish forecast is not one to be dismissed lightly, if at all.
Solomon Weaver
(01/02/2000; 20:21:21 MDT - Msg ID: 22081)
watch 2 k
Well, the electric is on for two days now�phones work�.the internet up�.the worst case scenario for y2k is no longer coming true�

I have always thought that y2k would go one of two ways (in relation to financial markets):

The first outcome would be such utter collapse and chaos that markets would not be able to trade because of infrastructure problems�If that had happened, most of the developed world would have been blind to the amount of value destruction going on behind the scenes, until when the markets reopened, and almost all things were trading at a steep discount.

The other outcome (which I think we are now in) is that the infrastructure stays up, the markets stay open, and the world can have a play by play view of the slow meltdown�having y2k problems is like having AIDS�nobody wants to admit that any current computer problems are "y2k" related� the reason why I think meltdown is coming is that the entire USDollar reserve asset base worldwide is tied to the economy which has the largest amount of information jobs per capita. If 5% of that information becomes unreliable, the trust level will start to plummet.

What we have already seen is that the physical infrastructure appears to hold. It is important to remember that electric, phone and internet are all networks�.all are able to lose as much as 20% of their function and still get by because the remaining nodes pick up the work. It is not really true that there were no problems�it was rather that these networks were able to adjust. Additionally, the "problems" are visible in real time and mechanisms are in place to correcting for imbalances.

In the coming week, we will now test the information infrastructure. Maybe the problem has been solved�but if it hasn't been solved well, then the primary value added layer in America's economy will erode in function. Like no other country, America is an information economy�.dollar bulls will point out that this technology is the strength of our dollar�that cyber economics are here to stay and that it is a fountain at which all may grow "dollar wealthy". The truth of the matter is that "problems" in the information economy are sometimes obscure, visible not in real time, but with delay, and many failures of the coming week will not have mechanisms in place for correcting them.

An interesting contrast: In Japan, two nuclear reactors were taken off line after midnight�other electric production locations immediately take up the slack�but imagine what would happen if two major Japanese banks would suddenly go offline (say they couldn't settle trades and balance books for 3 days).

My family made y2k preparations�some of it is maybe more than we will need, but we were considering that some of our food might need to feed neighbors..that time may still come. Most of it was in things that I now call wealth�like if oil goes up a lot�at least we have the option to heat more with wood.

We have all been blessed that much human suffering has been avoided

We will have a lot to watch these next few weeks.

And the least of that will not be the great diversity of persons who all sit at this round table.

Poor old Solomon
mhchuck
(01/02/2000; 20:29:16 MDT - Msg ID: 22082)
FOA
Hello and welcome mhchuck,Thanks for responding----Yes, I have been on this trail for what seems an eternity, and I intend to finish the hike, hopefully in "YOUR" lifetime. (smile) A few months back I made the adjustment in my holdings to reflect more "physical" gold.(Having already been "crushed" in paper) If most of the mines have sold much of their future production at $300-$350, then their fate is obvious, should gold indeed rise.
There's an old saying that "A man with one watch, always knows what time it is, but a man with two, is never really sure."... I have discarded all other time pieces...you're it. It is not such a dangerous maneuver for me personally as some might think. You see, I "know" where the trail is going, but with your higher perch, I will improve my visibility. But whether or not any of your "pre-vision" comes to fruition, matters not, (although it might matter to you for having put it forth) ....the fact is, I like the way you tick.
Number Six
(01/02/2000; 21:16:54 MDT - Msg ID: 22083)
@Mchuck and poor old Solomon/AEL/Stranger
Mchuck - Good choice! - you will not regret it. We are entering turbulent times.

POS

An excellent post which sums up my views pretty well too!

I spent 6 years in realtime coverage programming with VISA - I dealt with transaction errors on a day to day basis with banks and financial entities all around the globe. My point is that even on a daily basis these transactions are tremendoulsy complicated - no two to be honest are ever really the same. I am expecting serious data corruption problems to surface (and perhaps propagate, although the jury is still out on that one) in the banking community. Cast your mind back just one month to DeutscheBank - they went belly up for just 24 hours - but it was enough to almost grind the system of systems to a halt. If we get similar occurrences, with more than one major bank, at the same time, we will be in serious trouble, it will goodnight Vienna! Then what happens to gold/silver/commodities...

Thanks also to AEL for the y2k roundup below.

I have particular regard for a fellow named Big Dog, who has written two excellent summaries (also below), well worth another gander.

This week should be interesting to say the least. Silver just up another 3 cents to $5.45 at MRCI.COM...

Watch the banks :o)

And "Hello Stranger!"
Black Blade
(01/02/2000; 21:41:22 MDT - Msg ID: 22084)
Stranger and Number Six
Howdy Stranger! Good to see you back. Should I find myself back in SLC I shall have to look you up and take you to the Dead Goat Saloon (my treat). I understand that there is some good old time Boogy Blues tomorrow night. Now that we have made it through the roll-over without much trouble (barring any delayed/unreported problems), the question of course is, will the foreign investors declare an "all clear" and withdraw from the US "safe haven" markets? Also if the Asian contagion is really over and it is clear sailing ahead, does it not seem that industrial commodities, petroleum, metals, would rise at least proportionately? And would this likely spike petroleum prices well above the recent doubling in price, therefore dragging other commodities along for the ride? I know that this is much to think about as well as being some very broad-based general questions. We just haven't had your imput for a while ;)

Number Six: I have read your posts on the other "site", I was not aware of any real problem other than the usual banter among the participants. The only reason I ask, is that I generally agree with the oil/gold correlation as it relates to inflation, etc (ala OPEC 1973, etc.), and the embedded systems such as SCADA, etc. did present some reasonable concern for oil production, refining, and distribution. Was there something else going on there since Dr. V. (the new Number Two?) was a big proponent of the Oil/Gold correlation as well?
Number Six
(01/02/2000; 21:55:38 MDT - Msg ID: 22085)
@Black Blade
Was there something else going on there since Dr. V. (the new Number Two?) was a big proponent of the Oil/Gold correlation as well?
============================================================

I don't know what Vronsky's problem is. He took umbrage at my posting on oil and gold and commodities in general. He e-mailed my privately saying I had an "agenda" (actually I just have a palm pilot but thats neither here nor there :o) ), so I composed what i thought was a gracious farewell message to the GE site, basically saying that I believed that in this day and age in order to understand gold and its role in the world you couldn't just do it in a vacuum, you also had to factor in oil, inflation, geo-politics and all the rest.

No sooner had I posted the message it was pulled along with my password. So now all the folks at GE think I am some sort of flake that has disappered into the ether... I was very PO'd to say the least. As I said though, I'm in good company, not the first and not the last to be viciously blackballed by the old goat :o)

I also, like yourself, am interested to see how the markets react to the "apparent" y2k non-event. this is clearly the way the media at the direction of the powers that be wanted it to play out.

Where does this leave Greenspan and his excess liquidity?

Where does this leave Wall street if foreign moola deserts US equities?

And what of all those "investors" who put off bailing out last week because of the tax hit? many will no doubt bail on Tuesday, but how many?

Will it turn into a stampede?

I really don't know - I can't figure out these market at all anymore...

However I do think I know why FOA has said gold will rally this week... :o)

Watch the banks :o)
beesting
(01/02/2000; 21:58:10 MDT - Msg ID: 22086)
@Chicken Man#22070 How come the BIS plays with real Gold chits?
http://www.bis.org/index.htmFirst: HAPPY NEW CENTURY TOO EVERYONE!!!
Second: Welcome back Sir Stranger, again.

Chicken Man, you didn't quite research far enough at the BIS site.It's under profile of the BIS.

The following proves the world is still on a Gold standard, because the BIS is the Central Bank for all the other Central Banks of the world, and they change all the fiat currencies, including U.S. Dollars,into Gold Francs in their books, as explained below.

From:PROFILE OF THE BANK FOR INTERNATIONAL SETTLEMENTS.

The authorised share capital of the bank is 1,500 million Gold Francs, divided into 600,000 shares of equal nominal value (2,500 Gold Francs per share), of which 517,165 shares are currently issued. They are paid up to 25% of their nominal value (625 Gold Francs per share).The amount of the paid up capital in the balance sheet of the BIS at 31 March 1999 thus stands at 323.2 million Gold Francs.
The Gold Franc of the BIS has a Gold Weight of just over 0.29 Grams of fine Gold, which is identical with the Gold parity of the Swiss Franc from 1930 to Sept. of 1936. The BIS employs the Gold franc solely as a unit of account for balance sheet purposes, assets and liabilities in U.S. Dollars being CONVERTED into Gold Francs at a fixed rate of U.S. $208 per ounce of fine Gold(approximately equivalent to one Gold Franc = U.S. $1.94) and ALL other currencies being converted into Gold Francs on the basis of market rates against the U.S. Dollar.

7.Bank Balance Sheet:
At 31 March 1999 the Banks balance sheet total stood at 66.2 billion Gold Francs, with the Banks published own funds ( capital and reserves) at 2.9 Billion Gold Francs, expressed in U.S. Dollars with Gold at the then CURRENT MARKET PRICE the figures can be put at $131 Billion and U.S. $ 5.7 Billion respectively.

The total of the currency deposits so placed with the BIS amounted to about U.S. $112 Billion at 31 March 1999, representing ""7%"" of WORLD foreign exchange reserves.
Most of these funds are placed in the market mainly in the form of investments with top quality commercial Banks and purchases of short term Government Securities, it also conducts a range of foreign exchange and Gold operations on behalf of its customers.
In addition to placing funds in International markets, the BIS sometimes makes short term advances to Central Banks, these usually are in the form of SECURED CREDIT AGAINST GOLD!!!!

My Comments:
This last statement insures Central Banks will keep Gold on hand, to act as collateral in the event a loan is needed from the BIS.
The next time someone says"Gold is a barbarous relic", show them a copy of this post.
By the way the U.S. is well represented on the Board of Commissioners of the BIS!!

We walk this Golden road of new awareness together.....beesting.
BTD
(01/02/2000; 22:19:59 MDT - Msg ID: 22087)
Steve H, Number 6 - Comex is closed tonight
The Comex is closed tonight and tomorrow. The prices you are quoting are Thursday's closing prices:

"Feb. gold down $2.8"

"Silver just up another 3 cents to $5.45 at MRCI.COM"

MRCI.COM gives a current time and date, but the quote is the last closing price. You can check the current spot price at http://www.kitco.com/gold.graph.html
Number Six
(01/02/2000; 22:31:46 MDT - Msg ID: 22088)
Oops
Too used to looking at the mrci night quotes!
Netking
(01/02/2000; 22:32:50 MDT - Msg ID: 22089)
"Relief rally in store" (spare us)
http://dailynews.yahoo.com/h/nm/20000102/bs/yk_markets_5.htmlExcerpt; ...`With Y2K out of the way investors and central bankers can now focus on the underlying economic fundamentals which point to
a strong global economy and ample liquidity,'' said Gerard Lyons, strategist at Standard Chartered in London.

``That will be reflected in surging stock markets in January in the U.S., in the UK, on the continent (of Europe) and also a
reinforcing effect in Asia.''

Number Six;Perhaps the good Dr heard about your going long on oil from monitoring this site!

Black Blade
(01/02/2000; 22:41:52 MDT - Msg ID: 22090)
Early indicators? Is the game a foot?
S&P futures are still down (currently -3.80) and Bonds are moving lower. I would venture a guess that we could see yeilds rise substantially in short order at the open. Could this be an indicator of foreigners preparing to bail out of dollars and/or investors moving to other investment vehicles? This week should be interesting.

Number Six, thanks for the explanation. Their loss...our gain. We also gained YGM in a similar situation. We do have a few "cross-posters" here as well. Take care.
canamami
(01/02/2000; 22:43:33 MDT - Msg ID: 22091)
Reply to FOA - Possible Demands re Gold Breach of Contract
FOA,

I believe the recent demands made against Germany/Switzerland flowing from World War Two, and the end of gold convertability under Bretton Woods, are almost completely disanalogous; I don't see any demands ever arising against the US flowing from August 1971.

The demands against Germany/Switzerland are heavily tied in with moral questions relating to Holocaust-type issues, and all that that entails. Whether rightly or wrongly, portions of world opinion (particularly important groups in the US, and the broader world community) continue to view a continuing moral culpability on the part of Germany and Switzerland. On the other hand, the end of gold convertability was a pure commercial matter, somewhat akin to a bankruptcy, not giving rise to important moral issues. Remember, every other country ended gold convertability, and some of these countries did not disestablish the previously gold-backed currency - for example, Canada kept its dollar and Britain kept its pound, though gold-backing ended for these currencies. Also, neither Germany nor Switzerland expressly stated - "no more claims will be recognized flowing from World War II". However, the US has expressly extinguished any demands for gold against the Treasury, except for some very old issues of certificates and dollars. Thus, the US has made an express policy decision that no demands are to be made against its gold. This has not stopped the rest of the world from continuing to view the dollar as the pre-eminent currency.

The bottom line: the US will not entertain any claims against its gold on either a moral or legal basis, and I don't believe any claims will be made against it either. This matter has been resolved, and the US would disregard any attempts to make this an issue, though I doubt such attempts would even be made.
pdeep
(01/02/2000; 22:51:55 MDT - Msg ID: 22092)
A Few More Cuts
http://home.kyodo.co.jp/cgi-bin/m_conciseStory#20000103807The Devil is in the details....
Number Six
(01/02/2000; 23:10:49 MDT - Msg ID: 22093)
@Netking
Number Six;Perhaps the good Dr heard about your going long on oil from monitoring this site!
=================================

I am being philosophical about this :o) Win some, lose some. There is a great deal of debate in my little circle about how the experts got it so wrong on the embedded chip problem with regard to oil production. I am actually long in call options out to April so i'm basically waiting and watching to see what happens... however I do find it quite surreal that absolutely ***ALL*** Oil Companies in ALL countries without exception have reported NO glitches whatsoever... and I'm the sugar plum fairy! :o)
Number Six
(01/02/2000; 23:32:00 MDT - Msg ID: 22094)
The infamous Infomagic speaks...
From csy2k

"I have watched with amusement as the pollies rattled their cages and "jumped the gun", claiming the Y2K rollover is a non-event. As usual, I decline to respond to their insults and choose to speak, instead, directly to those who have chosen the side of caution and preparation in this debate. Perhaps you need a word of encouragement, right now, and a caution not to undo your wise preparations. In fact, increase them if you can.
First remember that this is a _Year_ Two Thousand problem, not just a New Year's Evil, stroke of midnight computer annoyance, as some would have you believe. There are a number of problems, all timed for the year 2000, with which we will have to deal throughout the entire year, and for many years to come (that has been the essential point of all my writings).

I have _always_ said that Y2K is only the trigger, and the real target is "the economy, stupid". The bullseye is bubble.com and the sights have been aligned for and by the God of Ages. Last Friday, at midnight, the trigger was squeezed, but we will have to wait some time before the bullet leaves the barrel, before it strikes the bullseye, and before the target falls down dead.

In ballistic science, this process is called the "lock time" of the weapon and the flight time of the projectile. In the case of my own, personally accurized pistol, with a Colt 1911 "single action" design, the process is as follows:

Starting with a loaded chamber, one either pushes down on the safety (if already cocked), or pulls back the hammer to cock it, or, one racks the slide to both load the chamber and cock the hammer at the same time. Either way, all of these events produce a noticeable sound, especially in the middle of a "social" conversation. This was the preparation event the pollys reacted to in terror and disbelief.

After aligning the sights over the correct target (something done by someone far greater than I) one gradually increases pressure on the trigger until it releases (unexpectedly, if you do it right).

Depending on the weapon, and a certain willingness to place one's ear close to the weapon's action, one can hear the release of the trigger sear, which releases the mainspring, to push against the hammer. In a cheap weapon it sounds like grains of sand, grinding against parts of delicate machinery. In my pistol, with a sear hand-honed to a three and a half pound letoff, all you hear is a very sharp click. In a weapon forged and honed by God I would expect an even sharper, clearer release.

This was the sound the pollys reacted to on new year's eve, when they quite literally "jumped the gun" and assumed nothing had happened. It really hadn't. The gun had not yet gone off. But it will.

After the mainspring is released, there is no audible sound, it just takes time, a relatively long time, for the hammer to strike the firing pin and force it into the primer. This is the longest part of the "lock time" and it's duration is dependent on the mass (inertia) of the hammer and of the firing pin. One can shorten the time by reducing the inertia of the hammer (by cutting parts of it out) or of the firing pin (by using lighter titanium instead of steel). But, as I have found in my experiments, these also reduce the force of the blow passed to the primer. In effect, the reliability of detonation of the primer is reduced. I don't think the One who has planned all this would go for it, especially since His aim is so perfect and He doesn't need to reduce the lock time for accuracy purposes.

In any case we must still wait for the primer to silently detonate and ignite the powder, for the gas pressure to build and push the massive bullet out of the case, and for the bullet to accelerate and twist down the barrel until it finally exits, followed by a visible flash. This part can be accelerated by using faster primers, more powder and/or lighter bullets. Unfortunately, all of these tend to produce greater variations in muzzle velocity and accuracy, reducing the reliability of hitting the target, even with His perfect aim. I don't think the One would go for it.

After this, we must still wait for the bullet's flight to strike the target. And, again, this time can be reduced by using more powder and lighter bullets for greater velocity but, again, the reliability of the shot is reduced (less accuracy and less energy delivered to the target). Again I don't believe the One would go for it.

At roughly this point, we would finally hear the sound waves, recognize the flash and realize the gun has actually been fired, even though the target is not yet dead or even seriously damaged.

I don't believe this point will be reached until about the middle of March. And even then we must wait a whole lot longer to watch the target fall down dead. After all, after the shot of 1929, it took several _years_ for most people to realize they were really living in a "depression".

But we have another problem to keep us from realizing what is happening. Somebody, other than the One, has put a silencer on the gun, just to confuse us. Remember the lies? Remember certain Grabit agencies and Biztwits telling us all their "mission critical" systems were done and even lying about that? Do you really think they've stopped?

On New Year's Evil, right at midnight, a US spy satellite system failed in it's ground component. For a couple of hours, no data was available and, even now, the emergency backup system is still compromised and producing only limited data. As the Commander-in-Chief-in-Name-Only, Komissar Klinton was immediately informed of this (as we know from independent reports). Nevertheless, the next morning he continued to lie his skumbag heart out and insist there had been _no_, _zero_ failures!

This should not surprise us since, by definition. all pollyticians are liars -- whether thay are elected by the sheeple or erected through the Peter principle in "independent" business.

The history of Y2K remediation and early failures has been nothing but one lie after another. Not one single organization has ever told the truth, either about the state of their remediation or the facts of their actual failures. It has taken _months_ for serious failures to become generally known, and that process will inevitably continue. And, as the paid recipients of advertising revenue, the mainstream mediots will be only too happy to go along with the big lie (for the sake of the "children" of course).

The proof of this is in the _lack_ of reports of major failures since the rollover. The reported failure rate is not just lower than I and other "doomers" have predicted, it is lower than even the technically competent _pollys_ have predicted! This defies all logic and any rational technical explanation! The technical debate between doomers and pollys has never been about _whether_ there would be failures, but only about the number and magnitude of the failures and whether or not they could be fixed without entering a chain reaction. To say there have been _no_ significant failures is clearly a lie and the victims are the pollys, not the doomers.

In any case, the rollover failures we have seen so far apply only to a very limited sample of systems and hardly at all to the business systems that Cory Hamasaki, I, and others have always identified as the key to this problem. Except for embedded systems failures causing permanent damage to the physical plant they control, most rapidly detected, obvious failures will also be rapidly repaired, yes, even in a couple of hours (for example the year 19100 failures on Internet web pages). The real problem is the deeply embedded "quiet" failures which don't show themselves for weeks or months and in the meantime continue to generate invalid data which cannot be corrected later, even after the problem has been identified. These are the ones which will break Charlotte's web.

Contrary to Cory's belief, these are not just "enterprise" system failures. They can also apply to small scale users. I spent the New Year at the party of a federal biologist who has been a friend for many years. At home, he has a Packard Bell which I made SURE was compliant by reinstalling the software and personally checking the BIOS time stamp after the rollover. Nevertheless, at work, he uses an early Pentium running under DOS and, sometimes, Windows 3.1. On this machine he stores massive amounts of research data stored with a non-compliant version of dBase for DOS. Like most Grabit employees he has received zero help from any IT support specialists. Say no more. He's part of the 0.01% of the Grabit which Komissar Klinton admits has not been fixed and which I say is really 90% of Grabit computing. But at least his kids will be still able to play the games we gave them for Xmas!

My advice is to wait. Wait for the remaining 90% of business systems to be started on Monday, or Tuesday, or Wednesday, whenever "they" think they have escaped the problem. Then wait a few months more for the truth to come out and the effect of the real failures to be felt. In the meantime ignore the lies, the spin, and hang on to your supplies and preparations.

=====================================
y 2 0 0 0 @ i n f o m a g i c . c o m
=====================================


. . . one thousand nine hundred ninety nine,
. . . two thousand !
. . . Ready or not, I'm c.o.m.i.n.g !!!"

Journeyman
(01/02/2000; 23:41:12 MDT - Msg ID: 22095)
Stealing is not immoral? @canimami
The stealing of the gold from "foreigners" in 1971 by the US Gvt. in cahoots with the Federal Reserve by refusing to redeem redeemable notes, specifically redeemable in gold and as specified in the US Constitution was the SECOND biggest robbery in the history of the world. The FIRST biggest heist was pulled off by the FED & USA Corp. in 1933 when the same perps, this time headed by Franklin Delano Rosevelt, similarly stole the gold from its own citizens.

The question is, I guess, since these two events are the two biggest thefts in history, is "Is stealing immoral?" Well is it?

Or do you excuse those organizations calling themselves "government," no matter what they do?

Or is only when YOU are the beneficiary that anything goes?

Regards,
Journeyman
beesting
(01/02/2000; 23:46:03 MDT - Msg ID: 22096)
See if this news makes the price of Gold rise.
http://abc.net.au:80/news/newslink/nat/newsnat-3jan2000-30.htmFire causes $1.5 Million in damage at the Perth (Gold) Mint in Australia.
Mr. Higgins(Firechief)said," it was quite difficult to get into the building because of the tight security. See full story above.
Comment: I hope someone checks those firemens pockets.
Those in the know....buy Gold.....beesting.
Netking
(01/03/2000; 00:08:26 MDT - Msg ID: 22097)
GATA; Gold's propensity to retain purchasing power over the long term.
http://www.egroups.com/group/gata/330.html?Latest GATA post; Reginald H. Howe, lawyer and former mining executive, examines the prospects of a world financial order totally disconnected from gold in this essay, "Interest Rates: The Golden Connection." Implied is a forecast of hyperinflation for the United States and other nations relying on the U.S. dollar.

Excerpt; "...Gold's propensity to retain over long periods of time a
reasonably constant purchasing power is widely
recognized. Less widely appreciated but just as
significant is the long-term stability of gold interest
rates. Both together are the defining attributes of
gold money, features that governments have heretofore
proven incapable of replicating with their fiat money
substitutes..."
SHIFTY
(01/03/2000; 00:14:22 MDT - Msg ID: 22098)
Irrational Exuberance ?
I spent my afternoon siting here reading, with a cup of coffee and some home made fudge. Spent some time outside in my garden, ( I live in FL.) just a real nice day. I feel like a weight has been lifted. I hope it's not irrational exuberance setting in on me.
We will soon see.

Just wanted to say thank you to all.
Netking
(01/03/2000; 00:32:11 MDT - Msg ID: 22099)
Asia roars to life.
http://dailynews.yahoo.com/h/nm/20000103/bs/markets_asia_3.htmlHong Kong and Singapore share markets hit record highs on Monday up 1.6% & 2.5%.
SteveH
(01/03/2000; 01:06:13 MDT - Msg ID: 22100)
BTD
Thanks.
Goldsun
(01/03/2000; 01:42:24 MDT - Msg ID: 22101)
When Ducatis Are Priced In Euros
can oil and gold be far behind?
Goldsun
Goldsun
(01/03/2000; 02:25:13 MDT - Msg ID: 22102)
Wave Reversal
Canuck
Y2K ok causes US equities decline.
Y2K not ok causes US equities decline.
At least, that's how I've placed my bets.
Great mining story! Did the other miners consider you a little strange? BTW, when the pressure wave hit the end of the tunnel you were heading toward,it reversed sign and direction. That's what moved the smoke back, rather than vacuum. The same thing happens in the exhaust pipes of internal combustion engines and has long been used to increase the power of small, high specific output engines like those found in motorcycles.
Like you, I turned to explosives to explain Y2K peace and quiet. Y2K is like a minefield. Rollover armed the mines.
Goldsun
PERMAFROST
(01/03/2000; 02:31:57 MDT - Msg ID: 22103)
FOA Msg ID: 21859 Part 1
Dear Sir,

Thanks for your response.
You are advocating a global financial system predicated on the peaceful and mutually-beneficial "concubinage" of gold and the "new girl in town" fiat money the Euro which you unwarrantedly presume to be relatively more "chaste" than the Old Whore, the US dollar, ONLY because it is not "backed" by as much debt as the dollar, and its "lovers" (the EU Central Bankers, the Rothschilds?; an assorted variety of Illuminati and various other power brokers playing both sides [the sheeple?] against the middle [more sheeple]) tip their hat at gold without solemnly declaring their allegiance at sovereign money, PM etc.
This fiat money is necessary, you say, because it will allow management [manipuation] of the economy without suffering the deleterious side effects that a rigid gold standard has saddled us with in the past. Would you care to draw for the benefit of the forum the the philosophical line that separates you from, say, an Alan Greenspan, as per the gold/fiat money relationship? do we not have TODAY a fully-floating POG alongside the dollar? What shall we gain in re-baptizing fiat money with a different name, i.e., the Euro? except the prolongation of the Game? IF gold IS money than nothing else is. Disagree?
PERMAFROST
(01/03/2000; 03:02:19 MDT - Msg ID: 22104)
Reply to FOA Msg. ID: 21859 Part 2
Capitalism, this familiar but insidious term really stands for the willful confusion of a descripitive proposition [that private property exists] with a PRESCRIPTIVE one [that private property and the wealth that can be generated from it is GO(O)D]. It's a logical fallacy that doesn't survive the glare of critical analysis.
Omit the adjective "private" from the premise and what you end up with is the other side of the coin, or communism. Both systems are basically worship of materialism and humanistic (man is the measure of the universe) propaganda.
Now, whereas communism theoretically aims at generating its "GOD", or 'goods and services' in economic parlance, via the sweat and toil of its fellow gods (the proletariat), capitalism is predicated on CONSTANT INSTABILITY [the insidious rhetoric of the bankers notwithstanding] of the prices of these very goods and services, the [managed] fluctuations of which allow the people Greenspan works for to earn wealth they did not work for.
Therefore; I find myself obliged to conclude that, due to your avowed devotion to the Euro and the "The King is dead; long live the King" tradition it propounds, the only difference between you and an "Alan Greenspan" lies in your respective handles. If you already are not one of them, you wanna join 'em. Incorrect?
PERMAFROST
(01/03/2000; 03:09:12 MDT - Msg ID: 22105)
Reply to FOA Msg. ID: 21859
Lastly,

As to even the 'emperor running to higher ground when he sees the flood coming'--if he were to do so, he'd be emperor no more for what makes an emperor an emperor is the "land" he rules. Without it he's nothing.That's why captains do not abandon their sinking ships; and why sometimes even emperors get their heads chopped off. To die an emperor is perhaps preferable than to live as a normal human being for some...You?
PERMAFROST
(01/03/2000; 03:35:05 MDT - Msg ID: 22106)
Dear FOA
Sir,

Having noticed that the last of my three part posting is shown first, I thought you may mistake the tone to be on the inflammatory side. It's not the case. I consider it a privilege to have an intelligent conversation with people of knowledge. Please go to Msg. #1 then proceed "upwards."

Thank you!
PERMAFROST
(01/03/2000; 03:44:49 MDT - Msg ID: 22107)
Request for a little information...
Dear Forum;

Could you please tell me what an 1/2 Oz. Gold Eagle vintage 1989 goes for?

Thanks!
Number Six
(01/03/2000; 04:09:19 MDT - Msg ID: 22108)
Gold drains away in Perth Mint fire...
http://www.theage.com.au/breaking/0001/03/A4984-2000Jan3.shtml
Pity it wasn't Comex or the LBMA!!!!!!!
THC
(01/03/2000; 04:09:55 MDT - Msg ID: 22109)
Questions for FOA & Oro
Gentlemen,

I would like to second the questions asked by Permafrost. There has been much written here about how the Euro will dethrone the US$, and how the Euro will be pro-gold. It has also been suggested that the Euro is necessary for the convenience of �gdigital payment systems.�h

I have struggled with this for some time, and I have yet to find this to be completely logical from my perspective.

1. Is the Euro not just another fiat currency?
The Euro is not worth a fixed quantity of gold or any other commodity. How does this differ from the US$ and all other fiat currencies? Why would the oil producers or others who want gold settle for payment in Euros?

2. Why not digital gold?
It would be technically quite simple to set up a digital banking and international trade payment system based on gold should there be the will to do so. Why should those who truly desire an honest and fair global monetary system settle for a fiat currency like the Euro instead of gold??????

I think that these questions deserve to be settled, and I look forward to your thoughts.

Many thanks,

THC
FOA
(01/03/2000; 06:13:31 MDT - Msg ID: 22110)
Reply
PERMAFROST (1/3/00; 3:35:05MDT - Msg ID:22106)
Dear FOA
Sir,
I thought you may mistake the tone to be on the inflammatory side.

Hello again PERMAFROST,
Did you ever go to a family gathering where everyone is in the living room after dinner. They are all talking over each others conversation,, get the picture. Then someone asks uncle Bill a question about his favourite political / religious subject. He goes on and on and soon is on the edge of his chair talking ever louder. Next he is up, walking around waving his arms in the air and seemingly telling everyone about his views. Finally, someone says, "Bill why are you shouting?" Bill says, "I'm not shouting"?

PERMAFROST asks, FOA, why are you answering in a defensive way? FOA says, "I'm not defensive!" (big smile) Sorry PFrost, I'll try to sit down when I talk.

Be back later (answer the rest)
FOA
Black Blade
(01/03/2000; 06:49:32 MDT - Msg ID: 22111)
Interesting day on Wall Street today?
S&P futures up +9.80 and bonds plunging. What next? Meanwhile Au up +0.70. Let's see if any "bugs" crop up.
TownCrier
(01/03/2000; 07:58:01 MDT - Msg ID: 22112)
Perhaps the dollar was the primary beneficiary of pre-Y2K jitters, now it suffers
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=0ad5f79c53148a0f994ac7c4e3386e32U.S. Treasury Bonds fall to nearly two-and-a-half year low prices, the yield of the bellwether bond rising so far today to 6.55 percent.
Bloomberg reports that for the year 1999, holders of 30-yr bonds lost 12.6 percent (including reinvested interest), their worst performance since regular sales began by the Treasury in 1977.

Can their be much doubt that the days of the dollar's reign are thus being signaled as nearing the end?
Cavan Man
(01/03/2000; 08:12:15 MDT - Msg ID: 22113)
Townie and all
According to the WSJ, today's edition; paraphrasing.....all economists (those interviewed for the article) agree rising productivity, tame inflation and rising consumer spending will keep the economy "humming in 2000".

CM question(s): What am I missing here? What are forum members missing? What is the WSJ missing?

I suppose everybody is entitled to their opinion and events will determine future economic context. (?)
TownCrier
(01/03/2000; 08:12:33 MDT - Msg ID: 22114)
Answer for PERMAFROST?
You asked "Could you please tell me what an 1/2 Oz. Gold Eagle vintage 1989 goes for?"

Assuming this is not some sort of trick question, with a spot price per ounce near $290, the gold content on a half-ounce coin would be $145, but the final price would also include a fabrication and distribution premium, (some of which you would recoup upon selling the coin.) MK could give you a quote based on current market conditions. Give him a call or e-mail if you're interested. The unbinding ballpark price anticipated from this tower outpost is $160-$165, plus or minus. What's the significance of 1989?
Aggie
(01/03/2000; 08:31:15 MDT - Msg ID: 22115)
not the y2k bug
http://biz.yahoo.com/rf/000103/b8.htmlwhat will this do to oil and commondity prices?
TownCrier
(01/03/2000; 08:38:01 MDT - Msg ID: 22116)
Cavan Man, regarding the spectre of self-doubt
You posted, "all economists (those interviewed for the article) agree rising productivity, tame inflation and rising consumer spending will keep the economy "humming in 2000"" and wondered what you were missing.

You are missing nothing other than proper perspective in coming to terms with this "news." You are genuinely interested in these affairs of gold, have done your research, and by your presence here we'd wager you are better versed in the developments that will "blindside" these economists.

Your self-doubt is only in your misplaced confidence in the quality of these unknown economists. Similarly speaking, you wouldn't likely expect the great former coach and professional football announcer, John Madden, to have any inkling of your local high school football programs. This isn't to say that gold is amateur in the realm of economics, but that it is not an area into which many so-called professional economists give much attention. Their opinion wouldn't affect the progression of events (as we see them unfolding) anyway. Had we been among them, the article would simply be altered to read, "*most* economists agree..." etc.
RossL
(01/03/2000; 08:39:27 MDT - Msg ID: 22117)
Oil and Gold charts
http://www.usatoday.com/money/charts.htm#SP500_GOLD
Wow take a look at these charts. Must be a bug.
Gold is at 11506 !!
TownCrier
(01/03/2000; 08:44:32 MDT - Msg ID: 22118)
Indonesia's Central Bank Needs Government Cash to Remain Solvent
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=7201e74ebee8ca07e33c3dea67ebb8d1The headline says enough.
USAGOLD
(01/03/2000; 08:45:34 MDT - Msg ID: 22119)
Today's Market Report: London, New York Closed Today
Market Report (1/3/00): The London and New York gold markets remained
closed today. We do have some market-making in the $290 area this
morning which essentially reflects the Thursday close. The big story
this morning is the bond market which is taking a major hit -- down
nearly a full point. There was some talk over the weekend that this
might happen given the fact that the dollar has been viewed
internationally as a Y2K safe haven. The theory is that if Y2K ends up
being a minor, or non-event, then a dollar exodus would begin. As most
of our readers know, the U.S. Treasuries market struggled through most
of the last quarter of 1999 under the threat of a Fed interest rate hike
sometime early this year and rampant money creation through most of
1999. Today's action could very represent an acceleration of trends
already in motion in the Treasuries market. The dollar seems to be
holding its own despite the bond market woes -- up marginally against
the European currencies and down marginally against the Japanese yen. So
far the world's computer systems appear to have passed the Y2K bug scare
with only minor problems.

That's it for today. We'll see you here tomorrow.
TownCrier
(01/03/2000; 08:54:13 MDT - Msg ID: 22120)
Wall Street Volatility
No play-by-play to waste your time and space, but in a market snapshot less than 90 minutes into trading, the Nasdaq has plunged 130 points into negative territory from its post-Y2K euphoric opening. Volume now exceeds half-billion shares. Incredible blow-off look to this stuff.
elevator guy
(01/03/2000; 08:58:07 MDT - Msg ID: 22121)
@ RossL (22117)
That gold chart has to be someones idea of a joke, or wishful thinking. Every other chart on that page seems reasonable, (except oil?)

Someones having a laugh right now, I think!!!!
TownCrier
(01/03/2000; 09:00:47 MDT - Msg ID: 22122)
Fed seen fighting expiring repos, still adding cash to maintain banking reserves
http://biz.yahoo.com/rf/000103/gx.htmlThe Fed added $8.99 billion through overnight repurchase agreements...approx 3/4ths were as mortgage-backed securities.
18KARAT
(01/03/2000; 09:02:41 MDT - Msg ID: 22123)
Interesting comment from Australian website
http://www.afr.com.au/content/000104/news/news2.htmlHappy new year to you all fellow bears and bugs.

18K
mhchuck
(01/03/2000; 11:13:27 MDT - Msg ID: 22124)
WORLD CURRENCY?
The success of any single world currency must have the backing and/or redeemability in a standard of value that has more intrinsic worth than paper. If it has no commodity backing, then it will be backed with GUNS, and we will have global Totalitarianism. In the economic sense, the one world "Big Brother" voice would in essence be dictating to its minions, "We shall dilute and pillage the fruits of your labor in terms of any remunerations you have received at our discretion." "All saving will be at your own risk--We do not encourage saving."(Not much unlike today)

In this upside down convoluted Keynesian economic world, the Japanese, with a savings rate of twenty percent-plus, are said to be mired in depression, while the prototype of the
keynesian model, the U.S., has a negative saving rate, continuous "record" twenty-five billion dollar monthly balance of trade deficits, and is said to have a robust economy. What's wrong with this picture? I think History will one day view John Meynard Keynes as the "Adolph Hitler" of economists.


"Of all the contrivances of cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money.
Daniel Webster.

"It is important to remember that government interference always means either violent action of the threat of such action. Taxes are paid because the taxpayers are afraid of
offering resistance to the tax gatherers. They know that any disobedience or resistance is hopeless. As long as this is the state of affairs, the government is able to collect the money it wants to spend .Government is in the last resort the employer of armed men, of policemen, of gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating,
killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom."
Ludwig Von Mises.

"There seems to be a correlation between the
intensity of the official attacks on gold and
the severity of monetary crises."

Hans F. Sennholz.

"Never have the world's moneys been so long cut off from their metallic roots."

Murray N. Rothbard.

Gandalf the White
(01/03/2000; 11:43:16 MDT - Msg ID: 22125)
PERMAFROST's and TownCrier's discussion -- Re: '89 half oz Eagle
The Hobbits wish to supplement TC's answer to PERMAFROST
-----
TownCrier (01/03/00; 08:12:33MDT - Msg ID:22114)
Answer for PERMAFROST?
You asked "Could you please tell me what an 1/2 Oz. Gold Eagle vintage 1989 goes for?"
Assuming this is not some sort of trick question, with a spot price per ounce near $290, the gold content on a half-ounce coin would be $145, but the final price would also include a fabrication and distribution premium, (some of which you would recoup upon selling the coin.) The unbinding ballpark price anticipated from this tower outpost is $160-$165, plus or minus. What's the significance of 1989?
******OOPS -- you are getting closer Townie -- yes, the 89 Half oz. was a low mintage year and does command a prem! -- In fact the present ask price is $300. (yes, you are seeing correctly -- THREE HEUNDRED for a 89 half oz. !!)
The only thing is to find someone that wants to buy one !!
Other years like 90 and 91 also command prems because of low mintage.
<;-)
elevator guy
(01/03/2000; 12:09:16 MDT - Msg ID: 22126)
@mchuck
And so it would seem, given TPTB are hell bent on attacking gold, that we wait for an end game to play out, where the worlds economic powers will either stay at the dollar table, and continue to do business on "our" terms, or if they will find another way out for themselves.

So the "Washington" agreement is signifigant, because it is clear public policy by the ECBs not to support whole hog gold bashing, and also the launch of the Euro is signifigant, because it begins a new alternative currency system to the USD.

My prognostication is that the FED/US gov/Big Business, et al, will continue to bash the paper price of gold, to support the USD, and try to manipulate our local economy to appear that nothing is wrong. Kind of a loss management statedgy.

And what can keep them from doing this indefinitely? Nothing that I know of, except victory by GATA, or a change in the general public's perception of gold as an investment or inflation hedge.

I may be a little behind the curve of understanding of possible outcomes to this dollar vs gold scenario, since I am not an economist, nor do I study even USA GOLD enough to absorb all that is said here (seing how there are no pictures), but I am catching on. At least I can see what Another means when he says "Things are not as before" Slowly, I am seeing through the fog, thanks to USA GOLD.
elevator guy
(01/03/2000; 12:10:39 MDT - Msg ID: 22127)
@mhchuck...correction
Sorry, I didnt get your handle right the first time, Sir "mhchuck"!
Aristotle
(01/03/2000; 12:28:13 MDT - Msg ID: 22128)
Question/comment for mhchuck
On your Keynes/Hitler comparison, you might have it turned around. Given the breadth of the social infamy of Keynes against the specific depth of individual infamy of Hitler, it is already said in some circles that it is Hitler who played second fiddle--the John Maynard Keynes of national leadership.

On your comments about a world currency, I wish you would elaborate on your thoughts as expressed in the first paragraph specifically. A lazy policy-maker might read your words and say, "Fine, let's return to the gold standard as existed internationally through Bretton Woods until 1971, or else let's return to the gold standard as existed prior to 1933."

My thoughts being, as long as we are giving ourselves license here to define the perfect monetary system, how would you suggest we overcome the failings of either of those systems, each of which at face value would seem to fit your demand."

Gold. A simple solution in a complex world. ---Aristotle
beesting
(01/03/2000; 12:39:23 MDT - Msg ID: 22129)
1989 1/2 ounce Gold Eagle!
From Coin Prices magizine January 2000 edition:

Date........Mintage..........Unc.............Prf.

MXMLXXXIX(1989) 44,829-------$400----------------

MCMLXXXIX(1989)P 44,264----------------------$305.

Seems like Gold is valued at either $800 per ounce or $610 per ounce if you are smart enough to hold it in that form.
Coins are collectibles which may raise value thousands of dollars above Gold content.
Anyone that owns coins should invest in an up to date coin book to find the latest published value of their coins, In My Humble Opinion.
Hope this posts correctly......beesting.
Goldy Locks Guy
(01/03/2000; 12:43:28 MDT - Msg ID: 22130)
Putin and platinum shipments
Hi folks....I'm just wondering if anyone has in input on the platinum shipments from Russia since the new guy is on the block. I'm assuming he will be a good boy until he actually gets re-elected, thus signing the papers for shipments to begin.....Any comments from you guys that know alot more than me???

Thanks....Goldi
Netking
(01/03/2000; 12:48:51 MDT - Msg ID: 22131)
Goldy Locks Guy (01/03/00; 12:43:28MDT - Msg ID:22130)
I was under the understanding these had already kicked off again. If you are thinking however that Russia's exports will affect the worldwide price, I have already been down this trail ... and as they only make up about 15% of world supply there will be no real threat here either way. (As an aside, Putin's background concerns me a little) Cheers Netking.
SteveH
(01/03/2000; 13:13:42 MDT - Msg ID: 22132)
Long term bond yield
6.598% ouch!
CoinGuy
(01/03/2000; 13:20:39 MDT - Msg ID: 22133)
test
test
nickel62
(01/03/2000; 13:22:06 MDT - Msg ID: 22134)
The American Barrick Web page
I was recently reading on the barrick web ppage trying to understand their specific exposure to a rising gold price and I was shocked to see the following assertion:"keeping in mind that Gold has never
consistently risen in price and stayed there. It is a volatile
commodity."
From the American Barrick Web Page regarding their hedging policy.

Are they not aware of the move from $20.67/ounce to $35/ounce in 1934 thanks to Roosevelt and Mellon forcing the devaluation of the US dollar? And the rise from $42.50 to the prices of the last twenty nine years ? I know this quote has come up before, if someone could shed some light on what was said about it I would appreciate it.
TownCrier
(01/03/2000; 13:28:29 MDT - Msg ID: 22135)
Hear ye! Hear ye! Witness gold that is earned, not bought!
Gather around to witness the conclusion to the challenge raised by our host in the final days of 1999 to list the five most significant events to shape the physchology within the gold market.

Let a new year begin with the proper recognition of those knights who by their efforts of illumination have rendered valuable service to us all at the Round Table.

On behalf of MK, let me first thank everyone for their participation...this latest call to service proved particularly challenging for our judges to narrow the precious candidates down to match the precious quantity of metal offered for this challenge. Well done, one and all!

After the difficult selection of the three entries to be considered for the French 20 franc gold "rooster" coin, and the two American silver Eagle coins, it was generally felt that we had a virtual tie for the top award. Therefore our good host MK gave the nod for the appropriate alteration in the awards.

Congratulations and a French 20 franc gold coin are offered to Sir Farfel (12/26/99). We particularly liked these three nuggets found among his top five events...
+
On Martin Armstrong denouncing gold while acquiring his own impressive cache of metal: "His actions may well
prove to be the micro- metaphor for what is really transpiring amongst the central banks as they trumpet their gold sales to the world whilst actually acquiring cheaper gold in a most quiet, shrewd manner."
+
On the IMF stats that total Central Bank gold inventory has actually risen since 1997 despite the highly publicized sales: "This net gain suggests that these sales might more appropriately be perceived as interbank transfers, coupled with the acquisition of additional gold from nonbank sources. So the next time a major media organization headlines another Central Bank gold sale, gold investors should realize that the vast majority of the gold sale will likely NEVER reach the public trading markets."
+
On the mobilization of Kuwaiti gold: "America appears to have persuaded Kuwait to lease its entire gold reserves immediately following Europe's surprise announcement to cap gold sales and terminate gold leasing. ... immediately following Kuwait's gold lease announcement, the US government declared it would provide almost two hundred million dollars of military aid to Kuwait. In doing so, the US government proved that it is much easier today to print millions of dollars than it is to obtain a mere 79 tons of gold."

Congratulations and a(nother!) French 20 franc gold coin are offered to
Sir R Powell (12/26/99). In addition to his good choice of events, he provided this most exceptional conclusion:
"General Review--
This past year has shown that gold is money! Backing the Euro with gold and defending the same with the Washington Agreement emphasizes this fact. More importantly this agreement implies limits on the supply of gold which, with central bank sales and leasing, had been unlimited for years. This should refocus the psychology of all gold investors back to the basic fundamentals of supply and demand. No market can be manipulated forever. Simply stated, gold is money and supply is not unlimited."

And finally, congratulations and a silver Eagle are offered to Sir Gandalf the White (12/22/99). We particularly liked Gandalf's culmination of events toward the conclusion, in Gandalf's words, that we now have "[the] GREATEST buying opportunity of the last two decades ...[which]...allowed the Hobbits the opportunity to gather together their lifetime financial insurance for their future years and therefore was the most important happening of the year."

Thank you, one and all. The Castle's heavy treasury doors have been ordered open wide so that this metal may now be sent by trusted couriers to your own future care.

Let the good thoughts and discussions continue!
Journeyman
(01/03/2000; 13:38:39 MDT - Msg ID: 22136)
Old Gold standard problems -- how about a comprehensive list?
Many posters here allude to severe short-commings to the "old" (pre 1933) free-market gold standard. I believe the Austrian economists had answers to most or all of these. Perhaps I'm just out of date? Or are some people just ass-u-me-ing that since the standard was abbrogated, there MUST have been something severely wrong with it?

Most of these references to such problems seem to me to be somewhat nebulous and/or overblown, or trivial when compared to fiat currencies' records. I believe, over the course of many posts, I've covered some of the classic Austrian answers to the more specific objections to gold as the primary trade medium -- shortage of gold, exacerbation (or perhaps even a cause) of normal business cycles, etc.

Could someone out there perhaps come up with a somewhat comprehensive list of objections to the pre 1933 gold standard (for "official" currencies) so I can either find an answer to them, or failing that, convert from free-market (competing currency) Austrian to monetarist or neo-Keynsian? Thanx!!

Regards,
Journeyman
CoinGuy
(01/03/2000; 13:40:04 MDT - Msg ID: 22137)
Thanks MK
Welcome back Stranger!

I haven't posted in awile, have to admit I was upset about the whole Stranger ordeal, but I believe in letting bygones be bygones. Glad to have Stranger back though...again Thanks MK

FOA: been some greating reading from your posts, still catching up...Where does gold end the week?

CoinGuy
USAGOLD
(01/03/2000; 13:45:58 MDT - Msg ID: 22138)
Farfel...
We need your new address. Please call or e-mail me. Thanks Marie
SteveH
(01/03/2000; 13:51:46 MDT - Msg ID: 22139)
must read!
http://www.gold-eagle.com/gold_digest_00/butler010300.htmleom
Netking
(01/03/2000; 14:22:53 MDT - Msg ID: 22140)
Fed Rate Rise Looms As Y2K Fears Fade
http://dailynews.yahoo.com/h/nm/20000103/bs/economy_fed_1.html"...Investors breathed a sigh of relief Monday over the uneventful passing of the millennium bug, but celebrations were overshadowed by mounting fears that U.S. interest rates may rise yet again as early as next month..."
Aristotle
(01/03/2000; 14:32:56 MDT - Msg ID: 22141)
nickel62 and Barrick--
I don't recall seeing this issue discussed before, so maybe you've started the ball rolling. I'm not a fundamental supporter of investment in public mining stocks, so what I have to offer on Barrick you'll have to take with a grain of salt. (Please be aware of the distinction that this postion does NOT equate with me being anti-mining. As an organizational business structure or corporation, I feel the best operations would be among those that are PRIVATELY held. If you literally "had a Gold mine," would you be hasty to give it away in an IPO? By way of contrast, internet companies all rush toward IPO's because many are dogs, and this represents their only real payday. Not so if you have a good Gold claim.")

Having said that, mining companies available for public investment are first and foremost CORPORATIONS--corporations that happen to be primarily in the business of mining in their efforts to turn a profit. In this era of the mega-merger, we are all accustomed to the acquisition of one corporation by another. They don't even have to be in related fields. Isn't it true that RJReynolds (cigarettes, etc) and Nabisco (OREO cookies, etc) are as one?

Corporations often cross industry or sector lines in their efforts to turn a buck or otherwise enhance their position. I could look into Barrick's principle shareholders, or the nature of individual that populates their management team and board of directors, but I'll leave that effort to those of you that are actually interested in buying into partial ownership of that particular corporation. My point, founded or not, is that any given corporation such as Barrick may in fact be more aligned with banking or hedge fund interests than with pure mining interests of such Goldhearts as our very own YGM, for example.

I seem to recall that George Bush and like individuals once served on Barrick's boards, or some other such nonsense. Are these guys miners with every fiber of their being, or are they merely three-piece-suits that feed their agenda, employing miners in the course of pursuing that agenda?

This candid opinion comes from a guy who has worn both a mining hat and a three piece suit (NOT at the same time!)

In an extension of my post yesterday building an analogy with the game Monopoly, imagine a hypothetical Monopoly property called Goldshaft Mines (located near the Short Line Railroad.) Would buying that particular property bring you any closer than owning Boardwalk (replete with commercial development) toward having the real-world assets you need to function when the game ends and the table is cleared for the evening meal? I'll maintain my contention that the special square called USAGOLD next to the Free Parking corner of the board would serve you the best. This is where you could convert your gaming assets to universal, immutable assets.

Thanks for the excuse to wander around amongst the cobwebs of my mind. I'm just a babe in the woods, so if this makes no sense at all, blame it on lack of adequate worldly perspective.

Gold. The best pacifier I've found. ---Aristotle
Cavan Man
(01/03/2000; 14:52:00 MDT - Msg ID: 22142)
Ari
I recently read for the third time (thick-headed Irish) your wonderfully illuminating five part series. Are you quite certain about all of the background information you presented? Do you have anything to add? Each time I read your series of posts, I am a more convinced goldheart.
Thanks.
Aristotle
(01/03/2000; 14:52:10 MDT - Msg ID: 22143)
Journeyman -- Msg ID:22136
Thanks for chiming in on this issue. Your question, "Could someone out there perhaps come up with a somewhat comprehensive list of objections to the pre 1933 gold standard...?" is along the same path I was hoping to travel in my earlier post to mhchuck. I could immediately offer some thoughts on the matter, but I've found that the more time I spend talking, the less progress I make on these issues. Hence the Golden pacifier.

Gold. Make you some. (an oldie but a goodie, thanks to FOA) ---Aristotle
Thriver
(01/03/2000; 14:53:10 MDT - Msg ID: 22144)
Aristotle, re Monopoly
Aristotle, your analogy of Monopoly can be taken a step further. Consider the recent movie, The Matrix: A web of citizens plugged into paper. Unplug, and what do you find?

Gold - welcome to the real world!

(or to steal another good scene from the movie) "Do not try
to break the dollar; for the dollar doesn't exist. Only recognize that it is the perception of a dollar that is in your mind."

This is indeed a good forum for such rehabilitation.
Back to lurking...
Solomon Weaver
(01/03/2000; 15:04:01 MDT - Msg ID: 22145)
price chart
When I went there the price was around $899

Not too far off if the unit is 100 grams.

Remember, some of the world thinks in grams.

Vielliecht werden Amerikaner nochmals Deutsch lernen mussen.

Poor old Solomon
nickel62
(01/03/2000; 15:09:34 MDT - Msg ID: 22146)
Aristotle thank you for your response.Your thoughts are always welcome.
I was intrigued by your earlier post concerning the various weaknesses of the gold standard as instituted between 1922 and 1931-33. and the Bretton Woods version between after the Second World War and 1971-72.As I remember the 1920's version allowed foreign currency to be included with gold for reserves and this led to an exhorbitant creation of money in several national economies.
ORO
(01/03/2000; 15:29:09 MDT - Msg ID: 22147)
Happy Y2K to all
Hello people

Happy Golden Millenium to us all.

Wellcome back Stranger.


FOA, Aristotle, mhchuck, Golden Truth, Permafrost, thanks for the many thoughts and questions.
FOA, your latest big post on the trading of stuff'n srvice through the currency is a marvel. Thank you.

--------------
Market comments:

Watch Dollar and Bond.

See the institutionals dump stock.
See small speculators who spent the 1st weekend of the millenium deciding which techno trollop stock to buy. See trollops jump on market buy orders put in before the the morning open.

See ball drop from Wall Street hands with 5% NASDAQ decline in 40 mins. See speculators jump back in, yelling dip! dip! dip!

Euro and Asia money exits as the flight to safety liquidity in the US is falling away. Who will buy the bonds? American speculators seem not to be of a mind to pick them up. Perhaps the Fed will buy the bonds - turn some of the temporary money into permanent money? What happens when the yields are enough to pull Americans from stocks?

We have broken solidly out of the 6.5% bond yield range. Well on the road to 7%. The value stock January effect has all but disappeared so far.

Will be back with some postings.
nickel62
(01/03/2000; 15:35:56 MDT - Msg ID: 22148)
Is Chris still with us?
Has the CIA operative Chris disappeared with the past?
Solomon Weaver
(01/03/2000; 15:41:59 MDT - Msg ID: 22149)
gold bashing vis-a-vis monetary crisis
"There seems to be a correlation between the
intensity of the official attacks on gold and
the severity of monetary crises."

Hans F. Sennholz.

Hey mhchuck - thanks for posting this simple but lucid quote.

Gold (and and little brother silver) as well as its cousin oil, are about the only liquid assets outside of fiat paper that play major roles in hedgebooks worldwide.

In a time when almost all nations abuse seniorage rights, create massive government debt, the safety net is built by massive portfolios of counterbalanced risks as seen in hedge books. The math behind these books, being the basis of Nobel Prizes is of course worshiped and used worldwide.

Sorry to say this in a goldheart forum, but it is probably true that gold is a monetary relic...well at least in the sense that in a barbaric world, gold was used instead of trust.

Today's world is more glittering (Times Square, Wallstreet and the like) but it is still barbaric. Ted Butler's recent accusations of Barrick and Goldman's behavior to the point.

The world moves too fast today (electrons). Gold in hand will have to be augmented by digital receipts. In order to understand the value of gold, we must take a barometer reading on the level of trust in international finance.

Poor old Solomon
nickel62
(01/03/2000; 15:47:31 MDT - Msg ID: 22150)
Aristotle the 1922-1933 gold standard
If i remember correctly the use of foreign currency caused the banking reserves to balloon in the late twenties.The money was put to work too aggressively and the French I believe began to be concerned about the real value standing behind the British pound. The British had four times as much sterling outstanding as they had gold to cover it and the French i believe began to convert their foreign currency sterling into gold and ship it out of London. The English were already in a deflationary enviroment due to their attempt to repeg their pound to the price of gold at the pre war rate which by then was unrealistically high. The french draining of their gold caused them to have to raise interest rates at a time when their economy needed the opposite.The threat of devaluation caused a panic of currency conversion and the world central bankers rapidly converted their foreign currency holding into gold and in the process quickly drained all the liquidity out of the world system. The resulting devluations and subsequent break from gold convertibility caused a panic into gold hording of momouth proportions. I believe the ensuing panic caused 3100 tonnes of gold be horded in 1931 alone when total world production was only 600 tonnes /year.
Aristotle
(01/03/2000; 16:45:41 MDT - Msg ID: 22151)
Thanks Cavan Man. My fingers have only just now recovered from the typing.
Anything to add, you ask? Only that the sum of all that I've encountered since then further supports rather than refutes that blueprint.

If I were asked to evaluate its primary shortcomings, I'd say that I got rather hasty to bring the epic to a conclusion, and therefore came up short on painting the clearest picture on the various forms of "paper Gold" and what their existence portended for the fate of our currency and the price of Gold. It isn't enough for me (or anyone) to TELL you (or anyone) something. The challenge is to SHOW the path and let others reach an understanding. Blind following gets nobady anywhere with any degree of comfort along the way. If you clearly see the path, you will be better able to step over the odd tree root that lies ahead.

It might help you to understand the context in which this was written. Then, as now, we had FOA as a grand tour guide offering the "recollections" of a seasoned traveller of the road ahead. It seemed that too many people, perhaps based on a lack of knowledge, where too quick to see FOA's message as something akin to a conspiracy rather than the rare insight that it was and is. It was important to help people work through their historical and monetary ignorance (not said as disparagement--a plain fact is that most people have simply never made a study of their own money) so that they could concentrate on the content of FOA's message without distractions of the boogeyman lurking in the hedgerows. Simply put, you can't learn alegebra until you are comfortable with addition and multiplication.

Although in my haste I may have come up short in my original goal to work toward building people's understanding of the various species of paper Gold, and to give the reader an better appreciation for the "other side" of these deals that seemingly have been getting crapped on all these years, it was of no matter--shortly after its completion such sharp minds as John Hathaway took the effort to thorough completion. I encourage anyone who hasn't done so to read John's "Golden Pyramid"--you can track it down quite easily in USAGOLD's Gilded Opinion page.

Where I feel I did succeed, maybe to an excessive degree, was in giving the reader an appreciation for the fluid and evolutionary nature of our monetary system. I guess subconsciously I had decided that making this point was the more important of the two. Why? To stave off the debilitating notions of that "conspiracy-boogeyman" mentioned earlier that too easily befuddled the minds of many that by chance stumble upon this same trail of ours. Far be it from me to foist any manner of religious views upon another, and only in that context do I offer this thought attributed to Karl Popper in "Conjectures and Refutations." He writes:
---- The conspiracy theory of society...comes from abandoning God and then asking: "Who is in his place?" -----

Hopefully I have successfully helped to demonstrate that there is no diabolical hand in all of this. (I encourage people to read the good words of Holtzman for more on this notion.) More importantly, I hope I have helped the reader see that the natural hand of man has greatly bumbled through an attempted departure from the universal and natural money (Gold), and has in fact failed. The end of this experiment is necessarily at hand.

However, it would be a mistake to think that history will repeat itself, or that the coming rise in Gold will be a simple, symmetrical mirror of its fall. It will more likely be very sudden, and will be more like a reflection of the steep mountain of accumulated credit. My final thoughts on the matter is that rather than blame others for anyone's perceived misopportunities (such as through holding Gold instead of various internet stocks,) I'd suggest that these same people at least acknowledge that they are both playing Monday morning quarterback AND counting their chickens before they have hatched. (I'd also recommend that they read MK's good words on that topic posted Saturday.) Essentially, I would encourage people to seek historical monetary awareness and to read the road ahead with the help of the many patient and interested Goldhearts found at this forum. There is nothing to be gained by anyone (other than demonstrating immaturity) through publically bemoaning missed "opportunities" that are seen with 20/20 hindsight. I'm willing to use my hindsight to suggest that these same people may have as easily lost their butts on the whipsawing of the Nasdaq today.

Cavan Man, you're one of my favorites. Thanks for giving this simple child a chance to share his thoughts with you.

Gold. Get you some. What can stop you in this most natural, intelligent financial act? After all, you earned it. ---Aristotle
Blue Sky
(01/03/2000; 16:45:50 MDT - Msg ID: 22152)
Happy New Year
I sure hope you get your site up and running. Miss one and all.
Blue Skies to all.
Aristotle
(01/03/2000; 17:39:33 MDT - Msg ID: 22153)
A quick explanation before we get put off the track by misunderstanding
I can see where my comment to mhchuck is possibly causing some unecessary hand-wringing. Let me walk through this. I suggested that in response to mhchuck's plea, a hasty politician might plunge recklessly back into the past, where there is no doubt that there were problems. Please bear with me. Further, I said,
"as long as we are giving ourselves license here to define the perfect monetary system, how would you suggest we overcome the failings of either of those systems, each of which at face value would seem to fit your demand."

The key thing to recognize is that I didn't say the failing was with the Gold itself. Nor did I say that the problem was with the implied convertability standard of pre-71 or pre-33 (although I will now state without hesitation that any system in which the people cannot own Gold--as in pre-71--is financially AND morally bankrupt.) The proper recognition/conclusion to be drawn is that the SYSTEM (not the "standard") failed. We can't be hastily returned to that same "sytem."

What do I mean by 'system'? That would be the entire financial architecture that includes not only the fixed Gold convertibility, but also the banking structure. I've said it before and I'll say it again. In my puny little childlike mind I can't conceive of sustainability for FIXED Gold convertibility of any currency that exists concurrently with tolerance for fractional reserve banking. You can have one or the other, but not both over an enduring span of time.

I think it is fair to say that fractional banking has become an entrenched fact of life that we must all live with. Therefore, Gold must be set free to float in a new financial "system" that reaps no benefit from the restraint of Gold. Savers (individuals and Central Banks) will hold Gold because it will gain in value over time. Spenders will borrow fiat currency from banks, and repay with interest, because that is what they do. Even as we can see and must admit today, a fiat currency is not utterly worthless as long as the loans are performing, and that the monetary policy is managed such that a credit contraction isn't allowed to collapse the banking system or the economy.

For some reason, people are more comfortable to see supply inflation erode the purchasing power slowly over time--to get pay raises and to pay higher prices--than they are to renegotiate lower prices and lower rents and wages due to a currency that gains value over time. In this perfect system, the Gold savings will gain (or simply hold) value without the need to risk it on loan for a share of interest. Today we can see that dollars must be "risked" in a banks' savings account, and yet that still falls short of inflation.

Allow me to be so bold as to suggest directly to ANOTHER, if you are in a postion to shape these wheels that turn the Earth (don't laugh, people...even I have had my hand upon wheels in other realms of endeavor), my perception leads to this recommendation. Gold must be the immutable North Star of the monetary world, and therefore it must itself be kept immune from the pricing influences of fractional reserve lending, forward sales, and the like. Financial operations with Gold must be managed such that no person thinks they have "ownership" of Gold when in fact it has be lent out for another entities use. It must be like the money in my wallet that I loan to a friend, not like the money in my savings that a bank loans to my friend. Clearly, in this later case we both believe we have the same currency, and that is the supply inflation that erodes its value over time...just as the current supply and use of paper Gold has hidden the real value of real Gold. You of course know all of this, but my perception is that you want to know if it matters to anyone else. It does. And I'm nothing more than a babe in the woods. Imagine what better minds might say if they looked at this as I have done. I look forward to FOA shedding more light on the potential for this protection of Gold being entrenched. It would seem that the ECB's (and others') Washington Agreement was a glimpse in this direction.

Gold. Nothing else will do. ---Aristotle
Netking
(01/03/2000; 17:48:26 MDT - Msg ID: 22154)
Euro Celebrates Birthday With Rally
http://dailynews.yahoo.com/h/nm/20000103/bs/markets_forex_23.html...go Euro!
Aristotle
(01/03/2000; 18:05:44 MDT - Msg ID: 22155)
Hi Thriver
Thanks for the Matrix endorsement. I see too that ORO has seen it, as have many others here. Your comment was the last straw--I'll have to make a point to rent it. To return the favor, I thought "Three Kings" to be fine piece of cinema, with lots of Gold as an added bonus! Seriously, though, it carried a very good human lesson. I also seem to recall JCTex (or another poster) saying it sparked a new intrest in Gold within his son. That, my friend, is a very fine thing!

Gold. Get you some. ---Aristotle
FOA
(01/03/2000; 18:06:02 MDT - Msg ID: 22156)
Long over due reply to ORO!
ORO (12/29/99; 12:15:39MDT - Msg ID:21792)
FOA - Pump

Hello ORO,
Your follow up post about the IMF money pump was very interesting. You state: ----- You are indicating (FOA), it seems, that the current consensus in the G20 is that the dollar reserve system should be allowed to slowly dissolve into cash full oblivion. --------

Yes, offering this analysis from the view that the dollar is being driven into a "cash position" is right on the mark. In hind sight, this would be the only way to prevent the reserve currency from deflating through the obliteration of world dollar debt. Further, as the Euro takes a larger and larger portion of debt financing, the left over dollars holders are forced into an ever more short term maturity. If you were a dollar holder and could see the transition ahead, you would not want to lend long either. This effect is well understood looking backwards, as it was usually caused from the Fed tightening credit. Today, the squeeze (on longer term dollar credit) comes from a perception that this market may be falling away. Making room for the Euro. Eventually culminating in an "almost cash" position for the dollar, the fastest moving currency derivative of them all.
I think this has to be the first stage of "flight" before a true gold run begins. This is the period where no past guidelines direct the trading. Everyone is looking around and saying, what are you going to do? Most will shorten maturities offered and feed slowly into the Euro and gold as a hedge. As you know my thoughts about the paper gold market; the enormous sums of floating dollars will easily crush this illusion. Long before any significant paper is exercised into physical gold that market will discount cash price in a big way and close.
Back to your thinking; notice how the Fed is still pumping money even after the year turn over! The liquidity squeeze is arriving and it has nothing to do with price inflation, Y2K or the stock markets. Another force is at work in the world today and it is attacking the dollar behind the bushes. You mentioned the Japanese and Eu banks in the carry trade. The Japanese are and always have been up to their eyeballs in US paper. They have to stay this way because of their dollar trade deficit. As they continue to decend into deflation, the strong Yen still locks their hands from selling our debt and the BOJ has always known this. So, they continue to add dollar reserves on balance with this deficit in an effort to keep the Yen from rising even higher and killing their US market share. These people are done in and will eventually print Yen (hyperinflate) in and effort to match any US dollar price inflation. Locked step to the end! The EU can play the carry game as long as they hedge in Euros (or gold) because it will balance the dollar fall. They will some day be seen borrowing Euros at 4% (??) and buying Eurodollars at 30% (??) or something like that. What else can be done with the eventual pool of Eurodollars floating offshore the US? It will already have
been devalued against gold and they will still want to trade with the US. After working through Exchange Rate controls that is.

ORO, more clearly, the period directly before us will be like a fiction book. Good reading, but I don't believe this is happening! Once the Euro gets it's legs, there will be no use for a Eurodollar holding as long as the US keeps it's trade deficit wide open. As the dollars flood in, we cannot
spend them in Europe because we will have to buy Euros first. As the existing Eurodollar holdings go further into cash mode their value must fall. And fall big!
These paper bullion boys at the front desk talk about all the excess ECB gold that must be sold. They are going to sound like the Y2K bugs after the fact. When the ECB and the BIS start moving unneeded reserve dollars for official bullion (this has started already) off market, we will see it in the US % rates (like today) and the Exchange rates (like today). The real bugs in 2000 are going to be in the paper gold market. Just watch it all unfold!

Thanks FOA


TheStranger
(01/03/2000; 18:20:20 MDT - Msg ID: 22157)
Black Blade #22084
Sorry to make you wait for a response. I think the answer to all of your questions is "probably yes". Clearly, the U.S. bond market was getting some support from fear of Y2k. Part of this was safe-haven investing. Another part of it was, no doubt, belief in the Yardeni recession scenario. All of that is gone now, and I think there is little to hold bond yields below 7% at this juncture.

It is evident tonight that we are also getting some selling in oil and gold which I relate to disappointment on the part of those who were expecting (hoping for?)a y2k disaster. I have fretted for months that those who didn't see the entire picture might pull the plug at this point. I can only hope the selling is very short-lived as I have no idea how much of this disappointment is out there.

1999 was the worst year for the 30-year long bond since they invented the darn thing back in 1977. Likewise, Alcoa, an aluminum company, was the DJIA's top performing stock. All of this should reassure us that we are not the only ones who have smelled this recovery in inflation. I do not yet see any reversal in this picture, so I think it obvious that gold will come alive soon and OPEC is not about to take leave of their senses. There is hope!

Dead Goat Saloon. The name alone is enormously appetizing, is it not? Still, I'll raise a glass with you anytime, Black Blade, dead goats or no. Maybe turbohawg will join us!

Thanks again to everybody for the warm wishes. I'd just like to know how the heck I am going to live up to this.
FOA
(01/03/2000; 18:46:32 MDT - Msg ID: 22158)
This tells it all! I'll be back much later.
http://www.siliconinvestor.com/insight/contrarian/Read it on this site!

http://www.siliconinvestor.com/insight/contrarian/

On borrowed time?... Last but not least, I want to share something that Dennis Gartman wrote late last week when I was out. It is the perfect period piece to capture the mood of what is really going on. To any sane person, it should be frightening; but then again, anyone who's frightened isn't having any fun. And those who are not frightened are making gobs of money speculating their heads off. Here's what Dennis said:

"As a final aside for the year, we went to our local branch bank yesterday to transact some business [Ed. Note: we actually got some cash for the Y2K `turn'...just in case!], and spent some time chatting with the branch manager. She does not know what business we are in, so when we asked her if she'd seen any increase in personal loans she replied out of hand that indeed she had. Indeed, the personal loan demand at her branch had escalated rather substantively.

"She then proffered that the sole reason for the sharp rise in personal loans was the investment in the stock market. She said that local doctors, lawyers, farmers, auto dealers... all of the leading figures of the local economy (and their wives) had been in recently to borrow money to `put into the market.' We asked her how long this had been going on, and she said that the branch had been making personal, signature loans like that for some while, but that the demand had really escalated in the past several months and has really become `hot' in the past several weeks. She
wondered if it was too late for her to join in the market's enthusiasm!

We said, `We don't know,' and left bemused and afraid.

"It is perhaps not new news, but we find it odd that the public is borrowing money on signatures without collateral (other than CDs and/or sizeable demand deposit accounts) that is then used to buy stocks, very probably upon margin. The leverage is immeasurable, for the public is apparently `Reg-T'ing' money that it has already borrowed with nothing down. She said that those who've been borrowing the most indicated that they `could get more out of the market than the interest charge,' and considered it unwise not to take advantage of the circumstance.

"Friends and clients, if this is not rampant, tulip - bulb' - like speculation of the worst sort, we've no idea what is. Of all of the things that we've read about, heard about and discussed at length concerning the mania that is the U.S. stock market, this is the most manic of all. When speculation comes to small-town southern Virginia, it is rampant and it is dangerous. We have at this point said enough."

Al Fulchino
(01/03/2000; 18:57:24 MDT - Msg ID: 22159)
Thanks FOA......
.... for the article (link). Even I understand it!
Al Fulchino
(01/03/2000; 19:07:27 MDT - Msg ID: 22160)
Lookeee here...didn't know he would put his email address out....
Is it him FOA? If not tell him there is another Another :)

GOLD? SOON YOU WILL HEAR THE POWER, FURY AND THE THUNDER OF GOLD.

"As I breath and walk today, gold will rise to the stars with the greatest triumph and fury the world has ever seen.
Will be gone for some time.

ANOTHER

"YES, I AM ANOTHER. GOLD MARKET IS NOT LIKE ANY BEFORE. IN YOUR LIFETIME THIS EVENT ONLY BE ONCE. WEALTH WILL BE FOR THOSE BRAVE HEARTS.

Will be gone for sometime.
ANOTHER"

-- ANOTHER ( another@geneva.com ) , January 01, 2000


Al Fulchino
(01/03/2000; 19:12:35 MDT - Msg ID: 22161)
Posted on TB2000
1/1/2000
Netking
(01/03/2000; 19:18:58 MDT - Msg ID: 22162)
FOA
FOA(22158) - Good comment Sir, when the Taxi drivers, Bar Maids & Firemen are throwing (being the operative word) all they have (and next years as well) into the market.... 'tis indeed time to run for them hills!
(The propensity for human misery only increases when we continually see this happening around us in both of our locations). Cheers Netking.

R Powell
(01/03/2000; 19:20:55 MDT - Msg ID: 22163)
Thank you!
Hello and thanks
Chicken man
(01/03/2000; 19:27:52 MDT - Msg ID: 22164)
beesting - Thank-you....!
Thank-you for responding to my question.....you were right....I did miss that part....! got to thinking about the gold bit...and I smells like lack of trust.....as long as all the players have gold held by the house,every body is honorable and there is no need to worry about one country kitting checks so to speak.....I don't think the China deal and BIS is so much as China "wants" in,as how mush the BIS wants China in the "system" to keep China honorable in there dealing with the world.(They had some GITCs default and then there is the big sugar default not so long ago)

But then why the 208 value of gold.....it doesn't work out converting US$ to gold at 208......I'm missing something here(A lot of you think I'm missing a whole lot).......pesonally...thought there would have been more heavy duty thinking on the subject....

See you either here or "there"....{;)}
Goldfly
(01/03/2000; 19:33:23 MDT - Msg ID: 22165)
Al,... geneva.com
http://www.geneva.com/Is a steel company in Utah. The have a link up to Geneva Switzerland as a courtesy though....
mhchuck
(01/03/2000; 19:35:53 MDT - Msg ID: 22166)
ARISTOTLE
Aristotle. Your five part series was a gem!

Aristotle (01/03/00; 12:28:13MDT - Msg ID:22128)
Question/comment for mhchuck
On your Keynes/Hitler comparison, you might have it turned around. Given the breadth of the social infamy of Keynes against
the specific depth of individual infamy of Hitler, it is already said in some circles that it is Hitler who played second fiddle--the
John Maynard Keynes of national leadership.

On your comments about a world currency, I wish you would elaborate on your thoughts as expressed in the first paragraph
specifically. A lazy policy-maker might read your words and say, "Fine, let's return to the gold standard as existed internationally
through Bretton Woods until 1971, or else let's return to the gold standard as existed prior to 1933."

My thoughts being, as long as we are giving ourselves license here to define the perfect monetary system, how would you
suggest we overcome the failings of either of those systems, each of which at face value would seem to fit your demand."



Let me unequivocally state that I am not an economist, (I am probably brighter than that) nor am I an expert at verbal jousting. Frankly, I have a distaste for it.

In response to your questions: I let my Keynes/Hitler comparison "Stand." You may interpret it as you like. I guess if you were my college professor and I had submitted a term paper, I would consider your critique.

To your statement that I was giving myself license to define a perfect monetary system (Gee, I didn't realize I was doing that) But I will say that there is no "perfect" monetary system, and from my readings, it was my understanding that the gold standard is the one that worked best, because it precluded the possibility of bankers and politicians from stealing and cheating.

"The metal gold might not possess all the theoretical advantages of an artificially regulated standard, but it could not be tampered with and had proved reliable in practice."

John Meynard Keynes.(From: "Inflation and Deflation")

Now I'm not an expert Keynes, nor have a read a lot of his material, but I have read some of it.
And let me tell you this man makes Bill Clinton look honest. I will be posting others Quotes and lengthy passages from JMK.


So the point of my Post is quite simple. Either we go back to free markets, or we continue on this road of interventionism to its logical conclusion....Totalitarianism.


Gold. It will do you no good in an unfree world.
R Powell
(01/03/2000; 19:39:16 MDT - Msg ID: 22167)
Thanks
Hello again I was dazzled when I read my name as a co-winner of the holiday contest. Most of my understanding and knowledge of the gold market is directly attributable to this forum and referenced sites from posting found here. I have been what you refer to as a lurker for some time because I am impressed by the information, imagination and presentation of knowledge found here. I don't always agree with everything but I'm most always impressed with the thought and research expressed. I feel truely honored to be a co-winner with Farfel among such company! Also a question-- Have both houses of the Swiss parliment okayed the upcoming 1300 ton Swiss gold sale? If not, when do they vote?
mhchuck
(01/03/2000; 19:43:52 MDT - Msg ID: 22168)
Prior Post
Hope my priore post below is not unclear. My response to Aristotle begins with. "Let me unequivically state....
Cavan Man
(01/03/2000; 20:13:13 MDT - Msg ID: 22169)
Aristotle 22151
Who is your Socrates?

Although I am the product of a mediocre midwestern university and poor planning on my part (don't feel bad for me I turned out OK), I have had a few good teachers along the way. Let's see, there were my HS french teachers; oohlala(!); two history teachers, one "stat" and one algebra teacher and, two wise old "beer men" down in Houston; Goober and Clayton.

Seriously though, the very best teachers I have ever had are right here and you, my friend are one of the very best. To what do we owe such kindness, patience, understanding and wisdom? My return on your investment of time and intellect can only be to, "pass it on". I am in the process of doing just that.

Thank you for taking the time to reply. Gramercy good Sir Knight!......CM
Cavan Man
(01/03/2000; 20:18:13 MDT - Msg ID: 22170)
Why I Recommend USAGOLD
For learning about wisdom and instruction,
for understanding words of insight,
for gaining instruction in wise dealing, righteousness, justice and equity; to teach shrewdness to the simple,
knowledge and prudence to the young--
Let the wise also hear and gain in learning,
and the discerning acquire skill,
to understand a proverb and a figure,
the words of the wise and their riddles.

Proverbs 1. 1-6

Thank you MK et al.
canamami
(01/03/2000; 20:32:43 MDT - Msg ID: 22171)
Reply to Journeyman - #22095
Journeyman,

Of course stealing is immoral, and it would have been preferable for the US to comply with Bretton Woods, or to withdraw while it was still able to meet extant obligations, so there would not figuratively have been a "breach of contract".

That being said, we are dealing with the actions of sovereign states, which are indeed immune from the ordinary principles of contract law, including the principles of private international law as they relate to contracts. My post related to the assertions of FOA, that the US would face demands for the honouring of gold backing just as the Swiss and Germans faced demands relating to Holocaust-related matters, years after the fact. I countered that the two matters are too dissimilar for there to be a valid analogy - i.e., like comparing apples and oranges.

However, if obligations relating to 1971 are to be dug up, then the US is free to dig up the defaults of countries after WW1. Back then, basically all currencies were completely gold-backed. In the course of WW1, the major countries became indebted to the US. Except for Finland, all the Europeans defaulted on their official debt to the US. So, if some countries can dig up ancient breaches of contract like 1971 (at law, an ancient issue, and I would also say a breach that has already been waived even on a moral level), then the US can dig up the WW1 breaches of contract by European countries - with accumulated interest. Also, such demands for compensation are made against Ger/Swit because Germany/Switzerland are willing to listen to such demands. On the other hand, the Japanese have ignored demands to compensate Hong Kong veterans and others who were tortured, and to compensate the victims of the Rape of Nanking. Thus, few demands are even directed at Japan. This is how sovereign states generally operate. Given that most of the putative complainers concerning 1971 have "shafted" the US in the past, I doubt any demands for the honouring of the Bretton Woods gold backing will be made.

Some of your post could be interpreted as asserting that I somehow benefitted from the closing of the gold window in 1971. I will assume that "spin" could not possibly have been intended by you. FWIW, I'm not an American, but a Canadian, so I'm not talking my country's book, so to speak.


canamami
(01/03/2000; 20:43:44 MDT - Msg ID: 22172)
POG Down $3.00
The POG's getting whipped tonight. Any theories or news explaining why?
summicron
(01/03/2000; 20:55:21 MDT - Msg ID: 22173)
$3 Drop in the POG is presumably for the same
reason that the long bond is going down: the Y2K fears are over and the safety of gold is thought to be no longer needed.
Aristotle
(01/03/2000; 20:58:53 MDT - Msg ID: 22174)
Thanks for the compliment, and for the reply, mhchuck
No need to be on your guard around me; to the core I'm just a simple country boy. I didn't intend to engage you in verbal jousting, or to test your mettle as an economist, or to imply you were presumptious in devising the perfect monetary system. To address these three items in reverse order: for the purpose of exploring our opinions, it was I that gave us license to devise the perfect monetary system. Why? Because we can do that here--we're not bound by our words like a high official at a press conference.

Second, you seemed to have some strong emotions and opinions regarding what should and shouldn't be in the monetary scheme of things. I wanted to know what was important to you--not necessarily looking for a clinical dissection of past monerary ills. (If you look at my Msg ID:22153 you see my own concessions and desires on this same matter.) Thanks for sharing your additional opinions with the latest post. I would guess that some of my current neighbors don't hold an opinion on these matters at all. Sad, but true.

And finally, my guess is that your verbal jousting comment was in regard to my turning the tables to paint Keynes as the greater villain. I hope that wasn't seen as something done in bad taste, but considering that this is an economics oriented forum, and my indication that Keynes' infamy was one of a broader nature, I felt people might see where I was coming from and get a wry smile out of putting that sunnuvabich in his proper place. Sure, Keynes had his moments of brilliance, but I can't help but lay primary blame at his feet for the spoiling of America through the influence he had on Roosevelt and his economic cronies.

After the country had learned the best possible long-term monetary lesson in the hardest of ways (speculative stock market crash followed by several years of crippling bank failures), Mr. Keynes offered a viper's voice to the sympathethic New Deal ears of a misguided and na�ve Administration. However, it could also be argued that America was destined to make this mistake whether Keynes had come along or not. Anyway, judging from your own comments, it would seem that you might agree with me in choosing to paint him as the greater villian--insofar as an economics forum is concerned. ---Aristotle
PH in LA
(01/03/2000; 20:59:55 MDT - Msg ID: 22175)
Another's e-mail address
Al Fulchino:

Wouldn't the e-mail address have to reside at the website? "geneva.com" is the website of the Geneva Steel Company, located in Provo, Utah; hardly a likely place for the poster and sage we know as Another to reside. In any case, can you direct us to the site you refer to as TB2000? What is the policy there on internet identities? Are posters required to register and use passwords like we do here at USAGold? The message you quote could not be considered to be a very original message from the poster we know here as "Another". At first glance it looks to be an attempt to imitate his style and message, something the real "Another" would be very unlikely to do since he has always been a very original thinker.
TheStranger
(01/03/2000; 21:16:45 MDT - Msg ID: 22176)
Jam Yesterday, Jam Tomorrow, But Never Jam Today
http://www.gold-eagle.com/editorials_99/dvcohen122299.html I just reread Farfel's impassioned letter to Congress in which he indicts nearly everybody for just about everything. (I am just teasing you, David. It is a marvelous piece, or I wouldn't have read it twice).

This subject of central bank interference raises a question in my mind. Towit: Why do we criticize paper money so, on the one hand, and yet denounce central banks for trying to maintain its value on the other? And if we hold central banks responsible for maintaining cross-CURRENCY exchange rate stability, then why all the sturm and drang over their efforts to maintain an orderly exchange rate for real money (GOLD)?

Clearly, though some may disparage these activities as market manipulation, there is a de facto gold-standard which exists today, is there not? Why should it be considered any more or less suspect than the de jure one which was so easily abandoned in 1971? The point is, in the absence of monetary discipline, aren't both approaches equally ill-fated?

In 1971, official gold-backing failed to stand up to rapid currency inflation. To be sure, significant effort had been expended to depress the price of bullion in those days. The result, as we all know, was that what could have been a more gradual increase in gold prices was transformed into a tectonic shift. Perhaps today's attempts at unofficial gold-backing, if you will, will turn out just the same.

Gandalf the White
(01/03/2000; 21:21:11 MDT - Msg ID: 22177)
a VERY humble, "Thank You" MK
"The Ol'e Wiz" truly thanks USAGOLD for award of the Silver Eagle. Most of the Hobbits think that it is far more than enough for you to allow the Ol'e Wiz to sit silently (but sometimes mumbling) at the TableRound, and soakup wisdom from the mouths of the Giants, -- but to reward the Ol'e Wiz with tokens of SILVER for just awaking long enough to relay a few golden thoughts, is like the Hobbits seeing the White Tree of Minas Anor flower again!! ALL Hail MK!!
<;-)
elevator guy
(01/03/2000; 21:21:43 MDT - Msg ID: 22178)
@ canamami (22172)
In answer to your question, I humbly offer my limited perspective and insight.

Many gold bugs, myself included, were hoping, (against Stranger's better admonitions), for a Y2K driven rally, which never materialized.

Now that Y2K has been shown, (up to now), to be a non-critical event, weaker hands dump what they see as a losing position.
TheStranger
(01/03/2000; 21:24:47 MDT - Msg ID: 22179)
PH in LA
" Provo, Utah; hardly a likely place for the poster and sage we know as Another to reside."

I beg your pardon. That's right near where I live! ;-)
Solomon Weaver
(01/03/2000; 21:32:11 MDT - Msg ID: 22180)
Stranger, how did you read my mind??
This subject of central bank interference raises a question in my mind. Towit: Why do we criticize paper money so, on the one hand, and yet denounce central banks for trying to maintain its value on the other? And if we hold central banks responsible for maintaining cross-CURRENCY exchange rate stability, then why all the sturm and drang over their efforts to maintain an orderly exchange rate for real money (GOLD)?

When gold becomes money, she will always be attacked by the fiat princes...in her wisdom, even in her sleep she eventually wins out?

Poor old Solomon
Solomon Weaver
(01/03/2000; 21:37:34 MDT - Msg ID: 22181)
y2k goldbugs cashing in
Now that Y2K has been shown, (up to now), to be a non-critical event, weaker hands dump what they see as a losing position.

Hey elevator guy.....the number of people who believed in y2k enough to buy gold may have been enough to give guys like MK some extra business...but even if they all went en-masse to return their physical gold to the market, the massive short covering gang would just "sssssuuuuckkkk up" that new supply like nothing....

Although, I won't be surprised to hear of a murder story where some pedestrian gets killed by a guy who throws his unit of junk silver out the apartment house window.

Poor old Solomon
THX-1138
(01/03/2000; 21:44:26 MDT - Msg ID: 22182)
Y2K gold dip
I hope the price keeps falling until next Monday.
I get paid this Friday and want to get a couple more ounces.
At least I hope I get paid.
Crossing my fingers that the Gov't payroll system is working.
More than likely will also be cashing in the extra $400 I had in cash for another coin this weekend.

Solomon Weaver
(01/03/2000; 21:47:48 MDT - Msg ID: 22183)
who killed more people, Keynes or Hitler?
Aristotle

And finally, my guess is that your verbal jousting comment was in regard to my turning the tables to paint Keynes as the greater villain. I hope that wasn't seen as something done in bad taste, but considering that this is an economics oriented forum, and my indication that Keynes' infamy was one of a broader nature, I felt people might see where I was coming from and get a wry smile out of putting that sunnuvabich in his proper place. Sure, Keynes had his moments of brilliance, but I can't help but lay primary blame at his feet for the spoiling of America through the influence he had on Roosevelt and his economic cronies.

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

My wife is from Russia. Her parents still live in a southern republic now free....free to be poor that is...they see how friends die of disease because they cannot afford medicine. The death count is slow and people don't blame anyone really....just the times.

Keynes realized that easy money was both the opiate of the masses and the heroine (hero) of the Gov. If there is a coming economic collapse, which impoverishes Americans, it will also impoverish many around the world...who will suffer much, and die prematurely.

The people of the future will just have to find some way to avoid creating money in pyramid schemes...or they will all die like fruit flies when the apple is tossed.

Poor old Solomon
USAGOLD
(01/03/2000; 21:47:51 MDT - Msg ID: 22184)
Deja Vu...
I thought it a deja vu. This afternoon I read the following in Adrian van Eck's "Money Forecast Letter" for January which I received about two weeks ago and just got around to:

"The New York Fed (which controls much of the money supply and deals with foreign banks and currencies) issues a decree that foreign bonds will now be accepted for the first time as collateral at the Fed's re-discount window. It is though they expect serious Y2K financial problems overseas despite reassurances that all is well. We think something big and bad is brewing behind the scenes. And we decide to put up a red flag warning DANGER MAY LIE AHEAD IN THE ECONOMY."

"We are of the opinion that the Money he and the Fed have been creating in the past two months ( going on $200 billion...an awesome amount ) reflects his efforts to avert a crisis situation that is being kept hush-hush."

Then this evening I read this in FOA's #21792:

"Back to your (Oro's) thinking; notice how the Fed is still pumping money even after the year turn over! The liquidity squeeze is arriving and it has nothing to do with price inflation, Y2K or the stock markets. Another force is at work in the world today and it is attacking the dollar behind the bushes."

So what am I missing here, guys?

By the way, the last time Adrian raised the Red Flag on the cover of his newsletter?

Your guessed it.

1987.
RAP
(01/03/2000; 21:51:00 MDT - Msg ID: 22185)
IRS Y2K Problems
I have a very close relative who is an IRS agent, gun and all. They said they can't get there files out of there computers, and are waiting for "experts" to come and unlock them. This was a whole group of agents, not just one.
Y2K is not over!
Solomon Weaver
(01/03/2000; 22:00:21 MDT - Msg ID: 22186)
no leverage needed
summicron (01/03/00; 20:55:21MDT - Msg ID:22173)
$3 Drop in the POG is presumably for the same
reason that the long bond is going down: the Y2K fears are over and the safety of gold is thought to be no longer needed.

canamami (01/03/00; 20:43:44MDT - Msg ID:22172)
POG Down $3.00
The POG's getting whipped tonight. Any theories or news explaining why?

------

OK folks, Alan Greenspan just loaned out a bunch of dollars (on the order of $200 billion) based on repos of low quality debt instruments....the last thing he wants right now is for hedge books to start exploding....

If the S&P 500 futures market, and the gold market were fixed before y2k, why should anything be different?

FOA is right...at some point, gold buyers are going to realize that possession is 9/10 of the law and all these paper games are going to catch on fire.

Like MK said the other day....what is the real price for physical when he can't even find a supply of coins for a large client to buy???

The POG we see on the screen is the POG for a guy who is using a lot of margin...trading fast. That margin is what gives your physical all that leverage that FOA keeps pounding into our heads.

Poor old Solomon
beesting
(01/03/2000; 22:04:01 MDT - Msg ID: 22187)
Reply to Chicken man #22164
Your words:
But why the $208 value of Gold.... it doesn't really work out converting US $ to Gold at $ 208.....I'm missing something here.

BIS statement:
The BIS employs the Gold Franc SOLELY AS A UNIT OF ACCOUNT for balance sheet purposes, assets and liabilities in US Dollars being converted into Gold Francs at a FIXED RATE of US $208 per ounce of fine Gold(approximately equivalent to one Gold Franc=US$1.94).

My comments:
Chicken man I had trouble understanding that also, but see if this sounds logical.
The $208 per ounce of Gold is a fixed rate set many years ago.At this point in time it has to be a fixed rate because of the minute by minute fluctuating "spot" price of Gold worldwide,It would make math calculations changing by the minute, to complicated.They could have used Swiss money as a fixed rate, but chose US Dollars because thats what the world is using in their paper calculations.

Look at it this way,the paper currencies float against each other constantly,each changing value against each other by the minute, some of these exchange rates are questionable.The BIS converts all the worlds paper currencies into a fixed rate ($208= 1 ounce) of Gold, then into any currency they want to,to conduct business.
One Gold Franc(0.29 grams fine Gold) is worth $1.94 Dollars(paper money).
I would suspect as the paper loses value over time, it takes more paper to equal a Gold Franc.
Example given:
At March 31,1999 it took $1.94 to = 1 Gold Franc.
Right now it may take $2.00 to = 1 Gold Franc.
The BIS's Gold Franc is the real base of the worlds monetary system, not the US Dollar!!

I hope this hasn't confused both of us even more.Maybe some of the other Ladies or Knights can explain this better than me.....beesting.
Black Blade
(01/03/2000; 22:04:37 MDT - Msg ID: 22188)
oil and gold reaching new highs (wink-wink).
http://www.usatoday.com/money/charts.htm#SP500_GOLDThanks to RossL for the link. If it were only true but good for a cheap laugh. Y2K bug?
THX-1138
(01/03/2000; 22:05:06 MDT - Msg ID: 22189)
IRS computer files
If the IRS can't get computer files out of their computers, is that rally a bad thing?

Go gold, Go GATA, Go Alan Keyes.
Solomon Weaver
(01/03/2000; 22:10:39 MDT - Msg ID: 22190)
the swiss vote
Also a question-- Have both houses of the Swiss parliment okayed the upcoming 1300 ton Swiss gold sale? If not, when do they vote?

---

As I understand it, the issue must be voted on by the common folk...Referendum

Having lived some years in Switzerland, I learned this much about Swiss politics....most referendums do not pass....but, the parliment looks very carefully at the outcome of the vote (numbers and regional balance) and smaller laws which do not require a referendum are often enacted that help to satisfy the balance of those who wanted it passed.

My prediction therefore: The general public will not pass a referendum to sell gold in large amounts...but based on a 30% yes vote, the government will initiate capital investment projects (railroad expansions etc. as well as selling minted coins to citizens) to slowly let go of gold.
I also believe that the Jewish will be given Euros (not gold) in any settlement.

Poor old Solomon

Black Blade
(01/03/2000; 22:12:36 MDT - Msg ID: 22191)
Solomon Weaver
I saw some gold and silver miners "safety and attendance" awards at one of the local pawn shops here in Au country. I haven't seen them appear all that often, but now since the new year began maybe PM's will be unloaded or maybe some outta work miners need to pay for Christmas. I continue to snap em' up though. This of course is only a localized observation, but coupled with the current drop in POG who knows?
THX-1138
(01/03/2000; 22:15:53 MDT - Msg ID: 22192)
What about Cambior?
Didn't Cambior or Ashanti have their loan calls pushed out to 12/31/99. Are they being called in again or were they renegotiated?
Solomon Weaver
(01/03/2000; 22:16:41 MDT - Msg ID: 22193)
what I forgot to say about the Swiss
On very large danger to the Swiss folk is their gold...

The Swiss Franc has so much gold behind it, and the numbers of Swiss Francs is miniscule compared to Yen, DM, Pound, Dollar...

If there is any sustained rush to gold and Euro, the Franc will surely rise like a rocket...making Swiss folks rich...but they might wind up earning the equivalent of $200 per hour...that will kill any export business...and tourism is an export business..

Thus, it behooves Switzerland to rid themselves of (some)gold and back themselves with (some) Euros.

FOA, ORO, GANDALF, ANYONE, please refute me on this story with the SFR...perhaps you insiders see it better than I do.

Poor old Solomon
Black Blade
(01/03/2000; 22:17:42 MDT - Msg ID: 22194)
THX-1138 and IRS (Internal Racketeering Service)
THX-1138, Ditto on your last post! The IRS has been known to be wwwwaaaaayyyy behind on their y2k preparations for quite some time. Now just think if most people simply "forgot" to pay their tax this year..............hmmmm.....
BTW great handle and movie too!
Black Blade
(01/03/2000; 22:24:25 MDT - Msg ID: 22195)
Solomon and Swiss Au sales
The Swiss have not given the go-ahead on the sale yet. There is a waiting period to allow for petitioning for a referendum that expires in March. BTW if the Swiss Franc rises from a corresponding rise in POG, I'm switching from Nestle's (too expensive) back to Hershey's ;)
Aristotle
(01/03/2000; 22:33:12 MDT - Msg ID: 22196)
Golly, Solomon--
One of the few times I venture to use a relatively unsavory term, and wouldn't you know it...somebody feels compelled to paste it up for a second viewing. Never again.

Your question is my question exactly--which one killed more people? Certainly, one was directly responsible for deaths with malice aforethought, but what of Keynes? His school of thought was one that reached well beyond the U.S. and U.K. How many emerging nations failed to emerge because they could never build the wealth to climb out of abject poverty? How many others have been reduced to poverty because savings once meaningful became a currency that was poorly managed (with best intentions?) and reduced to nothing. How much malinvestment has resulted based on easy credit and too-big-to-fail mentality, putting us on the brink of economic and civil calamity?

Perhaps I've misinterpreted your words, but it seems that you are saying that the masses need the Keynesian type of money to survive/thrive. Please clarify if I've missed your mark.

But to that end, I'll leave you with this simplest thought from my innocent mind, which to me rings with a certain truth:
"There is nothing that a fiat currency can buy that can't also be bought with real Gold money."

So there you have it. Who needs Keynes, eh?

But in the interest of meeting Keynes halfway, I refer you to my prior Msg ID:22153 several inches lower on this page--for what it's worth. So it must be when we live in a world of compromise as this.

Gold. Better than paper every day of the week. ---Aristotle
TheStranger
(01/03/2000; 22:59:21 MDT - Msg ID: 22197)
Get To Know Me
http://utah.citysearch.com/E/G/SLCUT/0000/09/75/cs1.htmlThe above article is about me and may be of interest to some. (I am David Davenport).
Peter Asher
(01/03/2000; 23:06:46 MDT - Msg ID: 22198)
YO! DAVID
Wher's the "G" Word ???
PH in LA
(01/03/2000; 23:07:22 MDT - Msg ID: 22199)
Provo and Another (reply to Stranger)
Greetings Stranger, and welcome back!

I'm pretty sure you understood my comment about Provo and Another. (Many suspect that Another resides outside of the USA and that FOA almost certainly lives a bit to the East of Provo.)

No doubt Provo is a very nice place to live, though. Even if the climate can't compete with LA, and it's kind of inconvenient for sailing, too. (smile)

TheStranger
(01/03/2000; 23:09:48 MDT - Msg ID: 22200)
Peter
Remember, I didn't write it. You'll find a mistake or two also if you look carefully, but I think the guy did a pretty good job, all in all.
Peter Asher
(01/03/2000; 23:13:55 MDT - Msg ID: 22201)
Sorry David
Didn't mean to shout. did you try to slip in some gold advice and get stone-walled?
TheStranger
(01/03/2000; 23:16:30 MDT - Msg ID: 22202)
You Are a Good Man, PH
Actually, Provo sits on the large Utah Lake, and the sailing is pretty good when it ain't snowin' outside. By the way, you have a friend in me forever. I'll bet you know why.
lamprey_65
(01/03/2000; 23:22:48 MDT - Msg ID: 22203)
TheStranger...Talk about coincidence
My dad has an account with your firm (don't get excited, he lives in Alabama!). Anyway, I just recommended NEM to him about two weeks ago - he's dubious on gold's future. I'll send him the article and highlight your firm and Newmont...maybe he'll take it more seriously!

Lamprey
TheStranger
(01/03/2000; 23:29:21 MDT - Msg ID: 22204)
Peter
No, not exactly. But the article was supposed to be about investing in tech stocks. I did wonder if he might shelve the whole thing if I only talked about gold. As it turned out, the word "gold" didn't even get in. Too bad. I tried.
Still, I was surprised at how close he came to what I did tell him. I have been interviewed for television numerous times and been featured in print, but they never get it exactly right.
Black Blade
(01/03/2000; 23:36:03 MDT - Msg ID: 22205)
Chinese proverb (or curse) "may you live in interesting times"
Au still getting hammered (now -$4.45 at $283.35), crude down -0.78, bonds down slightly, and s&p futures trending lower. Let us see what happens when London opens for it's first trading day of the year.
TheStranger
(01/03/2000; 23:37:29 MDT - Msg ID: 22206)
Lamprey
Please be very careful! As the article suggests, my views do not necessarily represent the official recommendations of the firm. Morgan Stanley Dean Witter currently rates Newmont only a "Hold". They also are not very optimistic about gold at the moment.

I semi-retired from the firm some years ago, and I have no right to try and represent the views of so many hard working and professional people. PLEASE make that clear to your father so that I don't get sued!
lamprey_65
(01/03/2000; 23:41:23 MDT - Msg ID: 22207)
Stranger
Will do.

L.
SteveH
(01/03/2000; 23:43:02 MDT - Msg ID: 22208)
Bond
down .09 at 89.19.

Gold down $4.1 at $285.50

Crude down .75 at $24.85

SteveH
(01/03/2000; 23:55:43 MDT - Msg ID: 22209)
I actually wrote this to a friend when he sent me a rosy
outlook of the US from Stratfor. I did get a question on the source of the information whereby the EU marks gold to market. Did I get this wrong or do I remember that at the end of each quarter they mark their gold to spot? Anybody have a source on that?

Euro Speaks

Stratfor has been accused by some readers of being an Intelligence organization front and tends to ignore certain key elements that might otherwise be obvious to other analysts, including ignoring Y2K and the Euro.

For example, the Euro is directly competing with the dollar for market share as a world reserve currency. At first glance that doesn't seem frightful because Europe and the US both have about the same amount of gold (which everyone says is dead, except all the people who have bought the 10 thousand tonnes of metal that has been sold short into the market) with the EU at 11,000 tons and the US at 8,000 tons. The US has burned its gold bridges twice: first was with the US citizen back in 1932 when Roosevelt made all US citizens turn in their gold. Next, President Nixon defaulted on the dollar's gold backing in 1971. This is considered by some experts to have been the reason for the Mid-East oil crisis, as the Arabs love their gold and didn't want to give up their oil for fiat dollars (fiat is faith in Italian).

As a result of this default, the Jamaica Accords saw the demonitization of gold and an allegedly secret deal that would keep dollars strong and gold weak while the Arabs become the Fanny Mae, Freddie Mac of paper gold delivery contracts from large mining companies. In other words, the Arabs were able to take long-term delivery of gold mining production while the dollar was kept strong and oil kept low as the Arabs were able to buy cheap gold with cheap dollars. This is the reason, again per some experts, that gold has been held down and actually dropped over the period of 20 years since 1979.

Currently the Federal Reserve and Goldman Sachs and other bullion banks have been actively participating in a large paper gold sales effort culminating in the Bank of England auction whose direct result was to knock gold down to its 20-year low of $252 per ounce. Some suggest that the BOE gold auction is being orchestrated to keep the price of gold down while certain key bullion banks unravel some of their 10K to 14k ton paper-gold short position. Paper gold is defined as gold derivative contracts that leverage physical gold at times up to 100 times the actual amount of metal available.

Why are bullion banks trying to restrain gold? Gold is earmarked informally in some circles as the great inflation indicator. We have all heard the express gold only goes up in times of inflation. One analyst I know believes that inflation is currently running at 6-10% per year. One thing is certain is that 79 billion dollars have been added to the money supply in the last several months in direct anticipation of Y2k. Now, if your entire dollar supply (physical dollars) is only $400 billion or so dollars and you add to that in one year by almost 25%, one might construe that inflation isn't dead. Certainly gold isn't reacting to normal market forces as excess dollars compete with gold.

As I see it, the US dollar is likely to lose its stature as a world reserve currency. When that happens, the Euro will takes its place. Signs of this are evident now. EU long term bonds seem to be equal or better sellers than US long-term bonds. I am even hearing discussion of oil contract settlement in Euro dollars versus US dollars. As oil turns the world, as oil countries prefer gold to dollars, and as the Euro is less encumbered with debt than the US is, whose debt is estimated to be 5.7 Trillion dollars and whose derivative positions and counter-party risk contracts go into the 10's of trillions, the Euro and EU investments will likely become more enjoyed by savvy investors, including gold-based investments, stocks, and bonds.

The EU is going to treat gold differently this time than at any other time in history. They have said they will allow their currency to be marked to market or be valued at the price gold on the open market at the end of each quarter. If the price of gold were to double, that would back the Euro effectively with a 30% gold-backing. If gold doubled again, they their current money supply, which is all digital currently, would be backed by 60% gold. This is sufficient to interest the Saudi's in their quest for gold instead of dollars. For when Saudi oil is gone they don't want dollars, they want the gold.

So what does this mean for the US? I believe it means a massive stagflation or inflation of commodities and gold ($10K gold ?) and a recession where current housing prices and real estate come down as this market mania unwinds with the flow of dollars overseas to EU investments.

Is this a guaranteed analysis? No, but it certainly breaks a mold of current CNN and CNBC financial guru's and wizards who talk their book and predict the trend. Any market at an all-time historical high is subject to a massive reversal coming out of left field, from where nobody suspects. I say watch the gold market, watch the EU, and watch England. They are making noises about jumping the dollar ship and moving into the EU. Further, watch the settlement of oil. If that moves towards the Euro then the writing is on the wall.

One other factor may also surprise people. The stock option plans of the tech companies creates a bookkeeping profit only if the prices of these stocks continue to rise. Here is how it works:

Company A hires employee for less than good wage with stock options. Employee A sees that stock rises and exercises options. Company A gets to expense at the tax rate of the employee the amount of the options exercise and puts the cash from the sale of options into its bank account. Company A profit rises as a result of the write off. Now, if the stock doesn't go up, Employee A doesn't exercise his or her options. Company A doesn't get the cash, doesn't get the write off, and their profit is reduced accordingly. Profit goes down, stock price drops further.

If the company isn't making a profit then the pattern intensifies.

Combine these factors and the rosy outlook of the US economy becomes somewhat susceptible to foreign inflow of cash and an ever rising high-tech stock market. Combine that with a competing Euro for world reserve currency status that will orphan lots of excess dollars whose sole purpose was a reserve of a foreign CB. When that money needs a home, where will it go? The US.

When that situation reverses because of the liquidity that is constantly being pumped into this market dries up then this could turn out to be worse than the crash of 1929. Keep in mind that the 30-year old stock broker has never seen a bear market, never seen a depression or a recession and never handled a one-ounce gold coin. That tells me since they have been trained to buy on dips, they may just buy all the way down on the dips of the big dipper. Interesting thought anyway. I know that I have held stocks down to a low, in hopes of a reversal, and I did it even knowing about recession and stock collapses. What of the 30-year olds out there. Are they that smart they will know when to get out of a down market? Not.

No, somehow, we have gotten used to an ever increasing stock market that now can't afford to go down. When the momentum dies, then so will lots of wealth. The market is friendly to the least amount of people possible. When the market breaks that rule then it is time to turn on the bear sensors. Beware the Ides of March not to mention any oil disruptions as a result of Y2K glitches (FED EX already announced a 3% surcharge on shipment prices as a result of high oil prices).

lamprey_65
(01/04/2000; 00:39:45 MDT - Msg ID: 22210)
Sound Familiar?
http://www.gold-eagle.com/editorials_00/hickel010500.htmlA nice summary of the market/gold/euro

L.
Simply Me
(01/04/2000; 00:44:48 MDT - Msg ID: 22211)
The Fed's Unseen Assailant
Hello all,
Since I usually only get to read the day's posts after everyone else has gone to bed (the effort is always well worth the loss of sleep), everything there is to say (on a level I'm capable of comprehending) has usually been said.
But tonight, a thread has been left hanging that intriques me. MK referred to:
FOA's #21792:
"Back to your (Oro's) thinking; notice how the Fed is still pumping money even after the year turn over! The liquidity squeeze is arriving and it has nothing to do with price inflation, Y2K or the stock markets. Another force is at work in the world today and it is attacking the dollar behind the bushes."
Please, bear with this train of thought that really has no substantiating facts or logical conclusions. I am trying to follow hints and inuendos concerning actions that are hidden.
There is a "war of currencies", yes? In this war, the Fed is a VERY LARGE and powerful foe, yes? Therefore, one must engage in guerilla tactics...never engaging the enemy face to face. (Lao Tsu; Only fight battles you can win.)
The Fed, and thereby the US Dollar, has been placed in an unusually vulnerable position: [1]Ballooning stock market with political (election year + Y2k vulnerability) blocking any possible graceful retreat. [2]Liquidity (life's blood) pouring out all over the place! [3] Internet stocks holding up appearances while being leveraged paper thin. Bought with signature loans, repayable with nothing tangible! [4] Gold maneuvered into a range where, if it goes up or down the game is over. Up and the miner's get shaft...Down and Asia is ready to buy with both hands.
It seems to me the Fed (the Dollar) is bound and gagged, has an artery cut, and is hanging over the edge of a cliff! All done with the artful use of opportunity, leverage (meaning balance, not loans) and skilful hiding of one's moves (or motives)until the point where they are unstoppable. It also reminds me very much of ju-jitsu, where the skill and knowledge of the smaller, weaker opponent overcomes the brute strength of the attacker. Although, I readily admit, the moves may only be hidden from me!
It seems to me, though,an excellent time to administer the "coup de gras"...before the giant can regain a foothold on the cliffside, climb to safety and staunch his wounds.
Whoever is "attacking the dollar from the bushes" might even be clever enough to get the giant to commit "hara kiri" in dispair! Would it be stupid of me to suggest that maybe a forced "rate hike" at just wrong time will do it!?
Then some mighty fine gold mines will belong to whom?
OK, so I'm no economist. Maybe I'm just plain nuts to try and figure out what's so well hidden from general knowledge. But as long as I still can't figure out derivatives, I might as well try to see what's moving in the shadows behind them.

Rock covers paper. Physical Gold wins everytime.
simply me

SHIFTY
(01/04/2000; 01:09:26 MDT - Msg ID: 22212)
Simply Me
Im left wondering if the Fed's wounds are not self inflicted.
Simply Me
(01/04/2000; 01:09:33 MDT - Msg ID: 22213)
Gold $283 at London Open 1/4/00...Ouch!
Sure hope that's paper I smell burnin'!
SHIFTY
(01/04/2000; 01:16:22 MDT - Msg ID: 22214)
Simply Me
What if it is all by design. To bring down the U.S.A. and give us their New World Odor!?
PERMAFROST
(01/04/2000; 01:44:52 MDT - Msg ID: 22215)
TownCrier re Msg. ID: 22114
Thank you Sir for the information. No, it was not a trick question. I'm not familiar with American gold coins as my interest in them coincided with the years I lived between France and Constantinople. As for the mintage year, I thought that its being out of production might make it more valuable. Apparently not the case.
Looking forward to reading your regular posts!
Simply Me
(01/04/2000; 02:27:21 MDT - Msg ID: 22216)
Shifty
Nothing left to do tonight except tease the paranoid?
I'm not such a nut case in real life. But the stuff I know about aren't subjects for this forum (nothing kinky). I'm just doing the best I can to participate. Who knows, one of my crazy ideas may spark a direction of discussion no one thought of before!
simply me
simply me
Black Blade
(01/04/2000; 02:29:01 MDT - Msg ID: 22217)
Pass the rolaids and asperin please!
Au down -$7.25 at $280.55, T-Bonds trending lower, and s&p futures off -3.20. It looks down-right ugly.
Simply Me
(01/04/2000; 02:38:18 MDT - Msg ID: 22218)
Black Blade
http://www.usatoday.com/money/charts.htm#SP500_GOLDWierd. These charts put Feb. gold at $866.61 and Oil at $42.75. Probably not true...but a lot more fun to look at than Kitco tonight!

It's a good time to say goodnight.
Hoping for better tomorrow.
simply me
nickel62
(01/04/2000; 02:51:39 MDT - Msg ID: 22219)
Simply Me
I liked your post for its honesty. You of course know that most of us are as confused most of the time as you claim to be. I took heart a few years back when both George Soros and Allan Greenspan admitted that they didn't really understand derivitives either.
Farfel
(01/04/2000; 03:23:36 MDT - Msg ID: 22220)
Wall Street/Clinton Spinmeisters Target Gold for Drop Today
Gold dropping like a rock tonight. It would be scary if it were not so damn funny.

You see, it works like this: if there had been any notable significant infrastructural y2k problems, then Wall Street and its subsidiary media whores would have stomped on the gold price, claiming that the current low gold price already discounted EXPECTED y2k problems, and now that the news was in, it was time to sell the yellow metal. The old adage, "Buy on the expectation, sell on the news," would have been heard all over The Street by each and every heavily gold short bullion bank.

Of course, the dominant spin today will be that everybody in America/the world is selling his/her gold because Y2k proved to be no more than a fart in the wind. Forget that such spin completely contradicts the earlier mainstream media spin claiming that the populist and institutional y2k gold purchases were relatively insignificant, especially in comparison to recent Bank of England gold auctions.

Remember, we are living in a New Paradigm whose hallmarks are the complete absence of so much as a single scintilla of logic...the proffering of one oxymoronic statement after another...the requirement that the American public's collective memory MUST never extend beyond one week (at best).

As a nation, America is fast moving into a final vortex of unbridled mania...a final frenzy of mass indulgence and social depravity never before seen in the country. With madness spilling over, all standards must be subverted and revoked. And GOLD remains an historical standard that must be overthrown if the current Establishment is to have its way free of all societal restraints.

Gold remains in a lose-lose situation because, no matter what the outcome, the Wall Street/Clinton spin machine always looks at the glass as half empty where gold is concerned.

So witness gold as it is sold down in paper terms today by those Establishment interests who have no dearth of official American paper by which to effect such sales Yet realize that nothing has changed! The gold short position is still a physical position. It requires obtaining physical real AVAILABLE gold to cover that position and there is only a small amount readily available relative to the astronomical gold short position.

At some point in time, some powerful entity or some shrewd collective will step forward from left field and make a grab for that physical gold, demanding to take delivery. Nor will they need any y2k scares to inspire them to make such a dramatic move. Instead, simple basic logic, common sense, and an overwhelming profit motive will drive them to do it. When that happens, all hell will break loose.

Those who panic and dump gold in order to chase hot air Ponzi schemes on the NASDAQ are not simply abandoning a metal...they are abandoning the last vestiges of logic and sanity with it. You can call basic logic or good common sense or pragmatism an OLD PARADIGM or any other pejorative. But words alone will not kill the heart of reason. It will survive, it will resurrect, it will have its day again. Without reason, there is only chaos, the pre-Millennial madness that now spills across the American nation.

The problem with "thinking OUTSIDE the box" in terms of each and every action in life is this: castles in the air, New Paradigms, and dreams are necessary ingredients in life, but they are not sufficient. Humans greatly need some historical standards, they crave some absolutes, and any new fashionable mass intellectual movement that threatens to eliminate them altogether does so at its own risk.

Thanks

F*
CoinGuy
(01/04/2000; 03:51:19 MDT - Msg ID: 22221)
Farfel, and an update...
Farfel,
I concur wholeheartedly with your posting, but I do believe we have become a society of risktakers, or fools, whichever term you prefer. I have neighbors that just moved into my neighborhood, new houses go for 325-500K. Their forgoing new furniture so they can put all their money in the market. They only put %5 down on the house...enough said.

S&P futures down 12 at last check, with a fair value of +3.92. Yield on the long bond, still ugly. Gold spot bid down 5.92 at 281.88. Overseas markets down anywhere from %1 to %3. CNBC seems to be mentioning the world is worrying about a rate hike in the US. I'm going to have to agree with Stranger, the bond goes to %7 in no time flat...Before or after the FOMC, I don't know.

screw the asparin and rolaids, I own physical...

CoinGuy
tedw
(01/04/2000; 04:50:45 MDT - Msg ID: 22222)
Y2k
Http://www.usagold.com
I was wrong about Y2k and I apologize to anyone that may
have been harmed in anyway by anything I posted or any links
I provided: (especially Jim Lords Newsletter).

Jim Lord,Worldnetdaily, and Gary North did not due their due
diligence (in my opinion) especially in regards to embedded
chips.

So, again I apologize, I relied on their advice and I should not have done that.

PERMAFROST
(01/04/2000; 05:31:50 MDT - Msg ID: 22223)
Thanks beesting and Gandalf the White...
...for clarifying the issue on that 1/2 oz. coin. I paid 200 dollars for it after haggling a bit with a local merchant. It was my first coin purchase since 1987....
It loooked so beautiful amogst all that nondescript Middle-Eastern jewelery I couldn't resist!
RossL
(01/04/2000; 06:00:46 MDT - Msg ID: 22224)
Permafrost

The earlier American Eagle coins with the Roman numerals are beautiful works of art, aren't they? I have one (1/2 oz.) coin from the first year. I don't know if that one is low mintage or not, I'm having trouble finding an online price guide for bullion coins.
I wonder why the mint dropped the Roman numerals in the 1990's? Too confusing for the masses?
Hermit Club
(01/04/2000; 06:07:16 MDT - Msg ID: 22225)
$billions return to fed?
www.cnn.comno message
Hermit Club
(01/04/2000; 06:09:57 MDT - Msg ID: 22226)
again
http://www.cnn.comtest
ORO
(01/04/2000; 06:15:22 MDT - Msg ID: 22227)
tedw - hold your fire
Before falling on your sword. Take into consideration that the fears were justified, though repairs turned this corner better than one could have expected. I can now say with certainty that the process control industry can now join the rest of computerdom in putting in last minute, or rather after last minute, fixes in. We are now ready to start remediation of Y2K on a full scale, fixing the small problems.
As far as the rest of the problems - including embeded chips - they were never supposed to keel things over in their entirety. Definitely not at once, and not at the date receiving so much attention. Only the chips with longer horizons than a day had any reason to keel over - the ones controlling service functions rather than the process. Even so, failures that have occurred, were probably overcome through workarounds prepared long ahead of time.

One of the things I think occurred, was that a methodology of running fixes for problems on a fix on fail bassis, but on running parallel copies of systems and system simulations some few months ahead of the actual date. This should have helped immensely, so long as they are actually ahead. Whether they will manage to keep ahead is another question altogether. Let's hope so. Larger corporations that have started on this early are only 6 months ahead.
Hermit Club
(01/04/2000; 06:25:03 MDT - Msg ID: 22228)
Just a thought...
Would the drop in gold be because many are selling their paper gold holdings? who's buying it or are they just getting dollars for their paper contracts?
PERMAFROST
(01/04/2000; 06:29:43 MDT - Msg ID: 22229)
Cavan Man...
I'm presuming your message was addressed to me. If so, thanks for the kind words.

As to the gist of the matter, the "background information" you inquiried about: the things I say are corroborated by sources as disparate as Karl Marx, common sense and the Bible itself. In fact, the holy book strictly prohibits usury--you know, that stuff you call T-Bonds, repos et al. In effect, our present-day financial system is wholly antinomic to Christian (or Jewish or Moslem for that matter) ethics, being nothing but an upside-down pyramid built on a mountain of debt.
I have the inkling that the bit about perpetual fluctuation
and instability being what generates "profit" is what got your intellectual eye blurry. I'll illustrate my point with two anecdotes: one referring to an actual recent crisis; the other, my personal musings as to why money (paper) and economy (wealth) are incompatible. [I consider gold to be a form of wealth and not a mere "medium of exchange" or "unit of account".]

Remember the Asian Crisis of '98? Here's what happened in a nutshell.
A) The Western banker chants the mantra of the "formidable Asian Tigers" and tells the Asian boys: 'Good boy! here's a loan denominated in dollars; go and build a factory with it!' RESULT: interest earnings on loan start accruing. [fluctuation/profit #1] B) The same banker cabal borrows from, or jawbones into printing, local Asian currency from the same (stupid) Asian which they swiftly proceed into selling short against the dollar making a killing on the FOREX. [fluctuation/profit #2] The new mantra now is, "too
many factories!" C) The Asian can no more afford to service debt denominated in USD due to the crash of his national currency; goes bankrupt. RESULT: the very same banker cabal that loaned them the money for the factories in the first place buys them back at fire-sale prices, say, 10 cents on the dollar [fluctuation/profit #3] PROVIDED D) even the 10 cents must come out of someone else's pockets in the form of an "IMF bailout package" [fluctuation/profit #4 E) The IMF loans really are taxes on Western citizens which are surreptitiously levied on them by the selling of bonds (borrowing money) in THEIR name by their respective governments. [different terminology for fluctuation/profit #4] F) Now Americans start paying interest on loans they did not take to build factories they do not own. [fluctuation/profit #5] AND ALL THIS IS TRIED-AND-TRUE OLD-FASHIONED STAID "FINANCIAL ENGINEERING"....
I'll post the next in a little while...
Cavan Man
(01/04/2000; 06:51:46 MDT - Msg ID: 22230)
PERMAFROST
Not sure what post of mine you are referring to. Sure glad you joined the discussion here. I'll do you one better; would you agree that the gold and silver formations on this planet were put here for a reason? Just curious.
Al Fulchino
(01/04/2000; 07:22:33 MDT - Msg ID: 22231)
PHinLA and Tedw
http://hv.greenspun.com/bboard/q-and-a.tcl?topic=TimeBomb%202000%20%28Y2000%29PH, I agree it would seem not to be Another, but take a look at the link above. I thought maybe FOA would shed some light on it. Either way, it is not really anything new as far as content. But simply a curiosity at this point.

TedW,

Takes a lot of character to apologize. But! 250 Billion dollars WERE spent. It never was going to be teotwawki, but like you, I prepare for inclement weather in the winter, and when I get a sixty degree day like yesterday and today, I take my jacket off and enjoy the respite. To be honest, I now have such a nice security blanket now that I am thankful for y2k coming along.

Best to all and nice to see your writings again Aristotle.
Ray Patten
(01/04/2000; 07:31:49 MDT - Msg ID: 22232)
Crude oil rally...

Does anyone know if there is any particular reason why crude oil had a 70 point rally from last night's low. I've searched some news sites but can't find anything.
PERMAFROST
(01/04/2000; 07:43:18 MDT - Msg ID: 22233)
Now the second one...
I shall briefly state why I disbelieve that any form of a financial system that assimilates to any degree fiat money and its concomitants (the bond and stock markets) cannot cohabit the same planet with a real, self-sustaining and stable economy.

A stable economic environment proscribes EXCESS REVENUE OR GROWTH, which are necessary conditions to turn a profit. Such a situation is anathema to the financial markets because it eradicates the very reason to invest in them: the potential for profit. Who would put money in a stock with ZERO yield or capital appreciation?

For here's how a truly stable economy would function.

Let's scrutinize the basic economic process in a barebones paradigmatic model of such a system. Let us postulate that there is a demand for good or service X and its production is our ONLY concern--the satisfaction of the consumer/citizen. To produce it necessitates 1)Investment in infrastructure including factory, roads, utilities, education for the work force etc. 2)Paying the salaries of the employees, from blue-collar to highest management-level white-collar; 3)Incurring distribution/marketing costs. IF all the aforementioned were so achieved as to generate enough return on capital to make reinvesments to compensate for depreciaton and redundancy of assets of production AND continue paying the workers' wages; in a truly free market [not "free" to the extent that it impinges on basic human rights and needs] where various enterprises compete against each other without any unfair market manipulation present, an equilibrium price will naturally assert itself WHEREBY ALL THE AFOREMENTIONED CONDITIONS ARE FULFILLED AND PRODUCT X IS MANUFACTURED/REALIZED----BUT----Such an economic model that caters solely to the material satisfactions of man, PRECLUDES PROFIT, or unnecessary growth and excess revenue, which, in financial terms, correlates to the charging of a price for product X that is higher than the equilibrium price.
No one one in their right mind would invest in financial instruments related to such a "business"; but, deep in their hearts, I sincerely believe that everyone would like to work in one--or at least have one in their town.
I assure you, I didn't smoke NOR inhale anything!
Nor do I think it's a "utopian" dream. I think this is what the economic workings of a humane society could look like.
Goodnight everyone!
PERMAFROST
(01/04/2000; 07:46:33 MDT - Msg ID: 22234)
Cavan Man
I'll up the ante: How do you know that you know?

see you tomorrow!
ORO
(01/04/2000; 08:09:17 MDT - Msg ID: 22235)
Talking Physically.
FOA (01/01/00; 14:42:33MDT - Msg ID:21993)
--->All the while, the bullion buyer slowly amasses a large "highly leveraged" position, just by channelling his would be trading loses into paid up physical and rare gold coins.

FOA has clarified the issue further, but I will post this anyway.

In the way of clarification for others, I think FOA is trying to tell us that the leverage is indeed there, just that when one buys bullion without leverage, the leverage you have is that put against you by the couner pairs to your "cash" position. Most notably, the counterparties in a typical gold transaction have claims traded among themselves and physical gold sold into the market. The trades involve a lender, a borrower, a bullion bank, and a physical buyer.
--The bank is both long and short gold denominated or gold indexed obligations. This is a complex multiple contract position. More on this later.
--The borrower is short "physical" which is due for delivery. This is a contract obligation. Gold miners and bank trading desks, as well as speculators hold these positions.
--The lender is long gold denominated obligations. This is a contract position. The contract is as good as the counterparty. If you own a gold account, or are long a derivative contract, this is what you have.
--The cash buyer holds gold bullion and is obligated to nobody. His holdings do not rely on anyone fulfilling an obligation.

The leverage built into the market, which we goldbugs will benefit from in the long run, is that of the many obligations denominated in gold. We need not buy leveraged instruments, because the leverage comes from the extreme volume of gold obligations issued within the "paper gold" trading arena described above. The same elements that make gold an attractive investment at this time and a long term store of value (over a lifetime), particularly during banking crises, make the various forms of leveraged gold unattractive. One should note the point of gold being protection from an environment of default on obligations. The same obligations that gold derivatives are.

The most important aspect of gold as financial disaster insurance is that it is immune from default. The second point, particularly important for the gold mining investor, is that in financial crissis, desperate governments are prone to disregard the property rights of large holders of industrial assets. The most captive form of industrial asset are the mine and the oil well. The most attractive asset for taxation and expropriation in time of crissis is a gold mine. Very large hoards of precious metals may prove attractive to a government seeking survival. The small hoards remaining in the West are not attractive targets.

The use of gold futures and options in the battle for financial self preservation during a financial crissis is equivalent to a knight charging at his enemy with a shaking kielbasa. Gold mining shares are similar to waving one's title to the land in face of the Mongol horde's charge. Wouldn't it be rather smart to hold a sword on top of the ramparts of a castle?
Taking our little Midieval setting further, one does not complain of the building of the castle, though long after its construction came no attack. The expense of time and effort, of missed opportunities and reduced performance will come to be appreciated when disaster strikes.
ORO
(01/04/2000; 08:16:45 MDT - Msg ID: 22236)
A (bullion) BANK NOTE
A note about the implication of the banker's situation: through the banker's borrowing and lending, all modern bullion owned outright has an equivalent part, nearly three times larger, of paper gold. The bankers have formed a 60,000-80,000 ton gold banking system using 20,000 tons of gold, most of which is now held by "cash" holders.

Common estimates of private gold bullion holdings available to the financial markets, most notably the one produced for the Fed in 1997 (estimated for 1995), put the gold at 20,000 tons. I have reason to believe that there are 10,000 tons more, bringing the total to some 30,000. I will not go into the iffy details of the estimate, but note that one of the major components is "Yamashita's treasure", which has been in the gold markets since 1984, some of it even before that date. Whenever stories come up about the reappearance of that hoard to act as an overhang on the markets, you can rest assured that it has already been introduced to them in its entirety. These 10,000 tons are in "semi-official" hands of Royals of the Oil countries, the Vatican. Much of the rest of the remainder (once the gold jewelry deficit is accounted for) sits in Rothchild vaults, and a few other large holders, "giants" much as described by FOA and ANOTHER.

The volumes of gold paper traded by the LBMA become much clearer when taken in context of the gold banking system rather than in context of annual gold production. The 1000 tons traded daily are well proportioned to the normal trading patterns in currencies. Eurodollar interest derivatives constitute about 5.5 $T traded on New York exchanges, and another 55 $t or so are traded OTC with 62% netting (figures are from memory so don't shoot me if I'm off a little) bringing it to 19 $t. This is equivalent to the estimated 21 $t in Eurodollar debt outstanding (my estimate). This comes to 7%to 7.5% of outstanding positions traded daily. Applying this proportion to the gold market's 1000 tons, one comes to 14,000 tons of net debt - the same kind of debt as Eurodollar debt. This is debt generated by the sale of physical gold in the four part transactions.

While the physical supply actually went into hoards of all sorts, the paper remained circulating in the markets. The gold accounts now stand at an incredible level of over 40,000 tons by my reckonning. Nearly 30,000 tons are owed by bullion bankers directly - without counter obligations denominated in kind. They have only 4,800 tons in credible gold mining company obligations, and another 9,000 tons were borrowed by speculative funds playing the carry trade. The remaining reserves, some 10,000 tons, can not be used to pay off the gold denominated debt because the reserves are mostly borrowed and must be kept on hand to cover obligations to Oil Royals (the major lenders of these reserves). Of the other 20,000 tons in private gold hoards, only 6,000 remain in private hands outside of the Bullion banking system. 14,000 were supplied to the market over the years, and hang around the necks and in the noses and from ears of a billion people. The total commitments of bullion banks (including derivatives) are most probably around 60,000 tons, with an imbalance of some 35,000 tons, where gold was "borrowed" by the bankers (in reality only dollars arrived at the bank for most of this, and the bank issued a gold denominated obligation), and the lending by the bankers was in dollars.
Their remaining gold denominated assets:
- Gold reserves are 10,000 tons, (I hope)
- mining company obligations are at 5,000 tons,
- Speculative fund obligations are 10,000 tons.
The remaining counters to the bullion banker's gold obligations are denominated in currency.

Physical gold lent TO bullion banks, about 25,000 tons.
Physical gold lent BY bullion banks, about 15,000 tons.
ORO
(01/04/2000; 08:20:41 MDT - Msg ID: 22237)
SteveH - historical commets to one of your previous posts
SteveH

--->As a result of this default, the Jamaica Accords saw the demonitization of gold and an allegedly secret deal that would keep dollars strong and gold weak while the Arabs become the Fanny Mae, Freddie Mac of paper gold delivery contracts from large mining companies. In other words, the Arabs were able to take long-term delivery of gold mining production while the dollar was kept strong and oil kept low as the Arabs were able to buy cheap gold with cheap dollars. This is the reason, again per some experts, that gold has been held down and actually dropped over the period of 20 years since 1979.

I think there is a small error here. The gold miners had only minor involvement in the 1976-1980 period. The thought seems to have been that the bridge to gold would go through oil. However, physical gold was being bought by Oil Royals, paper and physical were bought by westerners. By 1971, oil was the largest component of international trade as measured in dollars. The major reason Europe went along at that point was because the new format allowed European countries to use dollars accumulated over the 60s and then in the 70s to buy something they needed, oil. France was building nuclear plants and needed much less coal and oil than other European nations, and thus found less to be gained from the arrangement than its neighbors. In 1976-80 gold and oil continuesd to trade in tandem as the Fed continued to raise the float through the end of 79. All that was needed in order to stabilize the dollar was a direct relationship between the three components, oil, gold, dollars. Prior to 1971, gold was tied to the dollar at a fixed amount - allowing central banks to arbitrage between them. Already in 1969, oil was trading for dollars exclusively. The dollars were traded for gold and for whatever other economic needs the Arab oil countries had. Up to 1976, the situation was out of control, the gold auctions by the IMF were not helping the situation because they allowed the investing public to see the bids coming from private investors and Oil Royals cashing in their oil dollars.
After 1976 (Jamaica Accords) the US was to put its house in order and straighten out its trade deficit. Carter made serious efforts to have that happen. Among other things, the agreements required less foreign expenditures on arms - meaning less arms purchases by Israel, which brought about the peace with Egypt, which was pushed by the Oil states into a peace that assured Saadat's political death. The defense expenditure of the US fell significantly at that point. Carter attempted to bring US exports to balance with imports. But all was to no avail, because of the physical needs of the baby boomers and women coming into the workforce as a result of the splitting of households (divorce and gays ceasing to mary) and the change in attitudes towards women working. The new workers needed cars and oil to get to and from work, and needed new housing and furnishings. This had to come from somewhere, it came from abroad. Furthermore, the Carter administration and the Burns Fed did not want to raise real interest rates because of fear of returning to massive riots still fresh in the minds of politicians who lived through the late 60s. In 1979, new household formation tapered off to a steady rate, as demographics no longer pushed in this direction.
By this time, oil was in the sky rising beyond $40 after the Iranian revolution. Less developed countries were sinking quickly into debt spurred by arteficially low US rates and the need to obtain oil. At the new prices, gold proportions to the Fed's dollar float were back to the original ratio of backing. New gold exploration was coming up with great new finds in North America, and gold reserves in South Africa had increased. If oil conversion to gold were to be done just a few years down the road, the gold could be obtained at a lower dollar price. The North Sea oil was found and Mexican Gulf oil was found, which allowed some leverage over OPEC. A new arrangement could be assembled. The terms were as follows (as far as I could ascertain):
-The US will put the dollar float undertight control.
-Interest rates in the US would be sufficiently high to force dollar debtors to absorb new dollar creation (in the form of new debt and US trade deficits), whether within the US or without.
-The dollar float would be backed by private gold debt, to be purchased at a regular quantity in proportion to oil sold into the markets by the OPEC countries.
-The accounting for gold purchases would be maintained outside the markets at an official price related only to this arrangement. (In a way, the "right" to buy certain amounts of gold were traded at a high premium to market prices of the gold being purchased.) Keeping tight reigns on gold demand.
In this way, a fixed arbitrage could be maintained between oil, gold, and the dollar, though they were all floating in the markets. The arbitrage was available only to central banks. The tight money would assure Europe of a sufficient return on dollars so that non-US and non-oil goods could be obtained from third parties at favorable exchange ratios.

This arrangement was functioning quite well but for one hitch. The oil to gold ratio could not be maintained. The rapid development of Japan and emergence of Asia, had brought new demand for oil along with the dollar debt of Asia (contrary to South American debt and World Bank loans, this was invested in useful productive capital). Oil volumes increased as a result, increasing the amount of gold necessary to trade for it. Much of the expected growth in gold production never materialized. By 1985 global gold production in general, but particularly North American gold production had ceased to grow. Non OPEC oil production flattened, and there was no longer any way to avoid growth in OPEC market share. The gold price of oil had to be reduced without the markets being aware of the result.
Note on Japan: Japan had decided to maintain trade surplusses with the US in return for greater US defense expenditure in Asia, and maintenance of steady oil supplies

Interest rates needed for the maintenance of dollar demand were too high for US banks to grow, and Emerging Market economies were severely strained by the burden, and near default. The default would have eliminated future dollar demand, and undermined the arrangement. As interest rates were lowered in the US to combat this problem, the dollar plunged and gold prices started rising. The credit markets needed to come back to equilibrium. Japan lowered rates and the Fed raised rates through 87, but the dollar was not helped sufficiently, and the dollar rates were too high for the US, creating a liquidity shortage that the monetization limits prevented the Fed from solving. In 1987 Europe (Germany) refused to cooperate to help. The US equity markets tanked. A new plan was necessary. The arrangement was about to collapse.

To accomodate the reality of interest rate needs, the arrangement was modified to allow for a higher off-market gold price (lower oil price as denominated in gold), and an extension of the buying period for gold. One key aspect was that Europe would guarantee gold accounts and forward contracts, in effect setting of gold interest rates by acting as lenders of last resort to the gold banking industry. Europe had to start taking aggressive action to unify and issue a single currency that could serve Europe and its trading partners.
ANOTHER and FOA tell us that the studies of monetary history in preparation of the single currency negotiations revealed that there was not a single case of a paper currency surviving long term. The conclusion was that even if the politicians doing the negotiations and coming to agreement don't want to talk about gold being involved, the only way to create a common currency with solid fundumental structure was to have it backed by gold. In order to prevent the kind of short term instability in banking arising from the tight control of the gold redeemability standard, the currency was to be let free to float, acting much like a semi-closed end gold bullion fund. Long before things were finalized in the negotiator's minds, the inclusion of gold was already a done deal in the eyes of some of the important parties.

By 1992, the EU accords were finalized, and then written in the Maastricht treaty. Britain came to a monetary crissis by running bad current account balances and had to drop out of the Euro precursor's ERM=Exchange Rate Mechanism.

The low interest rates in the US at the time caused an incredible boom in the Emerging Markets. Gold prices stabilized and then started rising. The EU Central Banks had difficulty in maintaining low gold prices, and so lowered gold interest rates while keeping ex-US short rates high. The result was a huge growth in gold derivatives and gold banking. The gold price surge was capped but the size of the gold obligations outstanding grew tremendously. The Fed raised rates following this, in 94-5 and the Japanese and EU lowered rates substantially, carry trades were put on in enormous proportions, Gold interest rates were so low that the risk of a price rise was outweighed by the great spread on rates. The increases in oil purchases by the Asian nations in the last years of their boom was causing a great issuance of paper gold as the Asians were draining physical supply. The Europeans had to come forward and support their commitments to keep the market going till the Euro was ready for prime time. Had they not done so, the dollar would have imploded as gold skyrocketed in the way ANOTHER indicated would happen, though he talked of this as an imminent event, I think it was a thinly veiled threat rather than an immediate forecast. The threatened gold spike did not happen because of the agreement to assure further lending and some selling by EU member CBs. This continued till 97, whereupon gold tanked because of the cessation of Asian buying, their selling of some of their accumulated gold, and the hysterical hedging by gold miners. At this point, Oil Royals were aware of the disproportionate overhang of gold debt and ceased buying paper gold. The fall in gold prices continued as each new ounce of physical supply was accompanied by an extra ounce of paper gold. The physical gold went away and the paper version continues to circulate, just as Gresham's law would predict.


--->...the Euro is less encumbered with debt than the US is, whose debt is estimated to be 5.7 Trillion dollars ...

The numbers you are quoting are on an original sum bassis. There are no official values available for accrual numbers, which include relending and interest accrual. The IMF and OECD are attempting to assemble the statistics. Simple calculations give the number 21 $T. FOA thinks this is higher, perhaps around 40 $T.

The Market Cap of the US equity markets stands at some 17 $T. Global Market Cap is about 32 $T. Yes, the US bubble is (was?) over half.
USAGOLD
(01/04/2000; 08:42:21 MDT - Msg ID: 22238)
Today's Gold Market: Bug Remediation Times Two
Market Report (1/4/00): When the dollar and U.S. Treasuries took a
major hit yesterday and the financial pundits blamed it on market
remediation of successful Y2K remediation, many in the gold market
braced themselves for remediation in the gold market as well. And
remediation there has been -- almost $10 worth at one point and now it
looks like our old friend -- Yellow -- is saying enough is enough and
has retraced about $3.50 of that loss. We'll see if the bounce becomes a
trend.

Meanwhile, the equities markets have been bitten by a bug of their own
called "interest rate remediation" courtesy of the Fed. Since Y2K is no
longer a problem, the Fed appears to be reaching for the bug spray to
deal with the "maniacs" on Wall Street. Every bug has its day...and its
remedy. At last look the S&P was down a formidable 16.70 on the Globex
and the DJIA was in the usual
"my-computer-trading-program-made-me-do-it" lock step with the S&Ps.
Pass out the gas masks.

Previous to this morning's decline, gold had been on a winning streak
partly because of last minute insurance buying by some of the big
players. They are the ones seemingly unwinding their positions in the
early going. Once its over, the market could actually get back to the
base-building business. The amount of money created by the Fed and
pumped into the economy at record levels is no illusion; neither is the
overblown stock market nor the carnage in the U.S. Treasuries market.

When private investors look around at the investment landscape,
opportunities look a bit on the thin side. A drop in the gold price
might be just what these investors are looking for, hence the early
morning bounce from the lows in New York. $280 looks to be at least a
temporary support zone. One London trader was philosophically objective
about the whole thing: "There is good physical demand all the way
down...but it is still pretty quiet. I think we will wait to see what
New York does. They have not traded since last week," the trader said.
Reuters adds this comment: "Once the current spate of sales are absorbed
the market is expected to recover with the short-term objective seen
around $285.00."

So we watch with interest, holders of the bullion itself -- without
angst, without anxiety, without margin calls....

That's it for today. We'll see you here tomorrow.
beesting
(01/04/2000; 08:54:10 MDT - Msg ID: 22239)
Why is Gold taking a hit right now? Some speculation!
http://quote.yahoo.com/m2?uThe European and America's stock markets are all in correction mode, see above URL. It had to happen eventually.

Now, many here believe the Gold markets are manipulated, by the big boys with the solid approval of the US FED. With that in mind, as the stock markets correct in order to prevent a mass exodus from stocks into Gold, the "spot" Gold price is forced down big time to give the illusion that Gold is not a good place to store assets, looking for a home.
If Gold was climbing real fast today, it could spark a landslide correction in stocks.Follow the mob mentality.

FWIW......beesting.
The Invisible Hand
(01/04/2000; 09:03:09 MDT - Msg ID: 22240)
TB 2000
http://hv.greenspun.com/bboard/q-and-a.tcl?topic=TimeBomb%202000%20%28Y2000%29PH in LA,
This should be the link
SteveH
(01/04/2000; 09:06:15 MDT - Msg ID: 22241)
Beesting
Agreed. Except I believe that gold is so far off most everyone's radar screen that they aren't even looking. Now if gold did another $85 rise and then another $85 rise then I think people would sit up and take notice.

beesting
(01/04/2000; 10:00:31 MDT - Msg ID: 22242)
To FOA
http://www.bis.org/index.htmSteve H- "Good one #22209!"
ORO- Great posts today--Thank You!!

FOA, I have researched the above URL "BIS" site, and my conclusion is, the BIS only conducts business with Central Banks. So, in the recent Dutch sale of Gold, and future Gold buying by the BIS, ALL that Gold would stay withen the Central Banking System, and have NO effect on world "normal consumption" of Gold.

FOA, do you agree with that analysis? Or, do you think the BIS could enter the world Gold market, replace the LBMA, and buy and sell non-paper Gold only?

In My Opinion it would be a large European Bank that would first compete with the LBMA, and then after a collapse of paper Gold, join forces with The LBMA, sometime in the future.

Your thoughts and opinions are always greatly appriciated....beesting.
mhchuck
(01/04/2000; 10:19:30 MDT - Msg ID: 22243)
ARISTOTLE
Aristotle

Thanks for the (what should have been unnecessary) clarification of your thoughts, I did get defensive at the nature of your inquiry because I didn't know the specific "failings" of the Bretton Woods, or the Pre -1933 Gold Standard you requested of me. I should have pleaded my ignorance in the matter.

Sorry I didn't read your Keynes comment in the nature you intended it, but more as a personal criticism. Had I read your words carefully, I wouldn't have made the mistake. You were making a good point, and It was discussed in subsequent posts, that maybe Keynes was indeed the "outright" greater villain (sans even the "wink" and the "economics forum" consideration.)
I regret and apologize for my misunderstanding you.


It seems to me that these so called "monetary scientists" are practicing in a discipline that just won't give itself over to the term " science." Too bad for them...and sadly, tragic for the world.

I contend that the transition to the era of "managed finance" at the expense of "honest money" i.e. the gold standard, was made to accommodate (allow pilfering privileges to) bankers and statist politicians. This is corrupt and dishonest, and has spawned innumerable forms of corollary dishonesty and corruption. While some might say "That's life, we have to live with it," Others, like REP. Ron Paul, of Texas, introduced a bill in Congress to abolish the FED.

The blueprint for this state of affairs crystallizes in the writing of Keyne's. What does this have to do with gold? Plenty, I think, since Keynes was not a friend of gold in the least.

mhchuck.
mhchuck
(01/04/2000; 10:30:29 MDT - Msg ID: 22244)
John Meynard Keynes: The Banker's "Machiavelli"
From 1930..."But we may remind the reader of what he knows well--namely that gold has become part of the apparatus of conservatism and is one of the matters which we cannot expect to see handled without prejudice. One great change, nevertheless--probably in the end, a fatal change--has been effected by our generation. During the war individuals threw their little stocks into the national melting-pots. Wars have sometimes served to disperse gold, as when Alexander scattered the temple hoards of Persia, or Pizarro those of the Incas. But on this occasion war concentrated gold in the vaults of Central Banks; and these banks have not released it. Thus, almost throughout the world, gold has been withdrawn from circulation. It no longer passes from hand to hand, and the touch of the metal has been taken away from men's greedy palms. The little household gods, who dwelt in purses and stocking and tin boxes, have been swallowed by a single golden image in each country, which lives underground and is not seen. Gold is out of sight-gone back again into the soil. But when gods are no longer seen in a yellow panoply walking the earth, we begin to rationalize them; and it is not long before there is nothing left.

.....It is not a far step from this to the beginning of arrangements between central banks by which, without ever formally renouncing the rule of gold, the quantity of metal actually buried in the vaults may come to stand, by a modern alchemy, for what they please, and its value for what they choose. Thus gold, originally stationed in the heaven with his consort silver, as sun and moon, having first doffed his sacred attributes and come to earth as an autocrat, may next descend to the sober status of a constitutional king with a cabinet of banks; and it may never be necessary to proclaim a Republic. But this is not yet--the evolution may be quite otherwise. The friends of gold will have to be extremely wise and moderate if they are to avoid a Revolution."

John Meynard Keynes.

mhchuck.
beesting
(01/04/2000; 10:34:46 MDT - Msg ID: 22245)
CRASH-TIME!!
http://biz.yahoo.com/rf/000104/to.htmlThe London FTSE ends with record point loss!!!
Down 264.3 a 3.8% loss.
Eclipsing the 250 points lost in the 1987 crash!
Article goes on to say,"It's no big deal, only a small correction."
US Stocks are currently nose-diving also!
Keep the faith people, Gold WILL have it's day.....beesting.
CoinGuy
(01/04/2000; 10:47:08 MDT - Msg ID: 22246)
TedW
TedW,
I'm impressed by your forthrightedness, but I think it was uncalled for. I don't think any person knew for sure what was going to happen with Y2K. I respect your willingness to step out and show concern for other peoples welfare. I thought "the bug" could have been a heck of an event as well.

I appreciated all of the articles that were posted here on Y2K(yeah SteveH, you too). They were informative, and got me off my duff to do a little preparing for myself. I learned that it's nice to be more self sufficient. I guess that's why I own gold.

get physical, Armstrong did...

CoinGuy
Cavan Man
(01/04/2000; 11:06:27 MDT - Msg ID: 22247)
Whither gold?
Noon CST

DOW -251
NDQ -125
S&P -38
beesting
(01/04/2000; 11:22:45 MDT - Msg ID: 22248)
Margin Calls Initiated!!
http://quote.yahoo.com/q?s=^DJI&d=tI don't think the PPT can stop it today!
ALL US Stocks Plummeting today!
Today may be known as Black Tuesday with over 2 1/2 hours of stock trading time left.
I'm sure glad I don't have my life savings in stocks, right now!!

Those in the Know.....Buy Gold.....beesting.
silent runner
(01/04/2000; 11:36:42 MDT - Msg ID: 22249)
i confess. i started the meltdown.
being overloaded with gold and silver bullion i decided to buy into a mutual fund. i thought it was sound 20%gold 5%silver all physical purchase and held by the fund the other 75% was made up of 15%aggressive growth stock and solid conservative placements. sorry everyone, oh well if the fund performs as described the metal should make it hold its own. fund sign is prpfx
beesting
(01/04/2000; 11:37:03 MDT - Msg ID: 22250)
For those that insist on staying in Stocks!
http://quote.yahoo.com/q?s=GOLD&d=1dGold Fields Ltd. (NASDAQ -[GOLD]) is up 2.10% for the day!
Those in the Know....Buy Gold.....beesting.
TownCrier
(01/04/2000; 11:41:37 MDT - Msg ID: 22251)
Fed stays on sidelines today in both open market operaions and reserve adjustments via RPs
http://biz.yahoo.com/rf/000104/js.htmlIf you read this article you will see that economist don't have a clue as to what prescription is called for at this time. If the "experts" can't see what must me done (add vs. drain reserves) we are surely on thin ice of some sort.
Blue Sky
(01/04/2000; 11:48:42 MDT - Msg ID: 22252)
Y2Koed,
My computer must have taken a shot to the brain..couldn't pull up the forum..thought it was down.. last post I could get was Dec. 31 A.M.....My bookmark was wrong, or did the url change? I was out of loop quite abit in Dec..
Happy to have found my way, started withdrawal symptoms.
B.S.
nickel62
(01/04/2000; 11:51:15 MDT - Msg ID: 22253)
ORO
Your analysis as usual is very interesting stuff. Thanks for your time.
Cavan Man
(01/04/2000; 11:55:11 MDT - Msg ID: 22254)
beesting
Can you explain....

Stocks down
POG down
"GOLD" up
"NEM" down

I don't get it???????????
ORO
(01/04/2000; 11:58:01 MDT - Msg ID: 22255)
PERMAFROST - "usury"
The line of thinking you put in your last post is near the truth, but far far from it.

The wheat grown by an iron age farmer is 50%+ profit. Only one extra grain was available from agricultural production for every grain sown.

The wage of a laborer is his profit from provision of service.

The businessman's profit is a result of judgement, gumption and the trust of investors (whether justified or not). Trust brings us to the tiny world of top executives of major corporations, where networks of acquaintance, at times older than the nation, make for this important component of the businessman's profit.

It is often profitable to take time from the routine operations of making a living in order to improve the tools of the trade, or to invent new ones. When the economic structure is appropriate, there would be someone who sells these improvements or sells the service of making them. There would be profit for both the tool seller and the tool buyer if the buyer consumed less of his production, and traded the excess for the tools that improve his production. The price the tool buyer is willing to pay is limited in one of three ways. (1) Given an equivalent alternative to the new tool, the lowest cost tool. (2) if the productivity improvement is expected to be very great, the buyer would be willing to pay the portion of his production that is not necessary to assure smooth continuation of his production and does not threaten survival - in short: whatever he can afford. (3) If the expected improvement in future production at the same level of effort can be quantified, the tool buyer will pay a certain portion of the expected improvement in production.

Often times, one sees large scale irrigation systems dating back to the 4th millenium BC in Egypt, for example. The producer/s had undertaken a lifetime's work to improve their lot in life. The second limit, that of the ability to pay was obviously breached. The capacity of the people to do so stems from their coming to an understanding as to the division of labor. There are a few ways to accomplish this feat.
1. The people join together to support the familly of the person taking on the responsibility of making the tools or improvements. The flaw here is in that the person is motivated to put in a lesser effort than he would put into work for his own direct benefit.
2. They all join together and pool the necessary production "surplus" into a "fund". They have one person manage the fund and the project. His task is to find an available and capable person to put in the improvement, negotiate the price, quality, and timing of the work. This contract manager would not necessarily have a large interest in the efficiency of the project, though the problem of the dis-motivation of the person doing the work was solved by putting up a contract to specify what must be complete before payment is made.
3. One producer may calculate that he could obtain a certain excess production in each of the forthcoming seasons if he could get the improvements made, but having dealt with the problems above, he thinks of doing the following. He will borrow from each of the others around him and hire the tool/improvement maker, paying him other's production during the work. The lenders, in order to assure themselves of compensation in the event of the borrower not meeting his obligation, come to demand that the borrower lose his productive property to them if he does not make the promised payments.
Of course, of the many trustworthy people, the one offering the greatest return is the one expecting the greatest benefit from the improvements. In both fear for losing his property and livelyhood, and in his greed for the benefits of the improvements to production, the borrower will keep close tabs on the expenditure of his contractor.

The rate of return that will satisfy the lenders and the borrowers is the interest rate. It would be high enough to entice the lenders not to consume their production, and low enough to allow the borrower a decent return, sufficient to compensate him for the risk of losing his property.

This is the basis of "usury", the "renta", the time value of money. It is the reward for one's foregoing of current consumption for the purpose bettering one's position in the future. It is also the cost for having now, what you could otherwise not afford.
TownCrier
(01/04/2000; 12:04:07 MDT - Msg ID: 22256)
Another gift from the Bank of Japan last night
http://biz.yahoo.com/rf/000103/2c.htmlDollar holders received a new year's gift as the BOJ propped up the American currency in the course its continuing effort toward curbing the escalation of their yen. This is a good bulletpoint-style article that provides an overview of the conditions in place today.

Of particular note, despite the Japan Finance Ministry's efforts through the BOJ in a thin market to get the best bang for their yen, dealers noted that dollar selling interest was strong among interbank operators and by Japanese exporters. In these thin conditions, they said that without further intervention from the BOJ, the dollar could quickly give up its gains.

It should be getting clearer to you by now that if you are holding dollars, you don't have a lock on your own destiny...you're on a tightrope on a windy day, and others are holding the net (if any).
ORO
(01/04/2000; 12:10:51 MDT - Msg ID: 22257)
Silent runner - Casey's portfolio
http://quote.yahoo.com/q?s=prpfx&d=3mhttp://biz.yahoo.com/p/p/prpfx.html - description

http://biz.yahoo.com/p/p/prpfx_h.html - holdings/portfolio

This fund is run according to Casey's structured "permanent portfolio" Which includes gold, silver, TED spread (maybe dropped from the lineup at some point -methinks), Real Estate and natural resource stocks, aggressive growth stocks, and a hefty chunk of cash and equivalents.

It was originally designed to hedge price inflation, credit crunches, and general political/economic/financial instability.
ORO
(01/04/2000; 12:14:52 MDT - Msg ID: 22258)
Beesting, Nickel 62 - all
Thanks.

If you care to spend some time on it, please do question and comment.
Twice Discipled
(01/04/2000; 12:18:33 MDT - Msg ID: 22259)
Bars vs. Coins
Are 1 oz bars considered bullion?
Are there any disadvantages to owning a bar instead of a coin?
I have never seen this discussed before and I am considering a few more oz's as they continue to discourage AU purchases by sheople as the stock market falls.

Thanks in advance,
Twice Discipled
TownCrier
(01/04/2000; 12:38:41 MDT - Msg ID: 22260)
Mull this one over, if you will...
http://biz.yahoo.com/rf/000104/qs.htmlAs revealed by the Dutch bank's release of their weekly balance sheet for last week (ending December 30), it became known that the Dutch central bank moved another �27 million in gold through their stated program of sales conducted clandestinely through the Bank for International Settlements. A Dutch CB spokesman confirmed the action, "The gold reserves went down 27 million euros and we sold three tonnes of gold (last week)."

What we here in The Tower want all of you knights gathered at the round table to appreciate is that this gold was moved during that mid-holiday week...the slowest of all possible weeks in the gold market...and shorted to boot. Does any doubt remain that these sales are officially channelled, and at "official prices" that aren't market dependent? Bottom line: get your own will it is cheaply available at these prevailing market prices...we don't know for how long they will *prevail*.

Sir SteveH, in answer to your inquiry in yesterday's final post; Yes, the ECB partcipates in conformity with the best international practice of periodic gold asset revaluations through, in the ECB's case, quarterly revaluations marked to market. By comparison, the Bank of Canada we believe revalues their gold assets weekly. From our above discussion, you can readily see that a misguided market price which is improperly low has an adverse effect on these most important CB (and personal) assets.
TownCrier
(01/04/2000; 12:58:02 MDT - Msg ID: 22261)
Sir Twice Discipled's questions...
"Are 1 oz bars considered bullion?" --Yes.

"Are there any disadvantages to owning a bar instead of a coin?" --On a bullion to bullion comparison, and assuming you won't adopt a "day-trader" strategy of frequent buys and sales on every price swing, it comes down to personal preference. I mention the day-trader bit because on frequent turnover of bullion, you might find there to be some small advantage in the premium spread betweed buy and sell prices. And further, there is the chance that as one form of gold comes "into vogue," it may command a larger premium over other forms...just like one beanie-baby versus another. But in general, bullion is bullion...solid gold.

There are possibly some other subtle elements that MK's near 30 years of experience might reveal. Give Michael a call (800-869-5115) and chat things over. He's a great one to talk with, and there's never any pressure for you to buy. He's all about helping people live under their own terms. A most noble businessman if ever there was one! Here in The Tower we'll also be putting his service to use. As Sir beesting says, "Those in the know...buy gold."
Strad Master
(01/04/2000; 13:07:51 MDT - Msg ID: 22262)
Interest(ing) juxtaposition
I just looked over at Quote com and found these two market news items back-to-back. I find their juxtapositon to be quite fascinating. Make of them what you will:

Market Update: Tues., Jan. 4, 2000

Stocks opened sharply lower this morning, prompted by weakness in the bond market. After ignoring the bonds for a little over two months, traders coming back from the New Year's weekend found that they could no longer be disregarded with the yield on the thirty-year Treasury bond trading at its highest levels in the past two years. The sell-off in bonds has sparked a worldwide fear of rate hikes, which is focused on the Federal Reserve meeting the first week of February. The growing concern is that in order to prevent any disasters that could come as a result of Y2K, the Fed took a much looser approach to monetary policy than intended to maintain to boost liquidity. As a result, a series of rate hikes is now required in order for the Fed to reign in the economy.

Clinton Renominates Greenspan

Alan Greenspan, who has guided the nation's monetary policy since Ronald Reagan was president, has been chosen by President Clinton to serve a fourth term as chairman of the Federal Reserve, White House officials said.

Meanwhile the Dow is down 360 points!
TownCrier
(01/04/2000; 13:27:33 MDT - Msg ID: 22263)
Clinton Nominates Greenspan for 4th Term as U.S. Federal Reserve Chairman
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=aa4c75a52f59edbe648bf14f78427dc1Rather surprising that this news didn't prop up the stock markets more than it did. But then again, how much worse might things have been?

This article is a must read. Speaking for myself, knowing Chairman Greenspan's favorable disposition toward gold, I'm pleased to see him remain at the helm if/when this goldilocks economy comes unglued. (Even Bloomberg reports that the Fed is in a delicate spot.) The Chairman said he accepted the re-nomination because he's "enjoyed every minute...It's truly been an extraordinary challenge."

Getting to Know the Man...

On a personal note, Bloomberg wrote of the 73-year old Fed Chairman:

"---Greenspan is a devoted tennis player and a fixture on
Washington's social scene. He's a disciple of free-market
novelist Ayn Rand, and for several years in his youth, a
professional jazz musician.
"I played tenor saxophone, clarinet and bass clarinet. If I
were a lot better I would probably be still doing that at the
moment," Greenspan told the House Banking Committee
on Feb. 11, 1999.
Greenspan is married to NBC News correspondent Andrea
Mitchell. ----"
beesting
(01/04/2000; 13:58:58 MDT - Msg ID: 22264)
Hi, Cavan Man--Can I explain stock actions--
I can only guess why NASDAQ- ("GOLD") is going up in price, while everything else is going down.
Gold Fields Ltd. is a newly formed company(1999), that last week completed another phase of their of their formation, 100% ownership of St. Helena Gold Mines.

They consolidated several smaller Gold mines into one big company.( 2nd largest in South Africa behind Anglogold)Now produce over 4 million ounces of Gold annually.
It's my understanding their hedge book is very small, and their making every effort to stop hedging complete-ly.They are dependent on a rise-ing price of Gold for their profits. South African Gold mines and Gold Companys have historicaly paid much better dividends than all the other Gold mines in the world.They are making every effort to help cause the price of Gold to rise.(bought Gold at the 2nd BOE auction)The president of the company has publicly stated, he feels the price of Gold is going to rise.They have recently opened an office in Denver USA, a gathering site for major companies in the Gold business.

IMHO the stock was trading low awaiting the final outcome of the St. Helena merger, now that the merger is complete,(Dec.28, 1999) as the price of Gold rises, the stock price of Gold Fields will rise in relation. I honestly feel as the price of Gold moves towards $400, Gold Fields stock price should climb to the $40 to $50 Dollar range.

Of course Cavan Man, none of this is meant as stock advice, only a few random thoughts.
Thank You for asking......beesting.
TheStranger
(01/04/2000; 14:16:06 MDT - Msg ID: 22265)
Gold Closes At Its High Of The Day In New York
Sure, it was higher last night, but at least it rallied this afternoon. I don't know if this takes care of all the misguided y2k fugitives or not, but I suspect it does. In fact, I think much of the selling was from those who had covered their shorts prior to New Years and simply wanted to replace their positions. But, whatever it was, it is probably already over.

Nearly everyone is expecting higher interest rates now. That means nearly everyone is finally seeing the inflation argument. Boy, what a difference a year makes.

If you didn't buy gold today, you will soon wish you had.
TheStranger
(01/04/2000; 14:22:59 MDT - Msg ID: 22266)
Sopping Up The Liquidity?
Lots of people think the Fed is going to run around sopping up liquidity now that y2k is passed. Ask yourself what you would do if you were the Fed and you saw the stock market in freefall. Would you contract the money supply?
CoinGuy
(01/04/2000; 15:43:47 MDT - Msg ID: 22267)
Stranger
I agree with you about contracting the liquidity injected into the system. Didn't the institutional investors realize it would be taken out on the other side of Y2K? I guess my simple logic would go like this: Y2K bad = stocks down, Y2K good + Fed contraction via RA's + fed tightening( probably throw maniacal valuations in here as well)+ long bond = stocks down.

As a side, any way to trade stocks cheap, via the AAA account?

CoinGuy
R Powell
(01/04/2000; 15:55:39 MDT - Msg ID: 22268)
Good read
Found this from Mr. or Ms. Permabear on Kitco's forum www. gold-eagle. com/editorials 00hickel 010500. html
Netking
(01/04/2000; 15:57:25 MDT - Msg ID: 22269)
Hold that gold...
Bloodbath in Techland (aka Bubble.com)
http://cnnfn.com/2000/01/04/markets/techwrap/

Meltdown on Wallstreet' http://cnnfn.com/2000/01/04/markets/markets_newyork/
TownCrier
(01/04/2000; 16:25:09 MDT - Msg ID: 22270)
Must Read/Must Comprehend the Implications
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=21aa0d674a00a2c4ec561fedd090a51bThis offering from Bloomberg does a nice job giving you some of the insight you need into the forces at work.

In a nutshell, the Japanese government is trying to foster an economic recovery fueled by international demand for Japanese exports...demand that is curbed if the yen is "expensive" compared to the importing nation's own currency. To that end, even while other market forces are trying drive the dollar lower against the yen, the Bank of Japan is right there to meet them halfway...selling yen and buying dollars such that the exchange rate between these two currencies is maintained at roughly �102 = $1. The larger effect is that they both go into the toilet together while the euro remains safely on the sidelines. Grab your own safe seat on the sidelines with gold...a safe seat that also offers a potentially thrilling rocket ride to the moon.
lamprey_65
(01/04/2000; 16:25:35 MDT - Msg ID: 22271)
TheStranger...Today was NOTHING
It seems few understand where the averages are in relation to both the '82 Bull Market trend and the '95 "Super Bull" Trend. Let me throw out a few numbers:

The DOW closed today at 10,997.93...just to touch the '95 up trendline, it could fall all the way to 9700 -- this bull move would STILL BE INTACT!

The DOW would have to break below 6700 or so to break the '82 Bull Market trend line.

It has been my opinion that we were starting to get our much needed pullback in October when the markets were paying attention to rising interest rates...unfortunately, "Easy Al" threw money into the system (just like he did in '98) to protect against Y2K and the financials used it for a quick pop in the equity high fliers (what else could they do with it? -- 90 days is too short for loans). This hyper move since '95 has been too much, too fast...it's only FED liquidity that's propt it up for so long.

Today should be nothing less than a beginning of a much deeper correction...in a rational environment - we don't live in such times. Today's move down is nothing...until the buy on dips crowd learns some fear, I'm afraid 400 points on the DOW is not going to mean much -- we need several days like today just for starters.

Lamprey
Cavan Man
(01/04/2000; 16:33:01 MDT - Msg ID: 22272)
Townie
Didn't Another and FOA warn of this?

"We told them long ago to buy gold but listen they would not." Something to that effect?

I recall that statement about the time FOA was verbally mauled by someone exhibiting sychophantic behaviour.
TheStranger
(01/04/2000; 16:47:36 MDT - Msg ID: 22273)
Lamprey and Coin Guy
You guys have a better grasp of this stuff than most professionals. Gees, maybe you are professionals.

Coin Guy, I can't answer your question about AAA. Because the forum is a proprietary service of USAGOLD, I am committed to keeping my relationships here away from my professional activities. I hope you understand. But thanks for asking.
nickel62
(01/04/2000; 18:09:00 MDT - Msg ID: 22274)
Lamphrey
I enjoyed your post and couldn't agree with you more. The stock markets have gotten so far removed from reality that they don't even seem to reflect anything except gambling anymore. Very sad and very dangerous.
TownCrier
(01/04/2000; 18:23:34 MDT - Msg ID: 22275)
Sir Cavan Man's 22272... Right you are!
I do recall that phrase you mentioned distinctly provided for our benefit long ago. And a quick check of the archives yielded this related tidbit as recently as yesterday from Sir FOA:

"Another force is at work in the world today and it is attacking the dollar behind the bushes. ... The Japanese are and always have been up to their eyeballs in US paper. They have to stay this way because of their dollar trade deficit. As they continue to decend into deflation, the strong Yen still locks their hands from selling our debt and the BOJ has always known this. So, they continue to add dollar reserves on balance with this deficit in an effort to keep the Yen from rising even higher and killing their US market share. These people are done in and will eventually print Yen (hyperinflate) in and effort to match any US dollar price inflation. Locked step to the end!"

And also, our Tower's minions game up with this other related sentiment from the archives that may be of interest in this matter. You've gotta love the archives, and having trained minions to search them for you!

These are excerpts from Sir Aragorn III (2/20/99; 19:17:11MDT - Msg ID:2603):

"Answer to Stranger's Question #4: 'Is this week's decline in the yen temporary?'
Everthing is relative. I trust that you mean a decline relative to the dollar? As I showed in the original Msg 2506 (repeated below for continuity) the yen has every opportunity to rise against the dollar, or they could lock arms and stride step-by-step into fiat oblivion, neither rising or falling significantly against the other, but falling steadily against real goods and gold. It seems that these chapters are soon to be written."

[TownCrier's note: for perspective, The Stranger's question came after a 6-week period in which the yen had fallen from �110 to over �120 against the dollar, over half of that coming in that recently elapsed week. Followning this post, the yen did in fact promptly stabilize at �122 +/- for a four month period, then began to steadily strengthen against the dollar from July's �122 level to September �105, at which point it has essentially leveled off "in lock step" with the dollar amidst many BOJ interventions along the way. Continuing with some catchy tidbits...]

"The stock market is a bee upon your face. (But the bond market is a rhino charging at your back!) One may sting. The other will change your life. [From elsewhere in this post it was stated: "Woe is he that does not understand the dollar stands upon bonds alone."]
+
got perspective?"
koan
(01/04/2000; 18:48:02 MDT - Msg ID: 22276)
fed and macro economic trend
If the mkt goes into freefall the fed will increase liquidity.

I think the important concept that is being overlooked by many regarding the valuation of all stock mkts, is that whereas the stock mkt may be overvalued, in the short run, the technological revolution is impossible to quantify other than to say it sits right up there with the discovery of fire, the invention of farming and the industrial revolution in its impact on our species.

General productivity will keep rising at an exponential rate, which cannot be understood or quantified; and which means no one can really tell if our stock mkt is overvalued or not, in the long run (long run - just a few years as most )
Leigh
(01/04/2000; 18:52:13 MDT - Msg ID: 22277)
Town Crier, Cavan Man
The post in which Another talks about Japan is #14770 on September 28, 1999. That was an unforgettable one.
Cavan Man
(01/04/2000; 19:01:50 MDT - Msg ID: 22278)
Leigh
Thanks. That sent a chill down my spine then and it does now as well. My daughter wants me to put clothes on her "naked barbie" so must run...CM
Netking
(01/04/2000; 19:06:57 MDT - Msg ID: 22279)
Y2K Apologies continue
Ed Yardeni from Deutsche Bank securities on CNN just now; "I was wrong about Y2K" ... bring on the sackcloth & ashes guys!
TownCrier
(01/04/2000; 19:07:40 MDT - Msg ID: 22280)
Thanks for the assist, Leigh.
On the issue of the stock market valuation vis-�-vis the technology revolution, I always knew that the Fed Chairman was a visitor to this site. Now I know who he is...thanks for showing yourself, "koan." And congratulations on your re-nomination today. You've really got your hands full with this one. But don't worry too much about engineering a soft landing, just make sure it's a golden landing. :-)
RossL
(01/04/2000; 19:24:18 MDT - Msg ID: 22281)
Japan, Hong Kong, Singapore, Korea, NZ, Australia
http://quote.yahoo.com/m2?uMarkets take a dive in the opening hours.
FOA
(01/04/2000; 19:24:50 MDT - Msg ID: 22282)
Comment
ALL:
I guess everyone knows by now that I am somewhat "irregular" in my replies here. Still, I read
most everything when time comes my way. My linkup saves all the forum (even when I'm not around).
A few quick notes:

Aristotle (01/03/00; 17:39:33MDT - Msg ID:22153)
Aristotle, you prove the point that one person cannot understand everyone, nor can everyone understand the thoughts of one. You have a wonderful way of presenting things. Thanks, so much!

PH in LA (01/03/00; 20:59:55MDT - Msg ID:22175)
Another's e-mail address
" Geneva Steel Company, located in Provo, Utah;" ????

PH,
I'm thinking real hard as to why someone would set up in Provo to do that,,,,,,,,,'still thinking.
No, can't make any connection in my mind. (smile)

There is an old saying; "children of the sand curse the sun, yet run from the night". Adults often act the same way when they lack understanding of the world around them.

I'll be back when I can, PH. And be certain, so will Another.

FOA
TheStranger
(01/04/2000; 19:26:15 MDT - Msg ID: 22283)
koan and Japan
koan - that is the answer I was looking for, especially in an election year. We shall see. BTW, thanks for everything, buddy. You are Joe Cool in my book.

For all my crowing about Japan, I sold out today. I hope nobody invested there in recent days because of anything I said. (I told Jon just 2 days ago that I saw no reason to sell). The problem is the weakness in New York is of a magnitude that I would expect it to continue for awhile and to spread round the world. Again, we shall see.

Follow the yellow brick road!
TownCrier
(01/04/2000; 19:29:42 MDT - Msg ID: 22284)
Sir ORO, excellent posts today!
Thanks for sharing your time and talent. For lunch I had The Tower's kitchen staff send up a bite...I enjoyed a toasted sandwich, bowl of soup, and fine french roast espresso while reading every word. Much better than anything offered by the BBC! Thanks again.
TheStranger
(01/04/2000; 19:35:02 MDT - Msg ID: 22285)
Top Stocks For '00
http://biz.yahoo.com/rf/000104/4k.htmlI just found out today that Newmont Mining made Goldman Sachs' top stocks pick list for 2000. Homestake is on Standard and Poors' pick list for 2000. Hey, we're starting to get respectable around here!
canamami
(01/04/2000; 19:41:25 MDT - Msg ID: 22286)
Town Crier, koan
In defence of koan, his theory has been propogated by George Gilder for years, and Gilder is the pre-eminent thinker of our time (at least outside the world of science, about which I know next to nothing).

Not a day goes by without my questioning the wisdom of opting for gold, a decision contrary to most of my beliefs prior to about July/August of last year. Technology and mutual funds may have made the equities markets a viable investment vehicle for many due to risk and cost reduction, thereby causing a permanent upward revaluation in shares' values. Moreover, relatively few predicted the ease with which the equities markets shook off last summer/fall's correction (though perhaps at the price of an influx of liquidity which has yet to make itself fully manifest). On the other hand, current valuations just defy logic and sanity, and must somehow be reconciled to reality, at some point.

For good or evil, technology has further democratized our society. Without a doubt, real knowledge of the markets and the economy is more diffused than ever. However, the "quantum" of knowledge is not as important as the "direction" of knowledge- i.e., in other words, sometimes one is better off knowing less. Better to have 2 units of knowledge, and make the right decision based on expert advice, than to possess 5 units of knowledge and get it wrong on a do-it-yourself basis. To use a example from the field in which I was trained: Who is better off, the unsophisticated client who allows an expert to do it right, or an intelligent layman who acts as his own lawyer, inflicting harm on himself becuase he knew just enough to get himself in trouble?

Perhaps we in North America are going through what the Albanians went through, only we are somewhat further along in the process. They went through their primitive Ponzi scheme, and we are now going through the same process, but at a more advanced level. To steal from Blake, perhaps we are losing innocence through experience, only to achieve a higher order of innocence, as part of the diffusion of knowledge through our society and the achieving of a broader-based maturation of our society.

I forgot the original point of this, so I'll stop here.

R Powell
(01/04/2000; 20:01:53 MDT - Msg ID: 22287)
Agreement with TownCrier
I was shocked by your equating Koan with the Fed chairman so I reread Mr. Koan's post. I agree with both the opinion of the post and with your opinion that if those weren't the chairman's words they must have been written by his speechwriter. Sure sounds like him replying to a congressional question. Mr. Koan, thanks for the post.
TownCrier
(01/04/2000; 20:02:50 MDT - Msg ID: 22288)
Sir canamami...
"In defence of koan..."???
Have we mixed signals again? My comment regarding Sir koan's recent post was highly complimentary. In today's search for news I twice encountered seperate quotes by the Fed Chairman that were exactly echoed by the words of koan. A review of the TownCrier announcement of Mr. Greenspan's re-nomination will confirm that I personally hold the Fed Chairman in highest regard. Unlike the impression conveyed by some who fault him for the stock market's excesses, I have never personally had my arm twisted by Alan forcing me to participate in those excesses. I have used the opportunity to add to my gold holdings. If/when the markets collapse from their own weight, I will be watching from atop The Tower with calm emotional detachment. I'm unsure of your predispostion toward Mr. Greenspan, but I can see now with hindsight that the possiblity existed for those that held the Chairman in contempt to see my playful post to koan as derisive. I assure you all, it was not. I like them both. Perhaps I'd better turn the rooftop over to another 'Crier for the GOLDEN VIEW...
TheStranger
(01/04/2000; 20:08:18 MDT - Msg ID: 22289)
Gold Up 30 Cents in Hong Kong Amidst Stock Market Carnage
The second leg of the new bull(ion) market has begun!
CoinGuy
(01/04/2000; 20:11:43 MDT - Msg ID: 22290)
Stranger
No problem here at all...I should do the research myself anyway, and I understand your respecting the forum. I should have too.

Got physical, might go Newmont Mining,

CoinGuy
canamami
(01/04/2000; 20:14:33 MDT - Msg ID: 22291)
Reply to Town Crier
I'M the one who should stop posting, in that it seems I'm conveying the wrong impression in my recent posts. I understood your comment to koan to be a "playful" one, not an attack. It did appear you were expressing disagreement with koan's views, but like I said in a "playful" manner.

Re my views of Greenspan, he was an associate of Rand's, so he must be okay. My view is that Greenspan is Chairman of the Fed, not dictator of the Fed. The Fed's actions are not necessarily Greenspan's, IMHO.

Re your posts, they are excellent and informative, and I greatly enjoy and appreciate them. I think I need a posting holiday, to facilitate conveying my intended meanings more accurately.
CoinGuy
(01/04/2000; 20:31:31 MDT - Msg ID: 22292)
Asia
WOW! The Hang Seng down 1000 pts in the first five minutes of trading? Japan down 770. Could tomorrow be as interesting in the US? Or, are the Asians following our cue from today and the bull market continues tomorrow? Anyones guess...

Coinguy
Peter Asher
(01/04/2000; 20:38:13 MDT - Msg ID: 22293)
They don't GET it!

Yardini on CNN says "This may even give the economy a boost. People will be selling their stocks now and buying things with the money."

FACT, the sellers of stock have had money to buy things all the way up. The "flow through" is a zero sum game. Money "in" the market equals money "out" of the market. What will change is that lower prices will mean less money is circulating through the market as a whole. More importantly, as equity prices decline, less outstanding margin will mean some of the money supply goes back from the brokerage houses, to their banks and then into the black hole of the Fed from whence it came.

The economy will be altered by the fact of affluent people who have put off their furniture purchases and home improvements, now doing so instead of feeding the market. Conversely, what ever people were buying with their hot and heavy profits will have a slow down.

The other thing that will happen, is that when people realize that their "Perceived" savings were just that, then more of their money will go into real savings and less into spending.

There will be a shake out and hopefully a return to more rational consumerism and the better survival of those who produce quality goods and services in a sane economic world.
BTD
(01/04/2000; 20:43:08 MDT - Msg ID: 22294)
Ray Patten - Crude Oil Rally
http://pub3.ezboard.com/fdownstreamventurespetroleummarkets.showMessage?topicID=17.topic"Does anyone know if there is any particular reason why crude oil had a 70 point rally from last night's low. I've searched some news sites but can't find anything."

There is an article on the Petroleum Markets forum (see link above) about 3 refineries that are having problems.
Solomon Weaver
(01/04/2000; 20:43:48 MDT - Msg ID: 22295)
gold down to protect hedge books
beesting (1/4/00; 8:54:10MDT - Msg ID:22239)
Why is Gold taking a hit right now? Some speculation!
http://quote.yahoo.com/m2?u
The European and America's stock markets are all in correction mode, see above URL. It had to happen eventually.

Now, many here believe the Gold markets are manipulated, by the big boys with the solid approval of the US FED. With that in mind, as the stock markets correct in order to prevent a mass exodus from stocks into Gold, the "spot" Gold price is forced down big time to give the illusion that Gold is not a good place to store assets, looking for a home.
If Gold was climbing real fast today, it could spark a landslide correction in stocks.Follow the mob mentality.

----
Beesting

Perhaps Alan Greenspan and his buddies, when looking at the structure of hedgebooks like those at LTCM, have discovered that the gold carry trade is jeopardizing almost every one of the big ones....

I have always had my personal belief the the "plunge" protection team works on the S&P 500 and at the same time they can be called the "surge" protection team when speaking of gold.

If there is a big drop in the major US stock indexes, there is certainly a lot of margin money being called in...possibly requiring physical gold longs to cash in so they can ante up on their losses....with so many longs in the stock market melting down the big "too big to fail" hedgebooks can't afford misbehavior in gold.

Poor old Solomon
ORO
(01/04/2000; 21:14:10 MDT - Msg ID: 22296)
FOA, TownCrier - a request
If I may, I would like to ask you both for comments on the posts I put up earlier today.

The historical post and the bullion banking post contain many details. Many of these are difficult to estimate, some are shrouded in an opaque fog where barely an outline can be discerned, let alone seeing an image to the detailed level I've drawn.
I am trying to put together a more complete and more accurate historical overview.
FOA any comments - particularly errors of fact you may (probably will) find, would be greatly appreciated.

Thank you.

All, of course, are invited to comment.
lamprey_65
(01/04/2000; 21:16:46 MDT - Msg ID: 22297)
Batten down the hatches!
http://biz.yahoo.com/rf/000104/beq.htmlI don't think we'll know for sure until we get at least one failed bounce...nevertheless, it's sure looking like rough seas!

Lamprey
lamprey_65
(01/04/2000; 21:20:39 MDT - Msg ID: 22298)
Updated Story
http://biz.yahoo.com/rf/000104/bes.html
Peter Asher
(01/04/2000; 21:42:50 MDT - Msg ID: 22300)
koan (1/4/00; 18:48:02MDT - Msg ID:22276)

I have always agreed with you regarding the exponential expansion of this "Second"technological revolution and it's unique place in history. However, the "Stock market" as a whole, has many companies that are not part of this new business world and some will even be hurt or wiped out by it. For instance, what will on-line commerce do to Wall-Mart, Target, and Penny's and Sears etc. Or conversely will they overpower Net-only rivals with their own on-line operations.

It would be interesting to know what percentage of overall Market Capitalization, or overall corporate intrinsic value, is part of this technological paradigm.
lamprey_65
(01/04/2000; 22:17:23 MDT - Msg ID: 22301)
The Internet Revolution
Are we really seeing a revolution?...I believe we are, of sorts. I do believe, however, that it may not be as great in some areas as people believe, and possibly greater than they think in others.

For example, let's look at a favorite of mine -- Ebay. I love the company - I'm a coin collector and have found their auction process to be the very best on the net. The company is growing rapidly and is profitable NOW. I have perused other auctions such as Yahoo's -- no contest...Ebay is far superior in number of items offered, quality, and number of bidders. Ebay already has critical mass and should continue to remain far ahead of competitors.

HOWEVER, the stock valuation is completely ludicrous. There simply is no justification to pay a 2000+ PE for anything, imo. The point here is -- one must separate the company from the stock. If Ebay ever sports a PE under 50, I'll start to be interested.

Now, that's auctions - business to consumer (Amazon, Cyberian Outpost, Buy.com, etc. etc. etc.). Forget it. It's the Sears catalogue concept online and it's just too early to figure out who will survive and how long before any of these companies can make money. In addition, although growing rapidly, let's get a grip...there is an upper limit to how much people will buy online, no matter what hype CNBC et al may tell us. Most people like to shop...they like to actually see and feel what they are buying and many enjoy the social experience. This sector of the net is not a good investment IN MY OPINION. (Of course, that does not mean you can't make money trading the stocks!)

Next, the picks and shovels...Rare Medium or Razorfish and the like. They make websites and provide integrated software solutions for companies establishing an online presence. They really are like the sellers of picks and shovels during the gold rush...they should make money regardless of how well individual businesses do (as a matter of fact, they are turning away contracts, they are so busy). Definately a sector to look at, but also currently overextended - like just about everything else.

The last on my list...business to business. This really will be huge and where much of the revolution takes place...the buying of items by businesses through online companies. I will be researching this sector and hope to build some long positions AFTER we have a real pullback (not holding my breath!).

After a year of trading and watching this sector, I truly believe that most of it is hype and that most of the i-net companies on the NASDAQ will not survive (Anyone ever heard of CyberGold?...amazing what venture capital can do to help you get a listing).

A little off topic, but hopefully helpful to someone here. Yes, this is a true revolution -- no, the stock prices, for the most part, are not justified.

Lamprey
lamprey_65
(01/04/2000; 22:18:36 MDT - Msg ID: 22302)
Disclosure
I hold no positions in the stocks mentioned in my last post...nor do I intend to in the NEAR future.

L.
Mr Gresham
(01/04/2000; 22:26:54 MDT - Msg ID: 22303)
Analysis of M3 increase by Paul Kasriel
http://www.ntrs.com/rd/rd35/pos2000/pos_econ_04jan.htmlPassing the day at Prudent Bear's chat threads; wanna see a bunch of happy bears?! This was a link from there -- a lot of people digging up good stuff!
SteveH
(01/04/2000; 22:44:16 MDT - Msg ID: 22304)
Feedback and ORO
Oro,

Your on a roll today. Am still digesting. And for your pleasure, I got this question from a person. What are your thoughts?

Not to nit pick, but you mention that the Euro is not as indebted as the
dollar.

If you go to the EU Web page and add up the cumulative debt of the 11 Euro
states you will find that the ratio of debt to GDP exceeds that of the US.

This is the one element that has made the potential for the success of the
Euro suspect to me.
GFD
(01/04/2000; 23:16:59 MDT - Msg ID: 22305)
Koan
The thing with "technological revolution" is that it will not have a uniform impact on the economy. The net will certainly allow revolutionary things to be done in the area of business to business interactions. And it will allow catalog companies to operate more efficiently. But it certainly will not make it any easier to produce a ton of steel.

The markets reflect this spottiness. Some areas are very hot but those sectors reflecting the bread and butter of the economy have definitely seen better days. If you could filther out the noise caused by the net hype and the distortions by a lot of liquidity chasing a relatively select and scarce group of stocks I wonder what kind of a picture the overall economy would present.

SteveH
(01/04/2000; 23:21:43 MDT - Msg ID: 22306)
Interesting
http://www3.techstocks.com/stocktalk/msg.gsp?msgid=12461836eom
TownCrier
(01/04/2000; 23:31:23 MDT - Msg ID: 22307)
The GOLDEN VIEW from The Tower
To borrow from Charles Dickens, "It was the best of times; it was the worst of times." In a 24-hr period, we've been given a lesson how quickly fortunes can change on the stock market. Yesterday after a session of wild price swings, the Nasdaq Composite Index closed at its highest mark ever, and today it closed down, suffering its largest point loss in Nasdaq history (229 points, 5.7%). Far be it from us to rub salt in others wounds, so we'll move on without further comment.

From The Tower's lofty view over the financial plains, here is the reason bonds collapsed yesterday but recovered today, and why gold was sold down today despite the stock market woes.

Fortunately for all of us (we hope you agree), the world didn't end with the Century Date Change. Thanks to this pleasant discovery, many of those who had taken defensive financial positions likely resolved themselves when the Sun came up on Saturday morning to liquidate these postions at their first opportunity in order to join the party on Wall Street--a party which they watched from the sidelines in the final days of 1999...pouting no doubt, (but hopefully stress-free over the uncertainty of the coming rollover.)

Those that had bonds to sell were able to do so Monday because the bond market was open Monday, but not so with gold. As a result, the bond closed sharply lower yesterday, and was better positioned to gain today in a flight to safety as the stock market tanked. Those who had predetermined to sell their gold were naturally doing so today on this first day back from the holiday...overshadowing any similar flight to safety effects that benefited the bonds today. You'll also recall from our post earlier in the day that the Dutch Central Bank comfortably moved three tonnes through the BIS during the "non-week" between the two holidays last week. When we pause to reflect on the situation, we can not conceive of any condition that would justify gold prices being sold lower by any rational trader. (That is, unless the world were to be swept suddenly by another Asian Contagion-style currency crisis in which citizens were forced to spend their only remaining viable savings--with the dollar remaining immune once again from the contagion. We see this as unlikely.) While we have been gold buyers out of prudence these many past months, we are now buyers with the added confidence that no amount of waiting would likely yield significantly better prices.

Many people have tried to call the bottom...and somebody's got to get it right at some point. The $250's in August was likely it, and we seem to have shaken through the final downside-correction to the Washington Agreement run-up. In this spate of post-Y2K selling, spot gold reached $282.20 when NY closed on this first round-the-world trading day since last Thursday's close of markets for the New Year's holiday. The February futures contract on COMEX closed down $5.90 to end at $283.70.

There is no open interest in the current COMEX contract month, but February gold futures stood at 67,872 contracts when trading began this morning. Gold movement in the warehouse was limited to 2 kilos being withdrawn from the Scotia Mocatta vault.

OIL

February crude also traded sharply lower on NYMEX's first day back from the four day weekend. It slid in early trade by 85�, likely on the same initial knee-jerk sale instinct that swept through bonds yesterday and gold today. Before trading concluded for the day, this effect had largely been worked through, and short covering ahead of the API's anticipated afternoon report of crude stockpile declines lifted crude back up to its starting point, ending the day down only 5�. Brokers estimated a decline in U.S. crude inventory by 2 - 4 million barrels, but the report released at day's end revealed a somewhat disappointing decline of only 1.568 million barrels. We'll wait and see what tomorrow's DOE data reveals.

And that's the view from here...after the close.
ORO
(01/05/2000; 00:39:10 MDT - Msg ID: 22308)
SteveH - Internal vs external debt
The main point is that the EU and most of its members have no external debt. They are net creditors of other countries. There is no overhang of EU bonds in every central bank in the world.

The internal debt is similar to debts within your household. The familly is not in danger of losing the house because of it.
Netking
(01/05/2000; 00:56:05 MDT - Msg ID: 22309)
Nasdaq - The morning after the day before
http://dailynews.yahoo.com/h/nm/20000104/bs/stocks_nasdaq_7.htmlAfter Nasdaq's biggest ever one day points fall (8th in terms of percent) what's in store today? More of the same or consolidation or mutuals looking for buying oportunities(smile).
SteveH
(01/05/2000; 00:58:09 MDT - Msg ID: 22310)
ORO
You're incredible, man!

I spent several hours reading and re-reading your material.

You are coorborating Another and FOA. You are validating their message. You are saying that physical gold delivery is in jeapordy against paper-contracts.

Most importantly you are saying that gold's role in world economic affairs is as strong as it ever was, it has merely been placed in reserve ball section of the big economic pinball game in order to allow the dollar ball its turn on the board and it has been bouncing around since 1971. As long as the dollar was the only ball able to be played, all the bumpers and flippers have been keeping it bouncing around and using the ball to keep the game the game going.

For some reason, it became politically unexpedient to have gold be tradeable currency when the dollar defaulted gold in 1971. It even became dangerous to have gold be considered an alternative and so it was allowed to drop in price to where we are today. And that is why gold isn't popular and yet remains the most sought after asset next to oil of any asset. Incredible move on the players part.

To rephrase, gold and gold backed currency abounded up until 1971. Dollar defaults, then gold begins a ten-year meteoric rise in price until 1980. From 1980 gold is seen as a loosing proposition by citizens while in the background gold is traded off line just like before except with a twist of derivatives and hedges. In the first 3/4 century it was "gold-is-official." In the ensuing years, it was gold is "dead" but it really isn't because we will just use gold and trade it off market and hidden from view but we all know how important it was, is, and will be.

Somewhere along the way and in the last five years, oil demand outstripped the ability of gold production and pricing to keep up and so now we have a supply-demand disparity of 30K tons if I am reading you correctly. That is 30,000 tons of gold that needs to be settled up some how and what we are witnessing now is how the folks who are interested in settling this matter are trying to figure out how to do that without destroying the dollar and causing gold to replace the Euro ball in line for the board or the gold ball from replacing them all on the board. In any event, the way this plays out depends on many factors, none of which you nor I have control over, except to say buy physical now while it is cheap because yours and FOA's and Anothers and MAK's and Ari's and Strangers and Peter's And Gandalfs and TC's and TC's and all the remainder of us believe that no matter what the folks do with flippers and bumbers, the fact remains that the shoot at the bottom, the one between the flippers is ready and waiting for the dollar ball and just because the folks are trying to shake the game table without tilting it, there will be a tilt and the ball will drop and be replaced with the Euro ball. Is that pretty much what you were getting at?
SteveH
(01/05/2000; 01:06:31 MDT - Msg ID: 22311)
repost
www.kitco.comrepost:

Date: Wed Jan 05 2000 02:44
Jack (CaptainKirk...Peabody don't like them banknumber either and dirivatives may ruin Barrack too) ID#210169:
Copyright � 1999 Jack/Kitco Inc. All rights reserved

What if the investments that Barrack has placed the gold loan proceeds in go belly up?

Complacency Abounds

Today's Wall Street Journal was replete with complacency. Of the 53 economists surveyed, not a single one was forecasting an inflation rate ( as measured by the CPI ) of over 3.0% in the first half of the year 2000, and only two forecasted 3%. On average, economists are forecasting only a 2.5% rate of inflation in 1H�00, versus the 2.3% rate at year-end 1999. Given what the commodity indices are telling us ( see my report entitled "Commodity Inflation is Broad-Based" dated December 30, 1999 ) , I would like to take the other side of that trade, particularly if the Fed continues to drag its feet. My position remains that the long bond will see a 7% handle in the first half of this year ( i.e., a 4% risk premium on top of core inflation of over 3% ) .

Why should anyone care? Because of the amount of leverage in the system. The one product area where leverage dwarfs the system is in derivatives. Of the $35.7 trillion in notional value of derivative contracts, some $28.2 trillion ( or 79% ) is related to interest rate instruments. As over 90% of these contracts are "over-the-counter" and 60% have a maturity of greater than 1 year, they expose the participants to greater credit risk and tend to be less liquid. J.P. Morgan ( JPM-$123-SELL ) , Chase Manhattan Corp. ( CMB-$73-SELL ) and Citigroup ( C-$54-Not Rated ) derive the greatest dollar amount of trading revenues from interest rate-related derivatives, but these instruments also represent significant risk to end users ( e.g., Fannie Mae [FNM-$59-SELL], Bank of America [BAC-$49-SELL], First Tennessee National Corp. [FTN-$27-SELL], etc. ) .

Admittedly, as an outsider, an investor can't be 100% sure ( given the poor disclosure ) whether a bank is managing its derivative exposures well. But then again, investors can't be assured that, when rates rise as much as they have, a bank is not in harms way, either. My gut tells me that, after two decades of disinflation ( which tends to create a new permanent mindset ) and repeated benign forecasts ( such as those in today's Wall Street Journal ) in the face of rising pressures, most bankers are not yet positioned for a lasting rise in rates ( see report entitled "Higher Rates Still Impacting Industry" dated December 29, 1999 ) . In short, I expect interest sensitive sources of income to continue to disappoint as the industry adjusts to a new "inflationary" environment. Be long commodities!
canamami
(01/05/2000; 02:03:11 MDT - Msg ID: 22312)
Reply to SteveH
Two quick comments after a quick scan of your excellent, well-reasoned posts.

"Gold was "allowed" to fall." Sounds like it would have to be forced down by one awesome conspiracy, that somehow essentially didn't leak out for a long time. This does not accord with my experience of humanity.

"Gold production could not keep up with oil production". The point being, at the market price of gold and oil. The Cerro Casale reserves, with which you are familiar, is generally viewed as holding about 23 million ounces of reserves - all we need is $350 an ounce gold. We're also aware of a certain, still undeveloped/not fully explored project in the Carlin Trend, which would be in better shape (as well as our pocketbooks) if gold were a good $70 to $120 an ounce higher. I'm sure there are others upon others of possible projects which could fly if the POG were higher. Gold production would then catch up very quickly.
el St.One
(01/05/2000; 02:35:33 MDT - Msg ID: 22313)
Y2K
http://www.dingdingding.com/commentaryMassive Y2K Coverup by some major media houses and government: NO Serious problems after the
rollover! Some talking heads now suggesting that the bug might even have been a hoax! Even Bill Griffeth of CNBC when
interviewing Y2K-expert, Peter DeJager. Don't believe a word of it. There were hundreds of largely unreported, problems and
glitches - some very serious. Watch for our Y2K Coverup story and follow-up right here beginning January 7, 2000. Be
sure to tell your friends and any fact-based or reality-based media you know. We want to encourage any media with a conscience
to report some of these stories. And please send us your emails with any links to Y2K news that we can research and verify.

Is the so-called Y2K problem solved? Worse: Was it all a hoax? Let's turn ... not to the so-called Y2K experts ... but to a
source most of us would agree is reliable, at least in this one instance: "The full impact of the year 2000 computer glitch
will be largely hidden until mid to late January, the head of a U.N.-sponsored Y2K data clearinghouse said on
Wednesday" (ABC News online). According to Bruce McConnell, head of the International Y2K Cooperation Center, which is
funded by the World Bank, "lots of inconveniences" will "'erode productivity and possibly disrupt world trade." Was Y2K all
about the power and water going out on January 1st as some so-called Y2K experts and the major media would have us believe?
Since so little happened on January 1st, was the whole thing a "hoax" as some would suggest?

McConnell said, on December 29, 1999, that "The computers that control electricity and telecommunications perform
management functions for the most part ... And so even if there is a Y2K problem, it doesn't cause the power to go out
or the phones to go out." The question then is this: why is the media basing its reports of total success on the very thing the
government and World Bank say was never a serious problem? And the smaller problems have either not yet been reported - or
have not yet happened - during the first three days of January.
PERMAFROST
(01/05/2000; 03:32:33 MDT - Msg ID: 22314)
ORO Re Profit/Usury/Renta Msg. ID: 22255
Due to ingrained intellectual "habit", You are confusing 'profit' with 'necessary and beneficial generation of wealth'.

The "extra grain" the farmer, the wage of the laborer, or the Market's rewarding of the more efficient therefore more successful businessman by putting the money (proxy for wealth) in HIS hands which have proven themselves to be better at managing it fall into the latter category. And they are good and necessary, as common sense dictates.
On the other hand, Profit is the acquiring of UNEARNED wealth. Now this would have been the case if the farmer received more than the "extra grain" the earth is capable of giving [impossible in earth's case but NOT SO where the digital presses of the bankers are concerned]; or if the worker whose skills rightly qualified him for a job with a salary of 2,000 dollars were to get 4,000 instead [his boss would never concede to such a thing; but their "boss", Alan Greenspan, delivers the extra green to his masters on a silver platter along with their morning WSJ].

As for the businessman, prey tell, how can it be justifiable or acceptable that a creature as morally and intellectually bankrupt as Bill Gates be allowed to lord it over so much wealth and power [all due to an overlooked detail in his contract with IBM, if I recall correctly]?

I also read in the editorials section of GOLD-EAGLE--I think the piece was called "On the Side of the Golden Angels"--that the actual wealth of the Rothschilds must be several hundred TRILLON dollars by now, if they only turned a profit(sic) of 6-7% per year on their capital. ???????

As for your justification of debt--I think you referred to it as "renta"--as the instrument or catalyst whereby the otherwise-impossible accomplishment of MORE would not have been envisagable...

What's the rationale for having, desiring this "MORE"?
Why should we literally waste most of our limited lifespan on this Earth towards a frenzic orgy to produce ever MORE people, pollution, misery, depletion of natural resources? instead of devoting the time we have left once daily chores are taken care of to LESS (intellectual and spiritual growth; religion or philosophy, according to one's temper)?

This is the very "Life of Contemplation" that produced (sic) the rational foundation of the (Western) Civilization you now are the champion of?

Why must you have "now, what you could otherwise not afford"?
PERMAFROST
(01/05/2000; 03:33:42 MDT - Msg ID: 22315)
ORO Re Profit/Usury/Renta Msg. ID: 22255
Due to ingrained intellectual "habit", You are confusing 'profit' with 'necessary and beneficial generation of wealth'.

The "extra grain" the farmer, the wage of the laborer, or the Market's rewarding of the more efficient therefore more successful businessman by putting the money (proxy for wealth) in HIS hands which have proven themselves to be better at managing it fall into the latter category. And they are good and necessary, as common sense dictates.
On the other hand, Profit is the acquiring of UNEARNED wealth. Now this would have been the case if the farmer received more than the "extra grain" the earth is capable of giving [impossible in earth's case but NOT SO where the digital presses of the bankers are concerned]; or if the worker whose skills rightly qualified him for a job with a salary of 2,000 dollars were to get 4,000 instead [his boss would never concede to such a thing; but their "boss", Alan Greenspan, delivers the extra green to his masters on a silver platter along with their morning WSJ].

As for the businessman, prey tell, how can it be justifiable or acceptable that a creature as morally and intellectually bankrupt as Bill Gates be allowed to lord it over so much wealth and power [all due to an overlooked detail in his contract with IBM, if I recall correctly]?

I also read in the editorials section of GOLD-EAGLE--I think the piece was called "On the Side of the Golden Angels"--that the actual wealth of the Rothschilds must be several hundred TRILLON dollars by now, if they only turned a profit(sic) of 6-7% per year on their capital. ???????

As for your justification of debt--I think you referred to it as "renta"--as the instrument or catalyst whereby the otherwise-impossible accomplishment of MORE would not have been envisagable...

What's the rationale for having, desiring this "MORE"?
Why should we literally waste most of our limited lifespan on this Earth towards a frenzic orgy to produce ever MORE people, pollution, misery, depletion of natural resources? instead of devoting the time we have left once daily chores are taken care of to LESS (intellectual and spiritual growth; religion or philosophy, according to one's temper)?

This is the very "Life of Contemplation" that produced (sic) the rational foundation of the (Western) Civilization you now are the champion of?

Why must you have "now, what you could otherwise not afford"?
Black Blade
(01/05/2000; 04:23:26 MDT - Msg ID: 22316)
Asian markets hammered, Wall Street set to open higher.
S&P futures are steadily rising (currently +10.80), Au off $0.50 at $281.70. Off to the races at the market open? Meanwhile Pacific rim markets take a beating. Hang Seng off over 1200 pts (7%+ decline), Nikkei down about 800 pts. etc. Crude down again (currently -0.39). Could be an interesting day again.
CM
(01/05/2000; 05:51:52 MDT - Msg ID: 22317)
PERMAFROST Re Profit/Bill Gates -- msg #22315
I was quite amused by your remarks on the "evils" of private enterprise.

Guess I missed the news of Bill Gates being hauled before some high tribunal and being found to be "morally and intellectually bankrupt." (But with all of his money, he probably didn't mind it so much.)

Also wasn't aware that all of Gates' wealth was simply due to some "overlooked detail in his contract with IBM." You must be referring to his retaining the rights to the original disk operating system (DOS). I believe that Mr. Gates made quite a few other fortunate decisions that, over a period of time, allowed him to amass a great fortune.

But since you have decided that Mr. Gates obviously doesn't deserve to be rich -- let me help out. I hereby volunteer to take all of that "filthy lucre" off of his hands (heh heh).

Let's see, oh yes, concerning the "Life of Contemplation." I agree 100%. People shouldn't be allowed to control their own lives. We just can't trust them! I hereby volunteer to spend the rest of my pointless existence in studying the mysteries of life. Of course you'll help me out, won't you? I can probaby get by on an annual stipend of $30,000 or so. Shall I send you my mailing address for the checks?

SteveH
(01/05/2000; 06:04:22 MDT - Msg ID: 22318)
Canamami
Ah...the Carlin Trend...

Regarding 'allowed to fall,' I believe that is the logical conclusion of ORO's piece, explicit or implicit. The deal was oil-gold-dollars. The effect was a steady or lower gas pump price in dollars, oil for gold, and ultimately cheaper gold for dollars. At some point, in a decade or liftime later, gold would rise. Most us hope that gold would rise now, but not at the expense of oil or dollars, but someone seems to have backed all of us into a corner such that to like gold means all the rest. Not fair, exactly, you know.

I believe it takes up to five years to bring a mine into production so there would be a lag once mines like you mention are brought on line.
RossL
(01/05/2000; 06:13:58 MDT - Msg ID: 22319)
Permafrost
quote
"On the other hand, Profit is the acquiring of UNEARNED wealth. Now this would have been the case if the farmer received more than the "extra grain" the earth is capable of giving [impossible in earth's case but NOT SO where the digital presses of the bankers..."

I'm trying to follow your logic. It's OK to use the earth to create wealth, but not OK to use other people to create wealth? Right? How does the farmer grow extra crops without the tools sold to him by someone else at a profit? How do we get past the hunter/gatherer stage in civilization? I am lost into the fog of collectivism when I try to justify this concept in my mind.

Cavan Man
(01/05/2000; 06:31:25 MDT - Msg ID: 22320)
PERMAFROST
I see we have a "CM" posting here now. I believe your message is intended for that party.

IMHO, there can be no utopian economic organization of humanity in this life for us. Any supposed "perfect system" will surely be corrupted by the proclivity of our species to, corrupt and, gain individual and collective advantage from any economic order. What we can hope for is continued remediation of economic injustice and the unintended consequences wrought by the system(s) utilized today. Only in the hearts not the minds of man can harmonious economic accord be found for all. It is in the heart (and soul) of man where the problem lies IMHO.

Should the world economic system as we know it today be wrought asunder, it would no doubt be replaced with another model of imperfection and corresponding inequality.

The Euro may be just another patch on the bicycle tire but for this moment in monetary history, it will serve better than nothing.

Enjoy your posts much.
Cavan Man
(01/05/2000; 06:34:13 MDT - Msg ID: 22321)
ORO: (SteveH 22310)
Sir Knight,

In replying to SteveH could you please highlight the significance of the Jamaica Accords or perhaps do so in a subsequent post? Thank you.
PERMAFROST
(01/05/2000; 06:55:41 MDT - Msg ID: 22322)
Cavan Man...
YES! You put it very well. I wholly agree with what you're saying. I decided not to add anything more on this topic as its focus is getting lost in cyber haze.
Now, could you tell me what "IMHO" stands for?

Thanks!
Al Fulchino
(01/05/2000; 06:56:11 MDT - Msg ID: 22323)
Steve H/Pinball Wizard
Great analogy. Back in my younger days, I always sought out the machine with the best odds. When we found it, we played it until it smoked . Sooner or later the owners realized there little profitability in the machine or took it away and junked it. When, the current manipulators of gold realize that they can't squeeze any more money from the machine, either small gold owners like you and I will lose our gold and or the rules will change. All the same I would rather own it and take my chances.
PERMAFROST
(01/05/2000; 07:03:11 MDT - Msg ID: 22324)
Dear RossL..
What I'm saying is this: Do you think it would be right to sell something that costs you 1 to produce and market on a regular basis for 100?
Then answer this one: would it be right for you to sell AT ANY PRICE something that costs you NOTHING to produce on a regular basis? The latter is exactly what the bankers are doing.
I'm not saying don't buy what's necessary to make your product. Just don't SCREW people--and don't get SCREWED!
That's all I'm saying, my friend!
nickel62
(01/05/2000; 07:15:29 MDT - Msg ID: 22325)
I need to find a post from several days back relating to China
I need to locate a post from several days ago relating to China and the statement of a Chinese official that they might consider increasing their gold weighting. Can someone please tell me if there is a searchengine on the Forum that would help me retrieve the needed post without searching manually. Thanks
RossL
(01/05/2000; 07:15:37 MDT - Msg ID: 22326)
Permafrost

"What I'm saying is this: Do you think it would be right to sell something that costs you 1 to produce and market on a regular basis for 100?"

If I desired the product and it was the cheapest price I could find, it would be OK. If it were not a free market transaction, and you had used force or government laws to limit your competition, then it would not be OK.
PERMAFROST
(01/05/2000; 07:16:46 MDT - Msg ID: 22327)
CM...
Like all of us, you will one day die. I hope you will be able to look back and see SOMETHING you've done that was better than the posting of your recent message.
the act you're disparaging gave us Jesus and Gandhi and many others you could not pronounce the names. I guess "Hitler" and "Clinton" rolls off your tongue easily enough?
How 'bout Greenspam? (pun intended.)
PERMAFROST
(01/05/2000; 07:21:36 MDT - Msg ID: 22328)
RossL...
100-1=99. Not OK by me. Others in the past, and I'm talking about History, actually "disagreed" a bit more. Bloodshed and misery ensued. That OK with you as well?
RossL
(01/05/2000; 07:29:31 MDT - Msg ID: 22329)
Permafrost

I'm afraid you may have missed the point. The only way someone could keep a 100:1 profit ratio is through force or corrupt government laws. "Profit" or usury is not the villain. Force and corrupt government is.
PERMAFROST
(01/05/2000; 07:40:20 MDT - Msg ID: 22330)
OK RossL...
Thanks for pointing out that the difference between the symptom and the disease causing it...

As for me, time to go. Goodnight eveyone!
PERMAFROST
(01/05/2000; 07:41:25 MDT - Msg ID: 22331)
OK RossL...
Thanks for pointing out that the difference between the symptom and the disease causing it...

As for me, time to go. Goodnight everyone!
flierdude
(01/05/2000; 07:55:21 MDT - Msg ID: 22332)
What do you think of this? F.O.A. Oro Stranger Others?
Date: Wed Jan 05 2000 04:24
GoldBird1a (Armstrong-Republic-manipulations) ID#396247:
Copyright � 1999 GoldBird1a/Kitco Inc. All rights reserved
Whilst I have read a lot on this site about Armstrong and his supposed short gold position etc etc etc. I just thought
everyone should know that it is all BS. I have worked insided Republic Bank and quite frankly the whole thing stinks of a
major set up intended to frame Armstrong big time. Armstrong was right about the manipulation of silver and a whole lot
more . Not only was silver manipulated, they do it all the time. If you want to know the truth, it was Republic who has
been behind almost every manipulation I know of for at least the last 10 years, I've seen it first hand. Buffet is not lilly
white and this silver purchase of his was not the first. The manipulation by PhiBro in 1995 when they exercised the call
options way out of the money was executed by Andy Heck who now works for Republic. The CFTC went to PhiBro
demanding to know who the client was behind the trade and they refused to give up the name. The CFTC did not do
their job as usual and just walked away demanding that they exit the trade. PhiBro was owned by Soloman Bros and the
authorization to squeeze silver was given personally by Buffet. Does anyone really think that a small sub like PhiBro
could do a $1 billion trade without board approval from above? It doesn't end there. Bribes were paid to Russian
officials to "recall" platinum so it could be inventoried. Republic helped Tiger corner the market in palladium and stored it
for them just like they moved the silver from NY to London for Buffet. This thing even goes back to the manipulation of
the US Treas Auctions. The gov't boys are so stupid, when they threatened to take the license away from Soloman
Bros, Buffet came to the rescue. Ha! He was behind that trade as well and his name was concealed then as always.
Then that trader left and started LTCM and had a real merry old time. Look at who his investors were! Just before it
blew up, Buffet agreed to bailout that operation and wrote a letter stating that if his offer was ever revealed, it would be
void. That letter was published in the WSJ because it blew up before Buffet could put the deal to bed.

The point is, Armstrong was trying to fight the crowd. He knew what was going on and the word inside the bank was
that he might even have tapes of converstions between a lot of the players. Everyone is really worried about that for sure.
These guys take the market up get all you suckers believing the rally is real and then slam it again. How do you think they
make their billions? They don't care about bull markets. They shag the markets to make their billions off of the people
who don't have a clue. They rotate between the markets. All the same names were on the short-side in copper.
Sumitomo tried to fight these guys. They baited the Japanese into the trades offering them untold credit. They then would
short copper against them. Sumitomo tried to defend their position and ended up buying the entire inventory. When they
had Sumitomo loaded, they ran to the authorities and did them in calling it a manipulation. They made a fortune on that
short trade. To add insult to injury, Sumitomo ran to Goldman Sacks for help, Goldman started selling thousands of
contracts in copper that day and then accepted the work out the following day after front-running their own client. Jimmy
Goldsmith was involved in this one as well as Safra, Tiger and a host of others. They amazingly are all on the right side of
everyone of these trades.

Hell - bribes were even paid to bank officials at the Central Bank of Thailand to start the Asian Crisis! That was the
evidence the Japanese took to the G7 meeting and demanded controls against the organized hedge funds. The US gov't
refused to do anything against the group of players because this thing is so dirty nobody wants the truth out there. They
told the Japs they would agree to sanctions only. That's why Armstrong is being served up as the Xmas turkey. Quite
frankly, he knows too much.

Safra was paying bribes to people inside the IMF as well. They all thought they had the IMF in their pocket. That's why
they all invested so much into Russia. They even set up Bank of New York on behalf of a revial group of thugs in Russia
and because Republic hates Bank of New York because they are not part of the club.

These markets are never going to breakout until someone breaks up this organized mob of billionares. The gov't is either
too stupid or they are involved with them ==== a high probability! After all, Armstrong had a $1 billion credit line in the
bank and everyone knew it. Suddenly, his credit line was pulled and Republic took $500 million of his clients money
pretending it was never there. That order came from good old Mr. Safra himself and was carried out by George
Wendler personally. And if anyone believes that story about Safra's death, I guess they believe in Santa Claus and a few
other sudden deaths when the heat got turned up. If Armstrong or his clients got Safra on the stand, the whole thing
could have unravelled. His bodyguard was changed just after this affair started. You fill in the blanks.

Armstrong was never short 700 tons of gold. In fact, to get the silver manipulation going, Armstrong was out of the
country and they ran their orders through Republic to make everyone think it was Armstrong covering short positions he
never had. The records are all there!

All this stuff is on tapes, docs and emails. The question is, will the gov't go along with the big boys and cover everything
up again? If so, they say already Armstrong won't make it to trial. They cannot afford a open trial with everything
Armstrong knows. He probably knows far more than what has been written here. They just can't afford for the world to
know how rigged this game truly is and how these billionares really make their money at the expense of everyone else.

That's the real story. Take it for what it's worth.

Return to Kitco Homepage
Peter Asher
(01/05/2000; 07:56:22 MDT - Msg ID: 22333)
Ross,CM Peramafrost
Since the fur is flying on this sujectthis morning, I'm posting a part of an as yet incomplete article.

Fair exchange is not Marxism. Marx preached "From each according to his ability and to each according to his need." That is properly called THEFT. When he said "Workers of the world, unite, you have nothing to lose but your chains." he was talking about the power of the holders of the means of production to command cheap labor by having cornered the market on land and factories.
In response to that inequity, he came up with it's antithesis.

Many philosophers have perpetuated a massive lie by being idolized for a profound truth and emotionally blind-siding their worshipers to the falsehoods. The reason that Capitalism and communism have been the fodder for conflict is that each has within it an ethical truth and also a means for exploitation. The follower of each, is impassioned with that ethical truth and resists being aware of the harmful aspect.
Blue Sky
(01/05/2000; 08:01:57 MDT - Msg ID: 22334)
Ramblings
Good Morning All
Peter post 22300 re; Walmart competing w/e-bus...I know they are working at setting up their own, but I cannot envision them selling much at a lower price+shipping than they do at their physical stores. Nor do I see any e-bus competing in their market at this time or next few years. They and Target(plus others) attract the price not quality purchasing consumer, you get what you pay for, a MTD mower vs a John Deere.
Now if they set it up such that you e-mail your order for dederant and sox, then we pick-up at the drive-up window. Hmmm ,,,register that as my I idea, Do I need a Trademark or Patent???
I listened to a good book on tape, "Gravity". I didn't write down the author, about super virus from outerspace.
Steve H re; OIL.... Co I'm leased to locked in diesel at $1.229 for Jan. .05 cheaper than Dec. 31...Maybe reserves not as depleated as stated.
Maybe I'll be able to pay off my Y2K purchases at a higher rate of earnings. Spent NYears Eve with a vocal detractor of the Bug,,,got to eat my crow w/humble pie. Still smiling though , I still have my insurance premiums in hand.
I GOT GOLD, and always will have.
Blue SKY to all

PS : Scrappy ,how you doing?
Peter Asher
(01/05/2000; 08:06:15 MDT - Msg ID: 22335)
RossL
"lost in the fog of collectivism"

Simple, and succinctly exact
phaedrus
(01/05/2000; 08:10:35 MDT - Msg ID: 22336)
impressive
Got real time quotes here...just saw the Nasdaq 100 futures drop 50 points in less than 3 seconds. Now down about another 150 points.

Yowza.

Come on Mr. Market, you know I've got put spreads on, don't tease me...don't tease me...
USAGOLD
(01/05/2000; 08:19:43 MDT - Msg ID: 22337)
Today's Gold Market Report
Market Report (1/5/00): Gold gave up a little more ground today in the
New Year adjustment that began yesterday. FWN reports one London trader
as saying "The market is supported at $280, with some solid buying
coming in at this level. I think we may see some more short-covering
from the US this afternoon." The stock market is getting some support
this morning after the announcement yesterday that Alan Greenspan will
stay on for another four year term. That support, however, appears thin.
Asian trade was quiet with no surprises. Most of the Asian action was
centered around the platinum market where traders can't decipher whether
or not Russia is going to deliver any significant amount of the white
metal in the near future. One wonders what the Japanese really want.
They have a fear verging on paranoia over any weakness in the dollar and
move resolutely at the slightest provocation to squash their own
currency. Meanwhile, their forex reserves gained $16.1 billion in
December -- a record high level. According to the Bridge News report
last night, the CFTC is delaying processing its gold numbers due to a
non-Y2K computer glitch. The report being quoted in various media
contains "incomplete or inaccurate information" according to the news
agency. The surprise so far in 2000 has been the strength of the euro --
now in the $104 range.

That's it for today. We'll see you here tomorrow.
Cavan Man
(01/05/2000; 08:25:24 MDT - Msg ID: 22338)
PERMAFROST
IMHO-In my humble opinion
Gandalf the White
(01/05/2000; 09:36:19 MDT - Msg ID: 22339)
Test
<;-)
Gandalf the White
(01/05/2000; 09:37:34 MDT - Msg ID: 22340)
HELP ! --
The Hobbits want to know -- What happened to the price of the Long Bond at 11:31 NY time ?
<;-)
Gurn Blanston
(01/05/2000; 09:52:29 MDT - Msg ID: 22341)
Permafrost: IMHO means?
www.usagold.com/cpmforumMy guess is that "IMHO" means "In My Humble Opinion."

Gurn Blanston
TownCrier
(01/05/2000; 09:56:31 MDT - Msg ID: 22342)
Fed adds $6.8 billion to bolster reserves of the banking system
http://biz.yahoo.com/rf/000105/rb.htmlToday we have a comment that confirms our suspicion of yesterday when we stated: "you will see that economists don't have a clue as to what prescription is called for at this time. If the *experts* can't see what must be done (add vs. drain reserves) we are surely on thin ice of some sort."
James Blumenthal, Fed watcher at MCM Moneywatch, told Reuters "I wouldn't be surprised to see them come in and do matched sales sometime soon. But they themselves (the Fed) ... are also playing this day-by-day." The Fed had stayed on the sidelines for the second straight day during their regular 9:30 open-market intervention period...with overnight repo operations remaining a possibility.

Kim Rupert, economist at Standard & Poor's MMS, admitted that though an add need seemed to remain, there were too many factors to make a reliable prediction, saying, "it depends on how fast a lot of these factors run off. We know the schedules for maturing repos but we don't know the others."

Shortly thereafter the Fed did indeed participate in $6.8 billion in overnight repurchase agreements to provide the reserves needed by the banking system.
TownCrier
(01/05/2000; 10:03:54 MDT - Msg ID: 22343)
Here's one for TheStranger...HEADLINE: Strong U.S. Growth Will Push Up Service Prices
http://biz.yahoo.com/rf/000105/to.htmlIn a teleconference today, Ralph Kauffman, chairman of the National Association of Purchasing Management's non-manufacturing survey committee, said, "If the economy continues to grow strongly, price pressures (in the non-manufacturing sector) will continue."
TownCrier
(01/05/2000; 10:15:05 MDT - Msg ID: 22344)
Is Brazil on the ropes? Their foreign exchange reserves have plunged 16% since the end of November
http://biz.yahoo.com/rf/000105/nk.htmlWith these international reserves being Brazil's primary ammunition to fight off unwanted currency fluctuations in the foreign exchange market, you've got to be somewhat concerned by the 16% depletion since December began to the current level of $35.388 billion. By no means was all of this amount accounted for by their program of offering dollar-denominated repos through the century date change.
ORO
(01/05/2000; 10:22:38 MDT - Msg ID: 22345)
PERMAFROST
PERMAFROST (1/5/00; 3:32:33MDT - Msg ID:22314)

---->On the other hand, Profit is the acquiring of UNEARNED wealth. Now this would have been the case if the farmer received more than the "extra grain" the earth is capable of giving [impossible in earth's case but NOT SO where the digital presses of the bankers are concerned]; or if the worker whose skills rightly qualified him for a job with a salary of 2,000 dollars were to get 4,000 instead [his boss would never concede to such a thing; but their "boss", Alan Greenspan, delivers the extra green to his masters on a silver platter along with their morning WSJ].
----> As for the businessman, prey tell, how can it be justifiable or acceptable that a creature as morally and intellectually bankrupt as Bill Gates be allowed to lord it over so much wealth and power [all due to an overlooked detail in his contract with IBM, if I recall correctly]?

As you are revealing, one needs to use violence in order to gain UNEARNED wealth. Government, in "realpolitic" terms is the organization with the control of more means of violence than any others in a given territory. Violence is the only means of gaining from uneconomic activity, which is that activity that produces no profit. The warrior collects the fruit of other's labors by putting the producers to the sword and taking their production.
To equate Greenspan's actions as an agent of government with those of a Bill Gates in his heyday (the early 80s, not today), is absurd. What the Rothchilds and the Barings do in concert with government is not of the same stuff of free markets and personal actions. They do not produce profit, the produce booty, and their business is better known as plunder.
The true business opportunity exploited by Gates and Jobs right along with him, was to make use of inventions of others, that were not making the expected profit for their original inventors, most notably the ossified Xerox, and putting them to use by selling DOS to IBM or creating the Mac. These acts of vision and judgement are those bearing the greatest rewards. IBM's "overlooked detail" is in reality a lack of understanding, vision, and a lapse of judgement. They deserved what they got.
---->As for your justification of debt--I think you referred to it as "renta"--as the instrument or catalyst whereby the otherwise-impossible accomplishment of MORE would not have been envisagable...
----What's the rationale for having, desiring this "MORE"?
----Why should we literally waste most of our limited lifespan on this Earth towards a frenzic orgy to produce ever MORE people, pollution, misery, depletion of natural resources? instead of devoting the time we have left once daily chores are taken care of to LESS (intellectual and spiritual growth; religion or philosophy, according to one's temper)?
----This is the very "Life of Contemplation" that produced (sic) the rational foundation of the (Western) Civilization you now are the champion of?
----Why must you have "now, what you could otherwise not afford"?
These are the choices people make on an individual bassis. Perhaps the "life of contemplation" is more fulfilling to our spiritual well being when our stomachs are full, when we lay on the soft bed in a warm house flicking channels on a 500 channel contemplation machine with a 60 inch screen?
rsjacksr
(01/05/2000; 10:25:45 MDT - Msg ID: 22346)
Re: Gandalf the White (1/5/00; 9:37:34MDT - Msg ID:22340)
The Hobbits want to know -- What happened to the price of the Long Bond at 11:31 NY time ?30-year Treasury Bond Index Industry:
INDEX: TYX.X
Delayed as of 01/5/2000 12:17 EST
Last Sale 65.85
Change 0.53
% Change 0.81%
Volume 495
� Quote.com 1999
TownCrier
(01/05/2000; 10:58:13 MDT - Msg ID: 22347)
G-7 to Discuss Yen's Rise at Tokyo Meeting This Month
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=865421e4a8d064ee16ac68eebce51b21A good Bloomberg article to walk you through Japan's currency problems. The government wants the yen to be weaker to benefit exporters...ostensibly to bolster the economy in general and not just the corporate profits, and to benefit a class of Japanese investors by protecting the value of investments that they are currently holding abroad. (In this latter case, eventually the investors decide to cash out of their foreign investments and bring their profits home. If the yen is strong compared to the currency that denominated the investment, then they don't end up with as many yen to show for their efforts...although the yen they WOULD have would be stronger. Go figure. At any rate, you can see clearly that the class of citizen that gets the shaft is the simple domestic worker and saver that holds yen.)

Japan wants other members of the G-7 to assist in the efforts to flood the world with yen, but so far they've been told that they are on their own in this management matter. The Bank of Japan did finally capitulate to a degree in September, throwing honor out the window and making changes to their money market operations to allow for an increase in the yen supply. September has been the point (as we discussed in two important posts yesterday) at which the yen and the dollar have joined arms to stride into the fiat boneyard accompanied by Elgar's "Pomp and Circumstance March No. 1".

Meanwhile, the Euro has reached nearly a 2-month high. Get the drift?
mhchuck
(01/05/2000; 11:08:38 MDT - Msg ID: 22348)
Final Post.

All roads lead to gold.



mhchuck.
Ray Patten
(01/05/2000; 11:41:45 MDT - Msg ID: 22349)
canamami...

Please tell me who owns the Cerro Casale Gold reserves. I may want to buy some of their stock.
YGM
(01/05/2000; 12:08:06 MDT - Msg ID: 22350)
Town Crier
http://skybusiness.com/yukon-gold/index.htmlTC...I have linked USA Gold to my soon to be completed Gold Website.....I'll be away from the keyboard for a few weeks so keep up the good fight guys.....Ken...(YGM)
Goldy Locks Guy
(01/05/2000; 12:24:36 MDT - Msg ID: 22351)
china selling silver reserves
Hi...I know this is a gold forum, but do any of you precious metals buffs have any input on China selling into the market? Silver tanked today because of it, but I'm wondering if it's a kneejerk reaction or could the 29,000 tons actually make a difference in the big picture...Thanks...goldilocks
sstins
(01/05/2000; 13:21:47 MDT - Msg ID: 22352)
Mortgage Rates (FWIW)

Today's Par Fixed Rates (Par rate assumes standard closing costs plus pts)

30yr fixed rate locked for 30 days - 8.125%
15yr fixed rate locked for 30 days - 7.875%

Housing market slowing soon???

"I got gold and am getting some more."
Cavan Man
(01/05/2000; 13:22:36 MDT - Msg ID: 22353)
To Leigh
RE: Another 14770

On Japan and oil--If my memory serves me correctly, it is Yergin's contention in his "The Prize" (excellent BTW) that the real cause of Japan's murderous ambush at Pearl was the fact that the US cut back and/or embargoed oil exports to Japan. Frightfully ironic that Japan is the $'s staunchest ally isn't it? BTW, did you know that the incidence of mortality in Japanese POW camps was much higher than their German counterparts? That's a fact. Never forget PH.

I read Another's post one last time. I'm convinced of their (FOA & Another) authenticity and believe they make the effort they do so that they will live long knowing they did their best to warn of the "road ahead"; effectively with clear conscience. They post for at least two years; are driven from at least one other forum with ridicule; arrive here welcomed by a wise and open-minded host; and continue on using the best medium (widest range/no filter/free to all) to broadcast their message. What could they do; take out an ad is USA Today? Their message is anathema to many. That is one of the reasons I believe what I read from their hand.

Methinks 30% allocation is not high enough for PM. Suggest calling MK @ CPM today.
Usul
(01/05/2000; 14:27:16 MDT - Msg ID: 22354)
Gold for Oil
http://www.msu.edu/~kreinin/It would be great if someone with good library resources
(unlike myself, unfortunately)
could look this up and post relevant text... it does
look interesting, does it not? It is the only
authoritive reference to Gold for Oil I have
found on the Net (Yes, I know USAGOLD and other
gold forum sites talk about Gold for Oil incessantly).
Unless there are references in
MK's book (which I have not seen).

FOA, perhaps you have some literature references to
the Jamaica Accords?

Perhaps someone knows a reference buried in the Hall of Fame
or on the labyrinthine Eagle site?

The strength of a case in learned discourse is
supported by authoritive references to published
literature.

Usul (12/2/99; 15:57:43MDT - Msg ID:20078)
Gold for Oil

"Gold for Oil," New York Times letter, March 18, 1974,
included in Casebook of Economic Problems and Policies, R. Fels ed.
Mordechai E. Kreinin
University Distinguished Professor
Department of Economics
Michigan State University
Netking
(01/05/2000; 16:26:06 MDT - Msg ID: 22355)
"Bargain Hunters Squash Nasdaq Decline"
http://www.7am.com/cgi-bin/wires02.cgi?1000_00010506.htm"Bargain Hunters Squash Nasdaq Decline" - Are we missing something here folks Professors of precious metals & Macroeconomics as we are? When a 'Bubble.Com' stock has P.E. of only 100's we should be rushing in!(smile)

beesting
(01/05/2000; 17:15:30 MDT - Msg ID: 22356)
IMF researchers say Pound should fall to join EMU
http://biz.yahoo.com/rf/000105/bba.htmlBritians labor Government is committed in principle to introducing the Euro, subject to a referendum(vote) early in the next parliament.
For full story click above URL.....beesting.
Gandalf the White
(01/05/2000; 17:17:38 MDT - Msg ID: 22357)
Thanks rsjacksr for the message #22346
Why I ask, was that I was watching the LiveCharts on Quote.com -- when at 11:31 the line dropped off the chart!!! I now when I look at the end of the day, I see a yellow line at the 11:31 time which must be the erasure line to correct the error. -- WOW ended at 6.631% today!!! -- Will someone please awaken me when the Long Bond hits the rate of 7.00% yeild. -- The Hobbits are going GOLD shopping again tomorrow as they can not believe the after Xmas sales!!!!
<;-)
R Powell
(01/05/2000; 17:23:08 MDT - Msg ID: 22358)
Non-commercials short again
The imfamous commodity funds have increased their net short contracts position from 20553 on Dec. 14 to 28982 on Dec. 28 I used 'Consenus' COT figures for Dec 14 and figures from www.futuresource. com/cgi-bin/art? 000103/145302 for the Dec. 28. Most of the selling took place between Dec 14 and the 21. These are net short numbers and means that upward gold prices in the futures market for any-any reason will bring about short covering by the fund managers. The trap has been reset and baited and POG held its own fairly well during the selling. Noteworthy also, it was those concidered small speculators by the Commitment of Traders Report who supported gold during the selling. Something is needed to start an uptrend to force some shortcovering and perhaps the next move up will receive more support from John Q Public. Maybe?
pdeep
(01/05/2000; 17:30:40 MDT - Msg ID: 22359)
The Road to a Banana Republic
I read with some amusement today the growing feeling of unease amongst various economic poobahs at the thought that AG might migrate to parts unknown. Having the Fed automatically target a 2% inflation rate was one of the more laughable solutions.

So here is a modest proposal for his replacement. It has certain advantages: it is apolitical, it responds to feedback, its operation is the same as the departed Chairman, and bribes are easily uncovered.

Materials:

1 large cage
1 large monkey
Lots of large bananas

Methods:

Place the monkey in the cage. Feed with regular monkey chow for 50% of daily caloric intake. Begin by throwing in 20 bananas/day to supplement monkey chow.

Look at the weekly DJIA. If less than week before, remove one banana from daily ration. If more than week before, keep daily banana ration the same.

Hang a bunch of plastic bananas just outside of monkeys reach outside cage. Now count how many times the monkey reaches outside the cage for the bananas, per week. Divide by 7 to get a daily average. (This can be automated using a simple photoelectric circuit attached to a non-compliant old 486 not good for much else)

Multiply this amount by $1 billion. That is the amount the Fed adds to the money supply the next week.

And there you have it. In addition, when anyone exclaims that the Fed is monkeying around with the stock market, you can answer in the affirmative.


SteveH
(01/05/2000; 18:56:16 MDT - Msg ID: 22360)
Wrote this to another friend
I watched CNN Moneyline and then Crossfire regarding Greenspan tonight. I concluded that the information flow available to the talking heads (commentators) is limited by their traditional sources of information, in which phone calls, letters, and contacts (with books to protect) provide their base of wisdom. Well educated these folks are but somehow they seem to be so pleased that all traditional, conservative values of monetary policy have been thrown to the wind and that their 401K's are making them wealthy beyond their dreams. In that image of their world, they are presuming that inflation is low, when you take out oil. This is their fatal flaw, in my opinion. By removing oil from the equation, they are presuming that all is well. Oil is rearing its head for the exact opposite reason they presume -- the oil barrons are shaking their discontentment with manipulation, derivatives, and paper gold. The Long-term Bond would appear to be the great equalizer and thermometer here. What oil is telling us is they don't want dollars under its current bubble mentality, they don't want dollars that inflate regardless if it is seen in the price of goods. That is how I see this, but so far my friends just say, "Steve, you have been saying that for two years now and I have tripled my money, and look at you!"

Damn frustrating, eh?
SteveH
(01/05/2000; 19:33:44 MDT - Msg ID: 22361)
How soon before the bear?
Pretend for a moment that you were no longer a gold bug. Rather, imagine that you have $10K and you want make money like everyone esle is today. You sign up for *ebrade, you deposit your money. You make a few play trades to get the hang of it. That seems easy enough. Now here goes nothing.

You want to buy Frisco but can't, because you don't have enough. 100 shares at $100 less commission puts you over. So, you borrow some money from your bank account and send it to *ebrade. Hey, now I can buy 125 shares. Great. You post the transaction and get confirmation. Now, for the next three weeks everyday five times at work and five time at home you are slave to your *ebrade browser.

After three weeks you note you aren't ahead or behind. The stock just sits there. Common Frisco, go make the money I know you will make me. Suddenly, the stock drops $20 per share. Hmmm! That is not right. Wait. Talking heads say, good buying opportunity. Let me get some cash from my credit card...$2000 should do it.

You send that in to the *ebrade. Great, now I can buy more shares. Wait I need to buy 100 share lots. Well I will pick *iwin. They are cheap and the chat room says these are hot. You get 100 shares. Three weeks go by and you are still slave to the *ebrade browser. Yet it just sits there.

One day it goes down $5.00 dollars. Hey wait. This isn't cool. I start with $10K, bump another $4500 and I got squat.

Talking heads still say good buying opportunity. Maybe if I sell these and buy others...repeat above.

Anybody got the urge, because I know if I bought stocks right now, this would happen. So we must be about six weeks away from the big drop, eh?
elevator guy
(01/05/2000; 20:00:01 MDT - Msg ID: 22362)
@SteveH
Yes, thats a pretty accurate scenario for market gamblers, and all who are led astray by the lure of easy money.

As soon as it seems like a sure-fire bet, the hook is in the mouth, and the fool and his money are soon parted.
RAP
(01/05/2000; 20:27:56 MDT - Msg ID: 22363)
How soon before the bear?
That sound like what I have been going through with gold stocks for the past several years.
On a more serious note, I want to than MK for the silver eagle I am receiving from the last contest, just for entering it. I also want to thank him for this forum. I feel as though I should be giving him the silver eagle for the privilege of using it. I have to thank all the great people who give away all there knowledge for free at this forum.
Thanks again to all.
canamami
(01/05/2000; 20:34:20 MDT - Msg ID: 22364)
Reply to Usul, 22354
Are you a detective or private investigator in your non-posting life? One wonders whether "Contributor and Occasional Guru to the USAGOLD Forum" ought to be added to that resume? Check out the academic articles, particularly with reference to the 1970-74 period, when gold-backing died.
RAP
(01/05/2000; 20:35:01 MDT - Msg ID: 22365)
than???
Spell checkers think "than" is just fine in place of THANK!
Solomon Weaver
(01/05/2000; 20:53:07 MDT - Msg ID: 22366)
Oil and Steve H
Steve H

I saw the same show...and had the same thoughts.

What I also thought was funny was how that handsome young Economist said he wished that Alan Greenspan and the FED would put out a standard policy in numbers, for example...if inflation is above 2% vs. below 2%...economists just love spread sheets don't they???

Again, I think of that Arab Sheik story in Ascani's writings who gets a ton of gold sovreign coins for oil rights on his land...he didn't need a spread sheet to count all that gold....and he didn't trust anyone to do it for him.

Poor old Solomon
Solomon Weaver
(01/05/2000; 20:58:19 MDT - Msg ID: 22367)
pdeep and the FEDchimp
pdeep

great idea...just seems to have one problem...

There is no mechanism to determine if the FED should reduce the money supply...even if the monkey dies it is only down to zero.

Poor old Solomon
Solomon Weaver
(01/05/2000; 21:06:54 MDT - Msg ID: 22368)
a snippet from beesting's link
http://biz.yahoo.com/rf/000105/bba.htmlBeesting

Interesting to see signs that at least one party in Europe is thinking of joining in with the EU..Labor obviously thinks it will be worse for the common man if they don't.

This snippet caught me.....

``The results indicate that the pound should depreciate considerably before entering EMU,'' said the paper, which was written by researchers from the IMF, the World Bank, the Bank of Spain and Germany's Deutsche Bank.

The authors said their research calculated equilibrium exchange rates ``in a way that guarantees global consistency.'' The data showed that the euro was some 7.5 percent undervalued against the dollar at the end of 1998 ``which implies an equilibrium nominal rate of 1.26 euros per dollar.''

Poor old Solomon
RAP
(01/05/2000; 21:09:27 MDT - Msg ID: 22369)
PERMAFROST,ORO@profit
On the subject of "profit".
Since I am "intellectually bankrupt" myself, I do not want to get into this discussion, but I think I have something to offer. Is there any distinction between proceeds from gambling and "profit"? I think we all agree gambling is immoral and wrong. Just where do we draw the line between the two? At some point profit turns to proceeds from gambling, and therefore I thing you are both right, you just have not defined profit completely. IMVHO.
rsjacksr
(01/05/2000; 21:12:26 MDT - Msg ID: 22370)
Re: Beesting
Currency valuationsRead beesting post on "IMF researchers say Pound should fall to join EMU". Can someone please tell me what they use as a yardstick for determining the relative value of currencies and against what???

Solomon Weaver
(01/05/2000; 21:20:58 MDT - Msg ID: 22371)
some more on China and Silver
Goldy Locks Guy (1/5/00; 12:24:36MDT - Msg ID:22351)
china selling silver reserves
Hi...I know this is a gold forum, but do any of you precious metals buffs have any input on China selling into the market? Silver tanked today because of it, but I'm wondering if it's a kneejerk reaction or could the 29,000 tons actually make a difference in the big picture...Thanks...goldilocks

Hey Goldilocks

The following was a message I got from Ted Butler about silver sales out of China. I did not add the copy since it is copyrighted and I want to respect Ted's material...but If you go over to Kitco...it makes a good read..dealing exactly with Silver....and China.

A brief overview...according to TB China has a 100 million ounce reserve...which seems to be about 3,000 tons...where did you get the number 29,000?

Thanks for your note. Here's a post I made on the topic a little ways back on
kitco

Date: Sun Dec 19 1999 10:57
ted butler (China's silver) ID#370209:

Poor old Solomon
Gandalf the White
(01/05/2000; 21:26:18 MDT - Msg ID: 22372)
Poor old Solomon's calculation
Poor Ol'e says: "The data showed that the euro was some 7.5 percent undervalued against the dollar at the end of 1998" which implies an equilibrium nominal rate of 1.26 euros per dollar. <==
****The Hobbits read that quote a little bit differently, Sol. -- As the Euro did not exist in 1998, and when the Euro was born it was thought to have a value 7.5% GREATER than the US$, which would make the Euro = US$1.08 when it was about to begin its life. However, the Euro was born much more robust than that and quickly grew to = US$1.17 only to come back to "earth" near parity. -- Notice the strength of the Euro now. -- Wonder what it will be like when that "Black Gold" becomes priced in Euro's? -- AND then what it will be like when REAL GOLD gets used to price Gold ?
<;-)
ORO
(01/05/2000; 21:27:55 MDT - Msg ID: 22373)
Gambling
Can be fun and exciting if there is no problem of addiction. If the game has fair odds, you can play quite a while. Realize that the game is a less than zero sum game. Odds favor the house, and there is much danger.

If windsurfing, hang-gliding, parachute jumping, walks in Hyde park (Chicago), bunjee jumping and roller coaster riding are not evils, neither is gambling.

As a drink of wine is not alcoholism, neither is a weekend in Vegas. A lifetime in Monaco, however, is a different story.
FOA
(01/05/2000; 21:29:01 MDT - Msg ID: 22374)
CHINA VOTES NO FOR SILVER
NO LINKWednesday January 5, 5:24 pm Eastern Time

Silver Falls on Dumping Fears

By The Associated Press

Fears that China will dump silver on the market sent silver
futures prices sharply lower in trading Wednesday on the New
York Mercantile Exchange.------------------

------------Silver prices plunged on a report in the semi-official Peoples Morning News that the Chinese
government will sell some of its silver reserves. The amount of silver to be sold was not mentioned. However, China is believed to have 93 million ounces of silver in reserve, according to analyst James Steel of Refco. Inc.

China is currently producing about 1,300 tons of silver annually, while consumption in that country is about 800 tons, making it plausible that a sale would take place, Steel said.--------------------------
Solomon Weaver
(01/05/2000; 21:34:31 MDT - Msg ID: 22375)
Gandalf and more discussion on the Euro
Greetings Gandalf

Love your handle by the way...since I read LOTR over and over again..still a Hobbit at heart.

actually the calculation was not MINE...it was the calculation that I snipped out of that article that beesting posted a bit earlier...

I am aware that at the birth of the Euro, it made a massive slide (like when the new kid in town moves in and the other boys bully him just to see how he reacts)...also curious that on the one year birthday it starts to look stronger again....

Just thought it was interesting that a consortium of thinkers (including the IMF and World Bank which are americocentric) could whip up spreadsheets that showed that the Euro should stabilize at a higher level...

One small thing to remember...the number crunching for this report was probably done before all those repo dollars started flowing in very late 1999.

Poor old Solomon
ORO
(01/05/2000; 21:38:43 MDT - Msg ID: 22376)
The Euro and Japan
It is the Japanese doing Euro for Yen instead of Euro for dollars .
It's stupid, but they can do what they wish.

Aside from that, the first annual refinancing of Euro debt has arrived. Euro must be obtained to return this first batch of coupon payments.

But! Oh no!! We have no Euros, we only have dollares, what shall we do? We must part with les dollares and buy Euros.

Goldy Locks Guy
(01/05/2000; 21:41:27 MDT - Msg ID: 22377)
solomon and China/Silver
Sol,
Sorry about the 29,000...it was 2,900 tons....as you have said....I couldn't find the article from Ted Butler at Kitco would you mind terribly to email to me...@ Magnison@aol.com ???

Also, the post you mentioned on Dec 12....is that in the USA gold forum?

Thanks for your reply.......Goldilocks
Solomon Weaver
(01/05/2000; 21:46:51 MDT - Msg ID: 22378)
question to Oro
ORO

Is it the Japanese who have to repay Euros and are cashing in dollars to do it?

Or is it a Euro carry trade by non-Japanese parties who used the Yen to hedge the transaction???

Is Japan a net borrower of Euros???

Poor old Solomon
CoinGuy
(01/05/2000; 21:58:00 MDT - Msg ID: 22379)
How do I?
Now that you computer geniuses are done remediating code for Y2K, can you tell me how to pull up the S&P futures over at livecharts.com?

Gold is like a box of chocolates...ahhh nevermind,

Coinguy

RAP
(01/05/2000; 22:13:15 MDT - Msg ID: 22380)
Sir ORO, gambling
If gambling is a "less than zero sum game" it cannot play any part in a sound economic system, can it?
ORO
(01/05/2000; 22:17:31 MDT - Msg ID: 22381)
Solomon
Sorry for the confusion, they are buying Euro with Yen.

They are in no way Euro debtors. The new Euro debtors are in South America and Southeast Asia. They are also to be found in Germany's former elbow room.
ORO
(01/05/2000; 22:23:27 MDT - Msg ID: 22382)
Rap - it is entertainment
Gambling is a form of entertainment for those who can control themselves, and it can be the bassis of an economy relying on tourism.

It can't be a foundation for an economy in general, just as entertainment can't be the foundation for the US economy, though entertainment expenses are 10% of today's disposable income on average in the US - it is better than 6% of the economy.

Srocks, by the way, are not a zero sum game by nature. Historically, they are a better than 0 game.
beesting
(01/05/2000; 22:34:56 MDT - Msg ID: 22383)
rsjacksr #22370
Your Question:
Can someone please tell me what they use for a yardstick for determining the relative value of currencies and against what?

Excellent question rs, I have been trying to figure that one out in understandable terms for many years.
About 2 years ago I called my Broker and asked the same question, and here is what they sent me:

<< FLOATING EXCHANGE RATE:
Movement of a foreign currency exchange rate in response to changes in the market forces of supply and demand; Also known as FLEXIBLE EXCHANGE RATE. Currencies strengthen or weaken based on a nations reserves of hard currency and Gold, its international trade balance, its rate of inflation and interest rates, and the general strength of its economy.>>

Now the more I read this the more confused I got, when I went to the currency exchange site at yahoo and saw that some very small nations have stronger currencies than the U.S. One of which is England. How can their money possibly be worth more than U.S. money when you add the above mentioned statistics together. Ireland 1998 was another one, the irish PUNT was/is worth more than the U.S. dollar, haven't checked it recently tho.

I think the above statement from my broker was written by Casey Stengel(if you remember who he was) and translated by Alan Greenspan. It's english but if you think about it, it doesn't come out right. Like 2 plus 2 = 7.

I think there is also a population factor in the currency conversion equasion somewhere, they just left that out of my definition.
We know Japan holds a lot of U.S. debt and has a surplus trade balance to make their currency strong, but someone explain Ireland to me. Was their money tied to the English Pound?
There are others that are hard to figure out, off hand I think Cyprus is one, that has money more valuable than U.S.

I think The Bank of New York sets the currency exchange rates for everyone in the world except the BIS.They probably have a computer that someone constantly feeds financial data to from around the world, and the computer figures the rates. The trouble is whoever programmed the computer died and now no-one understands completely how it works.
It's all monoply money anyway, the only real money is....GOLD.

Those in the Know....Buy Gold.....beesting.


TownCrier
(01/05/2000; 22:59:15 MDT - Msg ID: 22384)
HEADLINE: Sony sends rare 'bubble' alert on shares
http://biz.yahoo.com/rf/000105/bez.htmlYou've gotta love the candor of Sony President Nobuyuki Idei. He told reporters that the company's shares were overvalued at the current price--like a "bubble." He felt the appropriate value would be the equivalent of $192 per share. Sony was presently trading at $247. Percentage-wise, that doesn't seem near as "bubbly" as many other tech stocks out there. Look out beloooooow...

One trader said, "It is surprising for a president to make such (bubble) comments about his company's own shares. It could bring some adverse effect on other high-tech stocks."
SHIFTY
(01/05/2000; 23:26:25 MDT - Msg ID: 22385)
Lemetropole Cafe
Intrigue abounds.
A must read. Keep an eye on GATA site I think it will be posted soon.
SHIFTY
(01/05/2000; 23:36:52 MDT - Msg ID: 22386)
(No Subject)
I see some of the info has already been posted by Flierdude msg Id : 22332. Glad to see nothing gets by this site!
TownCrier
(01/05/2000; 23:45:07 MDT - Msg ID: 22387)
HEADLINE: Europe to see next big wave of wealth
http://biz.yahoo.com/rf/000106/x.htmlJean-Francois Rischard, vice president--Europe for the World Bank said "It looks like European countries are now getting ready to catch the wave that started in the U.S. around the new technologies." He said in regard to a correction in the U.S., it would be hard to predict. "People have been wrong year after year...forecasters in general have not been doing very well." But he also said that "if Europe continues to grow at this pace, if there happens to be a weakening of the growth rate in the U.S, then Europe would be able to keep on going."
beesting
(01/05/2000; 23:56:06 MDT - Msg ID: 22388)
From Verdigris at Kitco about Warren Buffett..
http://cbs.marketwatch.com/archive/19991227/news/current/brk.htxArticle says:
The stock price of Berkshire Hathaway a holding company comprised of Buffetts favorite stocks is on the way to posting it's first annual decline since 1990. The stock has dropped 23%. Mr. Buffett refuses to invest in high tech stocks. Click URL for full story.

Now I think I have a little insight into Mr. Buffetts huge Silver purchase almost 2 years ago.
Mr. Buffett believes in tangible assets!Mr. Buffetts holding company owns many companies. If the stock market nosedives and his companies own buildings outright, real-estate, machines, equipment etc.,those things will still have value, and if the companies produce products that are always in demand, he is still in business.(batteries??)

Silver is an industrial metal and a store of wealth! If there is a great downturn in the economy and stocks lose much of their value, Mr Buffett is still in great shape because the Silver should go way up in value along with Gold.The rich get richer no matter what!....beesting.
CoinGuy
(01/06/2000; 00:41:53 MDT - Msg ID: 22389)
Bloodbaths and the S&P futures
ALL: Can anyone tell me where there is a good place(besides livechats.com) to check the S&P futures?

Bloodbath in Hong Kong again...down 1030.

Boy you know things are bad when Russia's looking bullish...

CoinGuy
Netking
(01/06/2000; 01:02:06 MDT - Msg ID: 22390)
Sony gives rare "Bubble Alert"
http://biz.yahoo.com/rf/000106/bu.html2.35am EST - Excerpt "...Sony Corp's president Nobuyuki Idei told Reuters on Thursday that his company's shares were overvalued, unleashing a ``Sony shock'' slide in Japan's high-tech sector and helping take the entire Tokyo index lower again.The outspoken Idei said that 20,000 yen ($192) was an appropriate price for his company's stock, given its current earnings levels. Anything above that would be ``a bubble,'' he added. On Thursday, Sony was trading around 25,700 yen.
...It closed at 25,700 yen after declining a daily limit of 2,000 yen or 7.22 percent in the morning, and off 20 percent from an all-time high of 32,250 hit on Tuesday..."
(Keep watching this space folks)


Peter Asher
(01/06/2000; 01:05:12 MDT - Msg ID: 22391)
Coin Guy
SP0H and hit "All sessions"0 is for the year digit, and H is for March.
CoinGuy
(01/06/2000; 01:07:45 MDT - Msg ID: 22392)
Thanks
Peter Asher,

Thank you kind sir...

CoinGuy
SteveH
(01/06/2000; 01:24:51 MDT - Msg ID: 22393)
repost
www.gold-eagle.com[ Add Message ] [ Register ]



Select Previous Periods Dec 31, 23:00Jan 01, 07:00Jan 01, 10:00Jan 01, 12:00Jan 01, 14:00Jan 01, 16:00Jan 01, 23:00Jan 02, 07:00Jan 02, 10:00Jan 02, 12:00Jan 02, 14:00Jan 02, 16:00Jan 02, 23:00Jan 03, 07:00Jan 03, 10:00Jan 03, 12:00Jan 03, 14:00Jan 03, 16:00Jan 03, 23:00Jan 04, 07:00Jan 04, 10:00Jan 04, 12:00Jan 04, 14:00Jan 04, 16:00Jan 04, 23:00Jan 05, 07:00Jan 05, 10:00Jan 05, 12:00Jan 05, 14:00Jan 05, 16:00Jan 05, 23:00 Current Postings


@TheBox and Dines' recommendation of FN
(kidklondike) Jan 06, 02:54

FYI, Franco-Nevada, not only has royalties on gold mining companies (including Barrick) but has royalties on Stillwater's palladium as well.



@Flambeur
(skyred) Jan 06, 02:43

Re: "I used to be one who thought this talk of a gold cabal was way too "out there" to warrant wasting time on. Now, I am not so sure."

Welcome to the school of believers! Now you're beginning to understand. It is like looking at one of those holographic pictures. At first you see only a jumble of colors, then suddenly: Bam! You see it! The real picture beneath the surface is as clear as anything. Keep asking questions! You are very astute. I'm sure you'll be able to explain all of this for our benefit.

A Bientot!



Hello
(nasdaqbubble) Jan 06, 01:07

Prediction:Nasdaq top=4192 (January 4,2000)

Dollar Versus Euro
Why is the bottoming of the Euro versus the dollar so Important to me?
Several Reasons, but i'll focus on two straightforward ideas:
1)leverage-speculators are using the weak euro to convert that currency to dollars and eventually play in the u.s equity and bond markets. Similiar to what the weak yen versus the dollar meant for u.s bonds until about 18 months ago.(hint:carry trade opened the door for speculators to borrow yen very cheaply, convert into dollars and then buy u.s bonds. The disparity in rates between the U.s and Japan gave investors an easy 3-4% As long as the dollar remained strong, foreign repatriation was profitable. If the dollar weakens then converting back into home currency proves less profitable.Basically, u.s bond demand was artificially strengthened and u.s rates remained low thanks in part to that weak yen.
Importance-source of cheap liquidity,take away the trade and the unwinding process becomes quite painful. Lots of leverage to unwind, Folks!

2)Psychology-Eventually a strong euro will represent a currency that is in favor by investors because of its strong backing towards gold.(The euro has a larger percentage of reserves backed by gold then the dollar). I believe that a serious move into the euro and out of the dollar will signal that the big boys percieve trouble with the paper world and must look for the safest fiat currency to protect their money.
You could just put your money into physical gold and avoid sleepless nights due to a future currency crisis.
Why make life easy?HMM?

A theory- The bottoming of the euro versus the dollar should coincide pretty closely to the second and final bottom for Gold.
Ramifications- If the euro has bottomed or if the euro has to test the bottom again versus the dollar and then proceeds to hold the bottom. My theory says that Gold should then bottom out in the not to distant future .

Guess- if the euro bottoms within a month or if it has already bottomed then gold should produce a second bottom somewhere between 260 and 280.
Maybe my theory is wrong, but its my best guess to how this whole big game plays out.

Stock market- You know the bulls will come out defending the market. i would not be suprised to see an attempted rally to new highs. I just don't see news high for the Nasdaq. I am bearish and will stay so even if my statements end up being wrong. I will accept being stupid and move on.

The reality of the matter- my bearishness is for real. what i want to make clear is my purpose. I post to let people know about the risks inherent in the u.s equity market. I just want to see people protect their hard earned money. That's all. If the market goes up forever and your in stocks then good for you. Bless You. If I am right, then i hope people will have heard both sides of the story before it plays out.. At least then, the investor can say that,"yeah, it was a bubble"," yeah, i knew there was risk , yeah, i knew that stocks could go down , but i decided to take the risk and accept the consequence whether good or bad!
Peace,
Nasdaqbubble
THE FOLLOWING STATEMENTS ARE ALL OPINIONS AND SHOULD NOT BE CONSTUED AS INVESTMENT ADVICE. READ MY POSTS FOR HUMOR IF NOTHING ELSE.
PEACE,
NASDAQBUBBLE


el St.One
(01/06/2000; 01:44:12 MDT - Msg ID: 22394)
S&P 500
CEF Centeral Fund Of CanadaAs of 3 AM EST S&P 500 Down 15.50 During the over night session.

Also is anyone watching CEF. It is down from 4.25 to 3.75 in 3 days. Unusually large move. Looks bigger than the drop in Gold and Silver. Any info or guesstimates?.........el

Netking
(01/06/2000; 03:32:33 MDT - Msg ID: 22395)
el St.One
Morning - Looks like POG touched around 279 territory this morning. Commercials (Comex) appear to be net short again...I think that there will probably be drifting & a little weakness for a while until the equity shakeout in Q1 is complete & we find a bottom here. Then we'll see further strength in the precious metals. There may be some very short term equity consolidation soon until Mr Greenspan confirms his numbers...a rate increase by a full point or what, then more drops on the markets, the shakeout this time could get 'ugly'.




PERMAFROST
(01/06/2000; 04:42:35 MDT - Msg ID: 22396)
Final thoughts...
Dear forum participants,

I've visited with you for a while and now it seems I shall be disappearing soon from the vista of your computer screens...

Last comments before je m'en vais...

I'm disappointed that many of you compartmentalize life, reducing it to a VERY-LOW common denominator, "It's the economy, stupid!" Not good, IMHO (now that I know what the acronym stands for).

As for the Euro being consecrated the next fiat/ponzy scheme champion...It ain't gonna fly because the conditions that induced the almighty dollar to earn its seignorage CANNOT be reproduced to birth the dollar bis (the Euro).

These included:
1) The virtual self-annihilaton of all the industrialized nations of the world (WW1 and WW2) EXCEPT the USA.
2) The Marshall Plan extravaganza which lulled and coerced the world entire into believing that the USD had real lasting intrinsic value. Various schemes and means of implementations were employed. To give you an example; the country I reside in today, Turkey, was given millons of dollars of credit with the attached stipulation that only AMER�CAN tractors be bought with the money. Similar things were done in Europe on a greater scale. This amounted to the US writing itself a check when it had no money in the bank. Later, when the Europeans and the rest of the world refurbished their infrastructure and began producing goods and services America printed more dollars and gladly exchanged them for their products. More dollars were injected into the financial system in the process. The hapless foreigners KEPT the dollars they received and "saved" them in dollar-denominated financial instruments inadvertently filling the empty coffers of the Bank (the USA) that had printed them in the first place. Effectively, the US received another check out of the blue, as it were. The rest of the world having thus converted half a century of labor and goods produced into dollars, the dollar became the global villagers' de facto TRUE currency which has superseded all prior forms of value. Everything and everyone has its price and that, you can bet your coin that "legal tender" dollar it is.

To implement the dollar bis, or the Euro, would require nothing short of WWIII. Not in the cards. To attempt measly little schemes like getting South America etc. indebted in Euros to force them to sell dollars to service Eurodebt is financial nonsense and monetary hara-kiri. Why? a)The Euro is officially backed by a big NOTHING, hence NOT a value in itself; b) the dollar constitutes a greater portion of EU reserves than gold and selling dollars (emptying one reservoir) to buy Euros (into another) will diminish the intrinsic value of the Euro itself (leaves you with the same amount of water); c) When the Europeans sell their A�rbuses or Mercedeses or French wines they receive DOLLARS in return--to get Euros instead would prescribe another Marshall Plan type con job (printing paper that a desperate, decimated population is willing to accept as if it were as good as gold) whereby the Europeans surreptitiously inject massive amounts of new paper to supersede the old paper. Again, that spells WWIII and a big NO WAY!

Cavan Man, you're right about human nature...

I will finish by repeating what I always said, in one form or another: If the Game ends, the "wise men" (Oro, FOA, Stranger et al.) along with their stillborn champion the Euro, will lose as well. For the end of the game spells REALITY and that's anathema to lies--the lifeblood of fiat currencies, immorality and injustice.

Mankind, having cut off all bridges leading out of Wizard Of OZ land and standing without a grape leaf before the One beyond description has become to reality what disease is to a body. One or the other has to "go".

I'll go first. :)
Black Blade
(01/06/2000; 06:24:42 MDT - Msg ID: 22397)
More fun today?.......Coin Guy this link's for you.
http://www.cnnfn.com/markets/us_markets.htmlS&P Futures down -9.90, could be fun on the street today. Au down -0.65 ($280.10), and bonds up slightly. Coin Guy: the above link is OK for s&p futures and world markets, etc.

Just a little trivia on rising bond yields:
Historically when short-term rates such as T-bills and Fed funds rise, then it is probably a sign that markets are about to correct. T-bills (90 day) are now more than 20% higher than their 12-month lows. On 6 previous occasions since the early 1970's the markets corrected well in excess of 10%. This includes the bear market of the early 1970's, 1981, and the Oct. surprise in 1987. 30 year Bond yields closed up 6.63% yesterday. Many believe that FED rate hikes are in the cards. Let us watch the action these next few weeks.
Canuck Gold
(01/06/2000; 07:50:09 MDT - Msg ID: 22398)
beesting (1/5/00; 22:34:56MDT - Msg ID:22383)
I've been lurking for a while because I don't have much time to post at the moment but I thought I'd respond to your question regarding the Irish punt. The Irish economy has been booming since they joined the European Union. Due to the vagaries of the EU funding formulas, Ireland has been the recipient of huge influxes of funds for various projects courtesy of the mandarins in Brussels. Unemployment is way down and income levels have take a big jump.

CG
USAGOLD
(01/06/2000; 08:28:51 MDT - Msg ID: 22399)
Today's Market Report: Keep an eye on Ecuador, Gold Starts Day Quietly
Market Report (1/6/00): Gold was off slightly in the early going today
with little in the way of news to take the market one way or the other.
Bridge News reports light short covering in Asian trading and London was
quiet. Keep an eye on Ecuador in the days and weeks ahead as it seems
that country has begun the long slide into chaos. This is the country
that defaulted on its Brady bonds, whose Harvard educated president just
declared a state of emergency (He has a 9% approval rating.) and whose
currency has been destroyed in another Latin American inflationary
nightmare. This could spillover to Wall Street's international banks and
reignite the set of conditions in Latin America that almost took it over
the edge last year -- debt default, currency debasement and economic
chaos/social unrest. The Ecuadoran problem could ignite similar problems
in other South American countries besieged by high debt, low exports,
and currency printing. The Ecuadoran sucre depreciated by 67% in 1999
and plunged another 15% to start 2000. Gold has skyrocketed in that
beleagured country.

That's it for today. We'll see you here tomorrow.
Cavan Man
(01/06/2000; 09:21:09 MDT - Msg ID: 22400)
Canuck Gold & beesting
I was in Ireland recently. The change from my last visit nine years ago was quite profound. There is certainly a bit of irrational exuberance noticable there in the real estate market as one example. Real estate prices rival either US coast and maybe a bit more. Ireland, impoverished for so many years is catching up to the rest of us almost all at once. Many US comapnies have operations there. The Irishman's opinion is that if the US gets a cold Ireland might come down with the flu (short term). The longer view for Ireland is quite positive I believe. Ireland is increasingly a very European country. Also, the Irish people do like US citizens unlike so many other global inhabitants FWIW.
Cavan Man
(01/06/2000; 09:50:00 MDT - Msg ID: 22401)
USAGOLD
Ecuador is very small. How can something so small cause so much harm? Don't understand because of the "size" of the problem. Thanks.
PH in LA
(01/06/2000; 09:56:21 MDT - Msg ID: 22402)
New graphics!! (smile)
`. .�

~-~
USAGOLD
(01/06/2000; 10:32:45 MDT - Msg ID: 22403)
Cavan Man...
How can a debt and currency problem in a small place like Thailand become an infamous "contagion" spread to the entire Pacific Rim and from there threaten the entire international banking sector?
Cage Rattler
(01/06/2000; 10:50:33 MDT - Msg ID: 22404)
Are the yen carry trades starting again ?
Heard very reliably that xxxxxxx bought a billion GBPJPY six months outright today. Seems that the carry-traders are still very keen and have only just started.
fox
(01/06/2000; 11:34:35 MDT - Msg ID: 22405)
Harmony's confidence




Breaking News Sport Technology Special Reports News Roundup




netAssets news
Harmony offers R780m for Randfontein
Harmony Gold Mining Co offers a premium of about 36% over the January 5 closing market price for Randfontein Estates


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

Independent gold producer Harmony Gold Mining Company Ltd is seeking to take control of Randfontein Estates Ltd in a deal worth R780m.
A statement from Harmony said the offer was for the entire existing issued share capital and the existing listed options of Randfontein at ratios of 31 new Harmony shares for every 100 Randfontein shares held and 7 new Harmony shares for every 100 Randfontein listed options held.

In addition, Harmony is offering a cash alternative of R11 a Randfontein share. There is no cash alternative for Randfontein's listed options.

Application will be made to list any new Harmony shares that will be issued on the Johannesburg Stock Exchange (JSE), the London Stock Exchange (LSE) and the Paris Bourse, where Harmony is currently listed.

Based on Harmony's closing price of R37.85 a share on Wednesday, and assuming the share offer is taken up in full, the offer values each Randfontein share at just over R11.57 a share and the entire issued ordinary share capital at some R750.29m.

The valuation does not include the proposed interim dividend of 50c a Harmony share to which accepting Randfontein shareholders will not be entitled.

The offer also values each Randfontein listed option at 261.45c a listed option, and all the listed options at approximately R31.37m, making for a total buyout in excess of R780m.

Harmony said the share offer represented a premium of approximately 36% over the closing market price per Randfontein share of 850c on January 5, while the cash alternative represents a premium of approximately 29%.

As for the offer for Randfontein listed options, the offer represents a premium of approximately 41% over the last closing market price of 185c each.

The deal is subject to various conditions, including the scheme of arrangement proposed by Western Areas Ltd (WAR) on December 6 last year between it and Randfontein not being implemented.

In addition, valid acceptances from Randfontein shareholders holding not less than 75% of the issued ordinary share capital (or such lower percentage as Harmony may decide), approval as may be required by the Competition Commission, the JSE granting a listing of the new Harmony shares, and all other necessary regulatory clearances will be required.

"There is a natural fit between Harmony's and Randfontein's assets, and this combined with Harmony's proven track record in transforming high-cost, mature operations, such as Randfontein, into low cost high productivity producers, will result in unlocking considerable operational and shareholder value as we have recently demonstrated with Evander," said Harmony chief executive Bernard Swanepoel.

"Harmony is confident that the acquisition will create value for Harmony shareholders, in which the Randfontein shareholders can participate through the exchange offer," Swanepoel added. "Our confidence is reflected in the board's decision to fully back the offer with cash."

A successful acquisition will see Harmony become the sixth biggest gold producer in the world in terms of ore reserves and production, with annual production increasing by more than 50% to approximately 2.2 million ounces.

Hilton Shone, I-Net Bridge















� I-Net Bridge (Pty)Ltd
Disclaimer
Add to Favorites








Breaking News Sport Technology Special Reports News Roundup




netAssets news
Harmony offers R780m for Randfontein
Harmony Gold Mining Co offers a premium of about 36% over the January 5 closing market price for Randfontein Estates


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

Independent gold producer Harmony Gold Mining Company Ltd is seeking to take control of Randfontein Estates Ltd in a deal worth R780m.
A statement from Harmony said the offer was for the entire existing issued share capital and the existing listed options of Randfontein at ratios of 31 new Harmony shares for every 100 Randfontein shares held and 7 new Harmony shares for every 100 Randfontein listed options held.

In addition, Harmony is offering a cash alternative of R11 a Randfontein share. There is no cash alternative for Randfontein's listed options.

Application will be made to list any new Harmony shares that will be issued on the Johannesburg Stock Exchange (JSE), the London Stock Exchange (LSE) and the Paris Bourse, where Harmony is currently listed.

Based on Harmony's closing price of R37.85 a share on Wednesday, and assuming the share offer is taken up in full, the offer values each Randfontein share at just over R11.57 a share and the entire issued ordinary share capital at some R750.29m.

The valuation does not include the proposed interim dividend of 50c a Harmony share to which accepting Randfontein shareholders will not be entitled.

The offer also values each Randfontein listed option at 261.45c a listed option, and all the listed options at approximately R31.37m, making for a total buyout in excess of R780m.

Harmony said the share offer represented a premium of approximately 36% over the closing market price per Randfontein share of 850c on January 5, while the cash alternative represents a premium of approximately 29%.

As for the offer for Randfontein listed options, the offer represents a premium of approximately 41% over the last closing market price of 185c each.

The deal is subject to various conditions, including the scheme of arrangement proposed by Western Areas Ltd (WAR) on December 6 last year between it and Randfontein not being implemented.

In addition, valid acceptances from Randfontein shareholders holding not less than 75% of the issued ordinary share capital (or such lower percentage as Harmony may decide), approval as may be required by the Competition Commission, the JSE granting a listing of the new Harmony shares, and all other necessary regulatory clearances will be required.

"There is a natural fit between Harmony's and Randfontein's assets, and this combined with Harmony's proven track record in transforming high-cost, mature operations, such as Randfontein, into low cost high productivity producers, will result in unlocking considerable operational and shareholder value as we have recently demonstrated with Evander," said Harmony chief executive Bernard Swanepoel.

"Harmony is confident that the acquisition will create value for Harmony shareholders, in which the Randfontein shareholders can participate through the exchange offer," Swanepoel added. "Our confidence is reflected in the board's decision to fully back the offer with cash."

A successful acquisition will see Harmony become the sixth biggest gold producer in the world in terms of ore reserves and production, with annual production increasing by more than 50% to approximately 2.2 million ounces.

Hilton Shone, I-Net Bridge















� I-Net Bridge (Pty)Ltd
Disclaimer
Add to Favorites




Aristotle
(01/06/2000; 11:44:16 MDT - Msg ID: 22406)
Jean-Luc Picard meets Ebenezer Scrooge
Here's some food for thought, somewhat appropriate with the holidays still near at hand. I had the good fortune to once again extend my tradition of listening to the pleasant voice of Patrick Stewart in his performance of his one-man adaptation of Charles Dickens' "A Christmas Carol." Don't miss it if you get the chance.

My purpose with this post is to inspire a bit of thought--in a novel way--regarding the value of money, particularly the value of Gold. We have come so far from the days when Gold was used directly in payment that many of us haven't the foggiest notion what Labor is worth in terms of real money compensation. While this example doesn't hold the many variables constant in this "Then vs. Now" comparison, I believe it comes close enough for a non-scholarly approach to merit my time writing and your time reading. If not, you have my permission to pull my hair or pinch my nose.

The following scene is from the beginning, just as Scrooge's nephew paid a visit to Scrooge's counting-house, failed at bestowing his uncle with good cheer, and was dismissed from the old miser's office with a curt "Good afternoon!"
___________________________________________________
...His nephew left the room without an angry word, notwithstanding. He stopped at the outer door to bestow the greetings of the season on the clerk, who cold as he was, was warmer than Scrooge; for he returned them cordially.
"There's another fellow," muttered Scrooge; who overheard him: "my clerk, with fifteen shillings a week, and a wife and family, talking about a merry Christmas. I'll retire to Bedlam."
___________________________________________________

This is where we get our lesson for today. Bob Cratchit, Scrooge's clerk, was able to scrape by on 15 shillings a week with a wife and six children, though admittedly, his eldest daughter, Martha, had already left home by this time. He sure couldn't pull off that feat today. So when did he?

The setting in time I can't state with certainty, though when Charles Dickens penned the prefatory note he signed and dated it with 1843. I don't believe he wrote the novel to be taken as a view of antiquity, nor a glimpse of the future. A contemporary novel is what we have then, and the setting is London in the early-1800's.

To make some sense of Bob Cratchit's 15-shilling-per-week salary, we'll also have to look at what a clerk makes today in the year 2000 (in terms of modern money), and then find some common ground for the two.

I shall implore our fellow poster, Usul, or anyone else intimately familiar with the British monetary system of the time, to ensure that my numbers have merit. By my understanding, one pound Sterling silver (92.5% silver, 7.5% alloy) at that time in the realm was comprised of 62 --a result of a long history of monetary fiddling whereby the value of the shilling was debased by the successive monarchs. (At least, I can say that as of 1798 the value as minted was 62 shillings per pound Sterling; cf. Sir Charles Jenkinson, 1805.)

So, Bob Cratchit's weekly salary of 15 shillings was slightly under one-fourth of one pound Sterling. It is now important to know that the beautiful British Gold sovereigns that our very good host sells were minted to be the convenient single Gold coin equivalent to the otherwise unwieldy pound Sterling. (My own oldest gold sovereign dates back only to 1880, so I rather doubt that Scrooge himself ever held it.) For those of you that don't know this, a British Gold sovereign contains slightly less than one-fourth of an ounce of Gold (0.2354 to be exact.)

Here's where this story comes together. Bob's weekly salary of one-fourth pound would have also been one-fourth of a sovereign. Bob Cratchit would have to work four weeks (one whole month) to earn a full Gold sovereign--on which he supported his wife and large family.

Let's look at a typical clerk's wages (and the labor price of Gold today.) I'm going to assume a "wretched" clerk like Bob Cratchit, working for a miserly boss like Scrooge today would be making $6.25 per hour; but perhaps it would be higher--could he support a large family on $6.25/hour?? The weekly salary in a 40 hour week would be $250--the equivalent to Bob's 15 shillings. At the end of the month, that would be $1,000--the equivalent to Bob Cratchit's Gold sovereign.

Gold is the Great Equalizer throughout human history, so I suggest you try to temporarily dismiss its paper price as measured in currency. Instead, try to focus on Gold's true value as measured by its "labor price." Sure, it might fluctuate a bit, but is the above example reasonable? Assuming for convenience that a Gold sovereign was priced at a nice even $100 each, our modern-day clerk could convert his monthly salary into 10 sovereigns, whereas Bob Cratchit only got one. Is the labor of the modern clerk at $6.25 per hour worth ten times the relatively equal service (adjusting for the expectations of the era) of Bob Cratchit?

In terms of Gold, Bob Cratchit was probably fairly paid, whereas with the absurd Gold price today, our modern clerk is grossly overpaid. The only problem with my math is whether or not it is reasonable to expect a modern clerk to be paid only $1,000 per month. Whatever dollar salary you want to give this modern clerk, that should be nearly the currency equivalent of the labor value we find in one single Gold sovereign. If $1,000 is fair, then we have a currency price for Gold that is $4,000 per ounce (four sovereigns per ounce.) If a modern clerk is paid $2,000 per month for his labor (can he support six kids on that?), then Gold value should more appropriately be priced at $8,000 per ounce.

Take a lesson from Bob Cratchit...a man in simpler times who provided for his large family on one tiny sovereign per month. Should Gold's recognized value make its long overdue adjustment to its historical labor-value, I hope you have been setting aside a simple clerk's wages in Gold during this modern-day era of excess and cheap Gold. Paid in dollars, you are surely underpaid. If you convert to Gold, you don't deserve it!! Smile big, and enjoy your life!

Gold. Earn you some. ---Aristotle
rsjacksr
(01/06/2000; 13:31:49 MDT - Msg ID: 22407)
Report finds audit violations at PriceWaterhouseCoopers
http://biz.yahoo.com/rf/000106/6u.htmlBy Peter Ramjug

>>>>>WASHINGTON, Jan 6 (Reuters) - Nearly half of the partners at PricewaterhouseCoopers LLP, the
huge accounting and consulting firm, admitted violating rules that prohibit auditors from owning stocks
in companies whose books they examine, according to an independent report released Thursday.

Written by Jess Fardella, a New York lawyer appointed by the Securities and Exchange Commission in
March to review auditor independence violations at the firm, the 127-page report found ``serious structural and cultural problems,''
the SEC said.

Pricewaterhouse Chairman Nicholas Moore and Chief Executive Officer James Schiro said in a letter to employees: ``These
infractions of the independence rules, however unacceptable, did not in any way impair the professional objectivity and integrity of
any of our audits.''

The firm said it has put in place new measures to prevent future violations.<<<<<<

Yeah! Right! Want to by a bridge???
ORO
(01/06/2000; 14:06:32 MDT - Msg ID: 22408)
Equity market out of kilter
The January effect in beaten down value stocks is in full bloom. The advance decline line looks better than it has in quite a while, yet the SP futures have been under heavy selling since the last trading day of last year.

The indexes are so laden with low float tech stocks that the selling of the SP500 and ND100 futures is having a strong negative effect on these stocks (where the selling is receiving the same leverage on the way down that had exaggerated the move up).
The stocks on the economically sensitive front, those that did well in the end of last year's first quarter - oil, paper, aluminum/metals, are all doing well, though the stock indexes have been below fair value for over 1/2 the time since the open of trading Monday.

For some reason, the portfolio insurance fiasco of 1987 comes to mind. Futures are being sold and individual value stocks are being bought. This could be the result of hedgers using the SP and ND to hedge their heavy exposure to these stocks while they transfer funds to value stocks.

Bank and utility stocks are saying that rates have done most of their move for a short while - say somewhere around one month, perhaps longer.

Town Crier, has the Fed actually drained liquidity from the banking system?
Au-some
(01/06/2000; 14:41:54 MDT - Msg ID: 22409)
Y2K Cash Infusion
A New York Times article from last weekend states that "The Federal Reserve filled vaults with an extra $70 billion infusion in anticipation of a frenzy that never happened. The money could end up shredded in a landfill."
A landfill? What does this tell us about the true value of a FRN? Garbage in, garbage out.
beesting
(01/06/2000; 14:48:16 MDT - Msg ID: 22410)
The United States Mint
http://www.usmint.gov/bullion/annualsales/sales1999.cfm#goldtotalsFrom the U.S. Mint Webpage:
In the more than 200 years since Congress created the U.S. Mint on April 2, 1792, the Mint has grown to a fortune 500 size company with more than 1 Billion in annual revenues and 2,200 employees, and the worlds largest manufacturer of coins, medals, and coin based consumer products.

Some figures:

1998 - Sold 1,839,500 ounces of Gold, or a little over 57 tonnes. A new sales record up to this point in time.

1999 - Sold 2,023,000 0unces of Gold, or almost 63 tonnes. A new all time sales record, and I don't know if these are the final figures for 1999 or not.

Comment:
The Mint is without a doubt one of the worlds largest companies with over 1 Billion in annual sales. Where I live little or no high pressure marketing of products, in fact a seemingly continuous negative main stream media blitz, of their base products.
Sales prove a HUGE retail demand for precious metals in the United States and worldwide.

Can anyone reading this imagine how much product would be sold with marketing like, Taco Bell, or Coors Beer, or any of the automobile companies?
Gold is an obsolete relic, SSSHHHHEEEEEEEEESSSHHHH!!!!Get Real!!!!

Those in the Know.....Buy Gold.....Statistics prove it.....beesting.
ORO
(01/06/2000; 15:05:40 MDT - Msg ID: 22411)
SteveH - An Evolution of Understanding
SteveH (1/5/00; 0:58:09MDT - Msg ID:22310)
Thanks for the kind words.
--->You are coorborating Another and FOA. You are validating their message. You are saying that physical gold delivery is in jeapordy against paper-contracts.
I am incorporating their message into the steel girders of my building. I do believe it is steel, since all the tests available to me reveal it as such. Their story, with significant modification, comes to 1/4 to 1/3 of mine. I have validated the message as far as I could, and now use it as part of mine.
----------
There are only three resources available on this planet, knowledge, labor, and oil. There is only one kind of catalyst for these to come together and form prosperity: freedom. Respect of property rights at all levels being the foremost. Oil can be replaced, but at a tremendous cost. Labor can be educated and capital can be brought in to make it effective. Knowledge is key to economic strength, as is the function of utilizing knowledge through entrepreneurial freedom, economic and fiscal discipline, and a healthy regulatory environment.
The US, with the anti-culture egalitarian attitude of its people and the imported English and German academic mysticism, self destructed on the education front. Because of the short sightedness of the industrial and political leaders doing the calculus of the old industrial world of the middle of this century, they let the un-knowledge academic mutants from Oxbridge's dank dungeon take over American education. Though the US continued to import the best minds of science, most of its natives were too far gone by the time they hit the universities. Their brains just could not come to speed after years of neglect at public schools. Though elite education is still the finest there is, the diffusion of trained and cultivated brainpower in the US is limited to a minuscule portion of its people.
The result has been a continuous losing streak in the use of the many technologies invented or perfected in US universities and laboratories. Far better educated Japanese, Europeans, and now Chinese, Koreans, Taiwanese, Singaporeans, Israelis, and even Indians, could take American inventions and reproduce them, improve them, and produce them more efficiently. Much of the deep brains of US high tech come from the newly - and well - educated technical elites of these countries. The American educational experience has been so overwhelmingly negative, as to overcome the much healthier regulatory and entrepreneurial culture of the US. Had Reagan closed the borders to these people as many of his voters wanted, we would have been the backwater hicks of the globe, a standing lesson in how a superpower turns to dust.
Part of the reasoning behind the crazy accounting standards for tech companies today (ESOPs) comes from the need to hang on to leadership in the cutting edge technologies and to do so without the government making the choices, but the markets themselves. The technology sector was given this bookeeping trick to help in getting leadership first, and then maintaining it. In order to do this, the paramount concern was the price of US techies, that is the highest in the world, be kept off the books. Because of their scarcity, capable techies garner a much greater premium for their services than they do anywhere else. Of course, the US and California entrepreneurial culture and easier regulatory climate also make them more valuable here, because a higher return can be obtained from their services (at least prior to the ESOP thing going so far out of hand).
---------
--->Most importantly you are saying that gold's role in world economic affairs is as strong as it ever was, it has merely been placed in reserve ball section of the big economic pinball game in order to allow the dollar ball its turn on the board and it has been bouncing around since 1971. As long as the dollar was the only ball able to be played, all the bumpers and flippers have been keeping it bouncing around and using the ball to keep the game going.
For years, I could not understand how the dollar could stabilize in 1980. It was a complete mystery to me. Austrian monetary theory, which I studied with the intense interest of youth, alongside Monetarist theory, was giving no clue as to how the dollar could be stable at all once the arbitrage to gold through redeemability was closed to everyone - CBs included. You see, up to 1971 there was someone somewhere that could exchange dollars for gold at a fixed exchange rate. That is all you need to keep a currency stable. The rest of the currencies could then be tied to the only one having a fixed exchange to gold.
According to Mundell's version of Gresham's law, the dilution of currency begins when the float of a fully convertible currency exceeds backing. The effect is at the margin. The currency would be accepted at face value outside the country of issue up to the point of the volume of notes in circulation leads those outside the country to suspect the issuer would not redeem all currency in specie (gold). In the US, 1933 marked the poing at which the external float of the dollar was made the target of gold backing. The conversion of dollars within the country ceased. Thus, in effect, using Gresham's law in reverse. The external float was backed completely. This allowed the retention of monetary expansion within the country, while removing the problem of discounting conversion at the margin. The dollar had retained its value by allowing exporters to the US to convert their dollars to local currency at the local Central Bank, which could arbitrage between the dollar and gold - through redemption in specie by the Fed.
The obvious experience of the 1970s was that in a floating exchange regime, all currencies would lose value constantly. No manner of government intervention could stop the world from the realization of an inflated currency being worthless. The only way this slide could be stopped was the re-establishment of a fixed exchange to gold or another commodity of value. The newspapers and the financial magazines never revealed such was in existence.
1980 to date saw a mechanism constructed and tinkered with to stabilize the system. The Romans took over all the gold and silver mines in all the territories they took over. They took their seigniorage from the fact that they controlled the only sources of the commodity backing their money. Even then, the value of Roman coin fell in accordance with its diluiton by non-precious components. Something of that nature must have occurred. ANOTHER and FOA gave us quite a few clues as to how this was done. They showed us how oil was used to pull it off.
Like the Romans before us, Americans got the dollar back on track by taking control of the only sources of the alternative commodity money, oil. It was only possible because of fortune's toss of the oil dice; the concentration of the cheapest oil in such a confined area and in the hands of such a very small group of people (the oil Royals) willing to cooperate fully in return for services they needed for protection of their underground wealth and for the continuation of their young dynasties.
In fortune's cast of the golden dice, the gold "just hapenned to fall" within the British Commonwealth (BC), now being administered from Washington and New York, but financially managed in London by the gold experts. The remnants of Empire taken over by Americans at war's end provided what gold was necessary for the sustenance of the dollar and the world economy. The external partners of this revived Rome, now ruled by a Barbarian Emperor, were mainland Europe, Sovietsky Soyuz, Japan, Emerging Asia, South America, Arabs and Gulf oil. The BC (a.k.a. NWO, or US/IMF, all now rather old and ragged), had all the resources needed but for oil. It had all the gold needed to trade for this oil. It had all the military force outside of SSSR since the end of WWII, and could take the oil if it became necessary to do so (e.g. running out of gold). The limit to this being that the rest of "those that could do something about it" didn't.
Mainland Europe was the major consumer of Gulf Oil and would retaliate against any attempt by the US "Grabit" (I just love Infomagic's term), leader of the BC, to take hold of the black blood of Europe's economy by unleashing its great Circus Bear, which cost alot less than the BC Elephants and Mules, but was more dangerous to use because of its carnivorous/omnivorous nature. Did you ever think of the "why" old Sovietsky was lent so many dollars to default on if they could not feed their own people? Wouldn't it have been better for the West to let their archenemy starve? Reagan, of all people, got this ball rolling - feeding the people of the Evil Empire with US grain. By the time Gorbachev was in the Soviet display window, Europe was getting natural gas from him to heat its cozy appartments. Obviously, there was something of a play by Mainland Europe to keep the two sides going at each other on the military front, and to work the one major (Saudi and satelites) and the three minor (Venezuela/Mexico, Russia/Caucasus nations, UK/Norway) energy suppliers against each other.
We don't speak of this often, but there were three major countries that lost WWII, Germany, Japan, and France (Italy isn't and never was a major). The French lost to Germany, the Japanese and Germans to the BC and SSSR. The French were allied to the reconstructed Germans since WWII, and they have become very chummy. The rest of Europe has joined together around them. I am referring to Europe Ex UK, which was still vacillating between its BC remnant of the past, and being just another unequal among the many of the EU.
The role of South Africa and Israel in the situation is very interesting, particularly as it pertains to China. Much of the gold needed to pay for Arab Oil in particular and for BC commerce with the rest of the world, in general, could only come out of South Africa. Furthermore, it had to come out of South Africa in direct trade for dollars, and nothing else. The embargo against them, in the name of eliminating Appartheid was intended to pressure them, through the control of their borders, to play along with gold deal, and not make one with Arab Oil and Asia (China in particular, but it's quaking neighbors too). In the mid 70s, Israel started trading with China. Israel gave weapons and training to China at unheard of premiums. This was the result of Chinese skirmishes with the Vietnamese.
The US experience of the Vietnam war was the catalyst for the Chinese break with the Four's cultural revolution legacy of destruction. The Chinese were impressed by the US equipment, though not with the soldiery or pollitical will. They decided to turn away from Moscow because of the danger of Vietnamese from the South and Russians from the North threatening their survival. Having turned away from Moscow and having swept the country of nearly all capacities, particularly military abillities, the Chinese were not capable of fending off the Vietnamese. Washington was willing to keep the Vietnamese occupied, but not willing to trade weapons directly with China. Israel took upon itself the role of building China's military. The story was recently published, you can read it in the Times (London) or the English edition of Haaretz (if you wish to pay their rather high price for an otherwise excellent foreign newspaper) on the net at http://www3.haaretz.co.il/. The Chinese traded goods for Israeli technology, training, and military supplies. The goods were traded for dollars, the dollars were traded for raw materials and gold from South Africa. Without this help, the Chinese would not have opened up as far as they had.
The friendly relations of Israel and South Africa were necessary for the secret trade relations with China, and to provide an additional conduit for South African gold to go to the West. I don't know how pivotal the connection was, but I know it was there. South Africans got to purchase whole industries back from European and US corporations at a super steep discount. In return, gold was smuggled out to maintain the dollar. Some materials were also traded with China directly and through Israeli and Swiss intermediaries.
The global trade system needed the dollar to survive in order for the SSSR to be defanged and to make it let go of the Central European states that the EU would eventually need for trade, a manufacturing base and investment. China and Asia needed to come alive economically because the US, Europe and Japan were all aging quickly and could not possibly find the resources to both care for the aged and produce the goods the caretakers need. I have not discussed this much, since I am still burried in the spreadsheets, combing through demographic statistics.
All of the major parties to the global economy needed this to happen, and they cut the deal with China to that end, and become a fourth pole for a multipolar military world. The one thing left was to reach a means for savings which would be fair for all involved (particularly to the mildly belligirent BC and the Russian bear, but also for China and it's quaking neighbors). It became obvious, at some unknown point, that the gold trade would have to come to the surface for the world economy to allow for transnational savings. One of the keys, however, was that the actual money, the gold, go to the Chinese, Asians, etc. who would supply the goods for the old retired Europeans only at a later stage. When Asia redeems the currency for gold only after European liquidation of its holdings in Asia. In this way, the goods could be kept flowing without their gold price rising significantly while Europe goes through their baby boom retirement hump.
China's baby boom generation will reach peak productive output in 2020, if I remember right. Those of other Asian nations will be coming into their best years within 10 years before and after the Chinese. If the deal could be made that would allow Europe, Japan, and (when Americans finally feel like saving something) the US to invest where the demographics run counter to their own, then both sides would benefit if there is either an ingrained system of respecting private investments, or the final say remains in European hands through starting out with an incovertible, but completely backed currency, and later transitioning to a convertible currency, when the Europeans are at their most vulnerable demographically.
The Japanese, going through a similar demographic hump, though a more severe one, had to meet the problem earlier, and had chained themselves to the dollar. Either because of theoretical difficulty with the economic analysis of the EU and Oil economists, or because of some other issues, perhaps the need to have the US protect it from China and Russia, the Japanese did not come on board and they rely on a stable dollar yen to both buy up US productive assets, and to have the US capable of buying its production till it tapers off with the declining poppulation. The buildup of Japanese owned productive capacity in the US was necessary so that the US supply it with real goods in return for dollars repatriating to the US. When the time comes for it to redeem the dollars in its portfolio (Treasuries) for goods produced in the US, there must be something produced here for them to buy. Further down the road, they would sell these assets, and use the proceeds for the purchase of additional goods.
By the way, if Japan's economic statistics are coupled with the US statistics, you get a much healthier economy than each seperately.
--->For some reason, it became politically unexpedient to have gold be tradeable currency when the dollar defaulted gold in 1971. It even became dangerous to have gold be considered an alternative and so it was allowed to drop in price to where we are today. And that is why gold isn't popular and yet remains the most sought after asset next to oil of any asset. Incredible move on the players part.
--->To rephrase, gold and gold backed currency abounded up until 1971. Dollar defaults, then gold begins a ten-year meteoric rise in price until 1980. From 1980 gold is seen as a loosing proposition by citizens while in the background gold is traded off line just like before except with a twist of derivatives and hedges. In the first 3/4 century it was "gold-is-official." In the ensuing years, it was gold is "dead" but it really isn't because we will just use gold and trade it off market and hidden from view but we all know how important it was, is, and will be.
These are all nice summaries, but the main thrust is that there actually was an attempt at the time to do the fixing of the dollar on the public markets. It didn't work well because of the missing dollar demand to satisfy debt, which just was not there till later in the 70's. The dollars paid for US oil imports just flooded the market. Furthermore, the dollars Arabs used to buy gold still had to go somewhere. They bought F-14s and F-15s till they could not find enough candidates for floight school to take the aircraft off the ground. They still could not do anything with the dollars but to dump them into the European banks, over and over.
The Fed, had to continue monetizing the debt from the late 50s debt bubble, or face bank collapses. The banking laws limiting interest rates payable to depositors, and creating of the mortgage guarantee resulted in the formation of a debt aggregation industry, that caused an increase in borrowing just as the US was undergoing the biggest labor force expansion it had ever seen.
--->Somewhere along the way and in the last five years, oil demand outstripped the ability of gold production and pricing to keep up and so now we have a supply-demand disparity of 30K tons if I am reading you correctly. That is 30,000 tons of gold that needs to be settled up some how and what we are witnessing now is how the folks who are interested in settling this matter are trying to figure out how to do that without destroying the dollar and causing gold to replace the Euro ball in line for the board or the gold ball from replacing them all on the board.
The whole point of having central banks has allways been to allow an exit from this kind of problem by the printing of fresh funds. The simple fact of the central bank's guarantee of liquidity prevented the gold account holders to move to full allocation.Full allocation at current gold prices can mean a 1% annual dollar loss for insurance and storage. This stands against a 1 - 2% return in the unallocated account. The CB guarantee was enough to allay concerns of account holders while the guarantees were good. Having the guarantees limited to current ammounts and supply demand deficit in the physical market being only met half way by the CBs should push investors to move away from the unallocated accounts to the allocated accounts.
This seems to have been limited by the current motion of many small CBs to provide liquidity. Presumably at the behest of the more influential account holders in the respective countries trying to protect their assets using their nation's gold reserves. The deals involved are probably very attractive. Either in terms of rates of return, or in equivalent asset value. However, they prevented the loss of confidence in the bullion banks. The gold accounts were not reallocated, and the flow of funds into gold accounts did not stop because of the liquidity problem, but increased because of the price rise. This raises the bank's gold liabilities, but still prevents people from straight out buying the bullion. Thus the accumulated diversion of funds from purchasing physical gold continues to grow. The bankers are only increasing their reserves slowly, and are likely not going to be able to obtain enough credible commitments to even come close. The fact that in LTCM bailout style they had come together to stop each other from lowering exposure is telling.

One of my thoughts about the reasons for the BOE sale have to do with shifting of positions away from European banks into US banks. The participation of the US banks in these markets has grown from 25% in 95 to 42% by my estimate for the last figures. Bankers Trust, a subsidiary of a European bank, had unloaded nearly its entire bullion banking business on JPM and CMB (Morgan Guarantee, and Chase) in one single quarter. It is probably the opportunity to unload commitments on other bankers that brought the BOE and IMF calls for gold sales. During the decline in May-June, non US banks had covered positions aggressively (hoping to get confirmation in Feb or March). US banks, however, had increased volumes tremendously in Q3.
Cavan Man
(01/06/2000; 16:06:03 MDT - Msg ID: 22412)
Aristotle 22406
Wise Teacher:

Why was the British Pound "Sterling" and not gold from the beginning? Why did the British go off gold after WWI and in what year? Was it to inflate because of the damage wrought by the war? I assume it was a liquidity crisis of some sort but not sure what sort and when.

What I am really trying to sort out is the history of "world reserve currencies" prior to Bretton woods. If you or anyone can field this I would be grateful. Thanks.

(no Plato moi)
CoBra(too)
(01/06/2000; 16:25:54 MDT - Msg ID: 22413)
Evolution of overload!
Dear ORO,
as much as I appreciate your hard work and your meticulously assembled -and mostly proven wisdom - please be so kind as to break up your affluent seminars to digestable parts and pieces for peasants like ME.
Thank you - and don't even consider my quest! -


Hallo, Fremder - GOOD TO SEE YOU BACK! -PROSIT 2000!!!
Cavan Man
(01/06/2000; 17:14:52 MDT - Msg ID: 22414)
Dear ORO
Second CB2.

So, where are we heading. Do you still favour gold metal, gold mines and inflation bonds and over what term?

Hope I am the first to buy your book.

Thank you.
CoBra(too)
(01/06/2000; 17:15:18 MDT - Msg ID: 22415)
Financial Analysts are way behind Reality -
Lehman Bro's 4th. Quarter profits more than quadrupled, as in line with Morgan Stanley and Goldman Sachs, all beating Street estimates by far. These reports bode well for the giants like ML & DLJ, which will report their (windfall?) later this month.
In view of rising interest rates - cost of funds - these kind of growth rates are more than suspect-and may derive from derivative business. A game, which conservatively can't
be upheld to continuosely promote the bottom line - It will rather corrupt the bottom line - until the line hits its bottom - Orange County, Barings, LTCM, PEI et al may just be the (corrupt?)signs - the trillions of paper debt - the trail for destruction!

- I believe in reality - I BELIEVE IN G O L D !!!
pdeep
(01/06/2000; 17:37:47 MDT - Msg ID: 22416)
ORO
Awesome post. Put me in line to buy your book!
ORO
(01/06/2000; 18:42:23 MDT - Msg ID: 22417)
CB2, Cavan and thanks
Thanks be to Pdeep and Cavan for the kind words.

Cavan -
As for the the recommendations I gave before, I still stand by them. I am somewhat cooler to the inflation adjusted bonds, but at the time they were trading at a significant discount to their value. The yield spread now is still good, but not great. The main caveat, though, is the tinkering with the CPI stats. Though the I-bonds would still provide certain protection against price inflation, the spread between CPI and my perceived price inflation (see ECRI-Economic Cycle Research Institute) would still "eat" some of the yield. I would still preffer them, hands down, over any bond or note maturing oney year or longer for the long term fixed income portion of a portfolio. The emerging market bonds/bond funds are no longer as attractive as they were when I pointed them out. There should still be an upside to the currency, but it seems that local interest rates across Asia and South America are not falling further - at least not at a great speed. They still give a good spread of some 2-4% over treasuries, but that is not enough to justify an increase of their weighting in a fixed income portfolio.
One new suggestion for fixed income would be the inclusion of some Freeport McMoran gold bonds.
If you have contacts at gold companies, you may ask them to issue gold bonds bearing gold interest. For one, they would not require the company to post margin if gold prices rise, while still protecting pricing for some of the future production.

The income the big investment banks are producing is coming from a drop in the market value of the derivatives they sold to the markets, to the pension funds and smaller banks. The BIS reports that there was a 700 $B drop in the market value of outstanding derivatives over last year (June over previous June). Most of this would be pocketed by the trading desks of the global investment banks. I suppose somewhat lesser returns continued through the past two quarters as the volatility portion of time premiums continued downwards. Spreads are higher today, particularly the TED, but I am sure the banks are positioned to gain from that as well.

The rest of their income is coming from normal investment banking ops, like mergers, acquisitions, and public and private offerings.
K Golden
(01/06/2000; 18:51:41 MDT - Msg ID: 22418)
Yo! Andy aka No. 6
http://greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002FTOLooks like there are whisperings of your "visa is toast" scenario coming down.

The folks over at TB2000 are paging you for comments.
canamami
(01/06/2000; 19:18:55 MDT - Msg ID: 22419)
Effects of Nasdaq Meltdown?
It has been speculated that Nasdaq capital gains from the recent sell-off are being channelled into the Dow stocks, and also the S&P. What will cause some of this Nasdaq money to come to gold? Will it keep coming to gold if all rallies in the POG are killed by "big players" manipulating the POG? (Will official Japan ever buy gold with yen? Why is the BOJ so in thrall to $US purchases, given that Asia-ex Japan is its natural sphere of economic interest in many respects?)

The Nasdaq is the home of the momentum-driven, margined-to-the-hilt retail investor. Evidently, Nasdaq "gains" are often used a collateral for more margin, and the cycle goes on, with only the Nasdaq's dizzying rises keeping it going as long as it has. When will the margin calls on retail investors send the Nasdaq into a true tailspin? What is the effect of there now being a number of big exchanges and indexes, and the large number of investors using non-brokerage, non-margined debt; will margin calls have the same tailspin effect as previously, given the relatively larger porportion of non-brokerage debt?

If the Bill Murphy, "no buyers" scenario comes to pass on the Nasdaq, what will be the broader implications of such a decline in the so-called market cap of the Nasdaq stocks, such decline respresenting a massive "destruction of wealth", or at least paper wealth. Will these broader implications benefit gold, and how will such mechanisms work?

What will be the public policy and creditor response to a Nasdaq meltdown? Will the public trusts (Social Security in the US, Canada Pension in Canada, state and provincial pension funds, etc.) do a "Hong-Kong" and become the buyers of last resort, to prevent a meltdown of the equities markets? Will the continued suppression of the POG be in the cards, to preclude an alternative investment to the equities market from arising? Will banks delay realizing on pledged or seized shares, to militate against a crash?
rsjacksr
(01/06/2000; 19:25:40 MDT - Msg ID: 22420)
Beesting and Oro
http://www.kitcomm.com/cgi-bin/comments/gold/display_short.cgi#startBeesting.
Thank you for responding to my question. I'm glad to know that I'm not the only one groping in the dark. I lifted this from kitco. I haven't had time to digest it, if ever, but it may contain a clue as to what is going on with rates. I'm sure there's more. Nothing in the world of politics and economics is that simple.

>>>>>>SDRer () ID#290174:
Xag/xau-this has, for three years, been the steadiest and most reliable of the relationships; all the monitored currencies
have ALWAYS been in lockstep on this baby. However, on 1/4/99
Xag/xau--0.018790 [China]
Xag/xau--0.018791 [US]
Xag/xau--0.018895 [Japan]
Xag/xau--0.019165 [Germany]
Xag/xau==0.019165 [Euro]

Managed news results
1/5/99
Xag/xau--0.018960 EVERYONE

Ain't power wonderful?<<<<<<

ORO (01/06/00; 15:05:40MDT - Msg ID:22411)
SteveH - An Evolution of Understanding
Oro. I don't know if I've ever thanked you for posting. Thank you. There are times when you are fluid and easy to read and other times when after reading you, I find the nearest wall and bang my head against it for relief. You sir can only be you. Again, thank you.


ORO
(01/06/2000; 19:26:02 MDT - Msg ID: 22421)
New Leading Indicator for Price Inflation
http://www.joc-ecri.com/Journal of Commerce and ECRI come up with new index for early signs of "inflation".
JOC-ECRI IPI

See chart.

We are already well on the way up.
The Alphabet Soup index joins with ECRI's other indices in indicating prices are set to blow.
SteveH
(01/06/2000; 19:29:04 MDT - Msg ID: 22422)
Protecting gold
Each of us has seen the biased reporting of stocks and bonds and gold. The press has lots its independence and is widely used for the bias of those who have the ear of the press. Although this isn't about gold or stocks. It is about the same issue:

Media Accused of Gun Control Bias
WASHINGTON (AP) - A conservative media group accused television networks Wednesday of biased coverage of the gun control debate.
The television networks are so badly spinning the gun control debate in favor of gun control they have become the ``communications division of the anti-gun lobby,'' said Brent Bozell. He chairs the Media Research Center, which released its study of two years of television news stories on gun control.
The study analyzed the morning shows and evening newscasts between July 1, 1997, and June 30, 1999, on ABC, CBS, CNN and NBC.
``There's a powerful, pervasive bias in the media,'' said Oliver North, the former Iran-Contra figure who now hosts a political talk show and is a national board member of the National Rifle Association. ``This blitz of bias is having an extraordinary impact on public policy and legal opinion.''
CNN spokesman David Bittler defended his network's reporting, saying, ``We do not advocate for or against any particular position and we stand behind the balance and fairness that goes into all our reporting.''
Calls made to the three other networks were not immediately returned.
The issue of guns has increasingly been in the news as the nation has grappled with school shootings in places like Littleton, Colo., Paducah, Ky., and Pearl, Miss.
Bozell's group says it examined 653 morning and evening news stories on gun policy issues and found that stories advocating more gun control outnumbered stories opposing gun control 357 to 36, or a ratio of 10 to 1. Another 260 stories were neutral, the group said.
In many cases, the study said, pro-gun themes were not covered and gun proponents were not given air time.
Naomi Paiss, spokeswoman for Handgun Control, called the complaints ``lovable chutzpah'' on North's part.
``Add to that the right-wing domination of talk radio, the towing by congressional Republicans of the NRA's line, the slavish devotion of the Republican presidential frontrunner to the NRA message and this is clearly the comedy press conference with which to start off the new year,'' Paiss said.
Peter Asher
(01/06/2000; 19:54:13 MDT - Msg ID: 22423)
Gary North's Reality Check, #45
Excerpt

The Dow Jones Industrial Average touched 11,568.72 on
> December 30. Then it fell back. Just one decade earlier,
> to the week (maybe to the day), the Japanese stock market
> peaked at just under 40,000. It has never come close to
> 30,000, except on its downward slide.
>
> This 11,568.72 number is curious. Let me explain.
>
> I am not a follower of Elliott Wave theory. It's too
> complex a system for my abilities. But last May, I
> received a detailed essay from a Jean Comeau of Quebec, a
> commodities advisor -- registered, he says, in Chicago. He
> wanted me to post the essay on my site. It was not Y2K-
> related, I told him, so I didn't.
>
> Yesterday, he sent it to me again. His essay said
> that the Dow's top would be 11,550-11,600. He wrote,
>
> "WAVE 5: WHEN DOW JONES HITS 11560 TO 11600
> POINTS. END OF MAJOR BULL MARKET, PERIOD.

He then got even more specific:
>
> Wave 5 or 1999 = Fibonacci number 34 times 339
> equals 11526 plus 43 (crash low) equals 11569.
>
Mr. Comeau is predicting a fall of over 5,000 points
> in the Dow in the next two months. I think I will ask him
> to do more writing for me as soon as it falls by 2,000.
>
pdeep
(01/06/2000; 20:04:17 MDT - Msg ID: 22424)
That pesky Euro sopping up the ca$h
http://www.goldensextant.com/commentary7.html#anchor6534Where has the liquidity gone?

"In 1999 euro-denominated bonds were issued in the amount
of $602.2 billion on international markets, compared to $572.5 billion of bonds denominated in U.S.dollars and $174.2 billion in other currencies, including sterling, Swiss francs and yen. In percentage terms, the euro took 45% of the market, the dollar 42% and other currencies 13%. In 1998, 48% of all bonds sold on international markets were denominated in dollars, and only 22% were denominated in European currency units or the currencies of the 11 EMU countries."
Gandalf the White
(01/06/2000; 20:16:57 MDT - Msg ID: 22425)
Notice of forthcoming "Serial" story.
The Hobbits think that they need much more time to let these lessons from the first of this year become fully understood. (Afterall they were saying that these last few days were part of the "HOLIDAYS", as Hobbits have a different calendar than most folks.) -- Soooo, they have ask me to tell everyone a story that does not require the deep thought of such lessons as from the likes of FOA, ORO, PeterA, Ari and SteveH, PLUS all the other newbies. -- UNLESS the Wiz hears differently from either Townie or MK himself, the "Serial" will begin soon. (like the old Tom Mix or The Lone Ranger and Batman short movie clips from the USA GOLDEN ERA) -- PS: the Title is "Mystery of the Lost Ozarks Silver".
<;-)
THX-1138
(01/06/2000; 20:27:51 MDT - Msg ID: 22426)
Next BOE gold sale question
When is the next sale?

Does anyone think that the FED and BOE are trying to keep the price down before the next sale takes place?
PH in LA
(01/06/2000; 20:37:29 MDT - Msg ID: 22427)
LaRouche: Back in the Headlines!! (well, at least here at USAGold)
http://www.larouchecampaign.org/pages/smauelson991228.html LEESBURG, Dec. 28 -- Democratic presidential candidate Lyndon LaRouche issued the following statement here today:

Remember economist Paul Samuelson, perhaps the most famous of the authors of "Economics 101"? Paul, who taught 1960s university students of the Baby Boomer years that "built-in stabilizers" would prevent an August dollar collapse 1971 from happening, has a son, Robert J. Samuelson, who regularly writes economics columns for the Washington Post. Robert Samuelson has now warned Washington Post readers and other people [WAPO Dec. 28]: "People are acting as if economic risk is declining, when it may be rising."

Samuelson is only one of a growing number of leading senior economic writers, economists and bankers who are now warning the world against signs of an early collapse in a world-wide financial bubble. Many among these are saying that the current financial boom is nothing but a new tulip craze, a bubble ready to pop.

Some in print, and many more bankers, economists, and statesmen privately, are warning that the world is faced with something far more serious than a stock-market crash. The world's financial system is doomed to a systemic collapse, from which only a radical return to earlier pro-nation-state policies could rescue humanity.

On the darker side, while most people in the upper 20% of U.S. family-income brackets are fanatically deluded enthusiasts for investing in money-management schemes, the insiders in the really top brackets, are getting out of these markets, buying up the kinds of assets which they believe would represent a continuing income-stream even after the total collapse of the existing financial system.

Does this mean that any politician talking about the smart ways to balance the budget is living in a dream-world? Absolutely. What kinds of people are foolish enough, still today, to vote for those kinds of political candidates?
SteveH
(01/06/2000; 20:51:49 MDT - Msg ID: 22428)
Hall of fame and question
Ok folks, admit it. OROs macro view in response to my question merits his posts admittance into the all of fame. I nominate, any seconds?

For ORO,

Please take a look at a few of the questions on your last paragraph. If you could develop this a bit further, I think most of us would appreciate it. Also, please answer you best guess as to when the price of gold will no longer be able to be sustained. I think you have go a good idea how much longer the BS can go on. Dare you?

The simple fact of the central bank's guarantee of liquidity prevented the gold account holders to move to full allocation.Full allocation at current gold prices can mean a 1% annual dollar loss for insurance and storage.

This stands against a 1 - 2% return in the unallocated account. The CB guarantee was enough to allay concerns of account holders while the guarantees were good. Having the guarantees limited to current ammounts and supply demand deficit in the physical market being only met half way by the CBs should push investors to move away from the unallocated accounts to the allocated accounts.
This seems to have been limited by the current motion of many small CBs to provide liquidity. Presumably at the behest of the more influential account holders in the respective countries trying to protect their assets using their nation's gold reserves. The deals involved are probably very attractive. Either in terms of rates of return, or in equivalent asset value. However, they prevented the loss of confidence in the bullion banks. The gold accounts were not reallocated, and the flow of funds into gold accounts did not stop because of the liquidity problem, but increased because of the price rise. This raises the bank's gold liabilities, but still prevents people from straight out buying the bullion. Thus the accumulated diversion of funds from purchasing physical gold continues to grow. The bankers are only increasing their reserves slowly, and are likely not going to be able to obtain enough credible commitments to even come close. The fact that in LTCM bailout style they had come together to stop each other from lowering exposure is telling.

One of my thoughts about the reasons for the BOE sale have to do with shifting of positions away from European banks into US banks. The participation of the US banks in these markets has grown from 25% in 95 to 42% by my estimate for the last figures. Bankers Trust, a subsidiary of a European bank, had unloaded nearly its entire bullion banking business on JPM and CMB (Morgan Guarantee, and Chase) in one single quarter. It is probably the opportunity to unload commitments on other bankers that brought the BOE and IMF calls for gold sales. During the decline in May-June, non US banks had covered positions aggressively (hoping to get confirmation in Feb or March). US banks, however, had increased volumes tremendously in Q3.
TownCrier
(01/06/2000; 20:54:41 MDT - Msg ID: 22429)
Ask, and you shall receive...usually.
THX-1138 (01/06/00; 20:27:51MDT - Msg ID:22426)--Next BOE gold sale question
"When is the next sale?"

January 25th, 2000, 11:30 London time.

"Does anyone think that the FED and BOE are trying to keep the price down before the next sale takes place?"

There are likely a great many who do think that, however, a quick survey reveals no one in The Tower to be of that opinion. At this juncture, what remains to be gained?
PH in LA
(01/06/2000; 21:21:49 MDT - Msg ID: 22430)
Deja vu all over again!!
The latest flap over the China factor in the silver market sounds all-too-familiar to observers in the precious metals markets lately.

Once again we have the "explainalists" (financial analysts whose "analysis" consists of after-the-fact explanations that their "analysis" failed to hint at beforehand) enlightening us with the fact that "China could sell some of their silver stockpile" which is supposed to explain the recent fall in silver prices; as if the Chinese are as stupid as the BOE in announcing their intentions in advance to insure the worst possible price for the sale of their product.

What the "explanationists" are careful not to point to is the eighteen-cent runnup two days before (after months of tight trading range activity that had silver trading within pennies day after day after day). The hope is that nobody notices that the upward blip was nothing more than a loading up for the coming short-sale attack that was hoped to take the market lower. Unfortunately, even coupled with a blatant disinformational announcement about China's intentions, the metal has only fallen back to its former moribund price range.

What seems worth taking note of here is the pathetic little rise the manipulators had to content themselves with as shorting ammunition. In better times, they could have dared push the price up $.50 or more before pulling the plug with their short-selling attack. Yet everytime they do this, they make it worse in the end. What plans do these "experts" have for that?

Same old, same old! How long do they think they can keep doing this before people start to notice?

SteveH: I'll second your motion!
TheStranger
(01/06/2000; 21:22:54 MDT - Msg ID: 22431)
The "Wizard Of Oz" Allegory For Those Who Didn't Already Know
The U.S. presidential election of 1896 pitted Democrat William Jennings Bryan against Republican William McKinley. At the time, America was on the gold standard, and a limited supply of bullion was believed to bear an aggravating influence on the nation's persistent deflation problem. Bryan was an advocate of bimetalism, a proposal which could introduce inflation by adding silver to the nation's money supply. He saw himself as a defender of deflation's victims, which included indebted laborers and farmers. In his most famous speech that year, he declared, "You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold." But, when November came, it was McKinley, and his support for the single gold standard, who prevailed at the box office.

Shortly thereafter, a midwestern journalist named L. Frank Baum penned an allegorical children's book about the campaign of 1896. Originally entitled "The Emerald City" but later renamed "The Wizard of Oz", the book tells the story of a lost girl named Dorothy who was meant to represent traditional American values. Dorothy and three friends, a scarecrow (the farmer), a tin woodsman (the laborer)and a cowardly lion (William Jennings Bryan) set out upon a yellow brick road (gold) to find the Emerald City (Washington D.C.) where everyone sees the world through green glasses (paper money). There, it is hoped, the Wizard (William Mckinley) can help Dorothy find her way home. But the Wizard turns out to be a fraud, incapable of living up to people's expectations. In the end, Dorothy discovers that silver slippers (they only became red when the story was rendered in technicolor) are all that's required to solve her problem.
TheStranger
(01/06/2000; 21:30:38 MDT - Msg ID: 22432)
Lamprey 65 und CoBra(too)
Lamprey - I loved your #22301 night before last. That would be a great post to put in a time capsule.

CoBra(too)- Servus und vielen dank!
TheStranger
(01/06/2000; 21:38:48 MDT - Msg ID: 22433)
Metals Stocks Booming Down Under Tonight
http://www.bloomberg.com/markets/asia.htmlCheck it out!
Peter Asher
(01/06/2000; 21:39:25 MDT - Msg ID: 22434)
Steve H, Town Crier, ORO and MK

Permit me to apply my profession of Design/Build, to the Castle Architecture.--- Frank Lloyd Wright picked up the slogan from his mentor Lois Sullivan, "Form follows function."

Gentlemen! The hall of fame needs some renovation. A great library may start out as a single hall, but a time comes when different categories and topics require their specific spaces to accommodate the scope and individuality of specific subject matters.

As the collection of great works builds in the HOF, threads are emerging that eventually will be best placed in their own individual reading rooms. I believe ORO's works have come to that point. I am sure I am not alone in failing to have time to read much of his brilliant theses. Even if there were a CD ROM of all the Archives it would not be possible to sort out the pertinent works from the more casual commentary. It is time for some partitions to be erected. As in all remodeling, agonizing decisions must be made. Do it piecemeal? Have a grand master plan? Put it out for bid? Time and material?? Plus, when your dealing with Castle construction, Every decision is literally cast in stone.

Certainly though, we are at the point where ORO should have at least a "virtual" alcove dedicated to his posts. I would also suggest, as a point of discussion, that the content of this be partly decided by ORO himself, (He is, after all, writing a book out of these posts) with perhaps the collaboration of Steve and the others who ORO has been repetitively bouncing ideas with.

Well, I should have warned you, I have a reputation for coming up with grandiose schemes that break budgets, It's an incurable compulsion.

Whatever happens, we do not want to take out equity financing to achieve this. The Castle must always remain free and clear!

Got a Design committee?
Peter Asher
(01/06/2000; 21:48:55 MDT - Msg ID: 22435)
Stranger
Life is allegoized by art which is alegorized back into life.

I believe a few of us have referred to AG as "The man behind the curtain." I had no idea that was a full circle deja vu.
TownCrier
(01/06/2000; 22:50:19 MDT - Msg ID: 22436)
The GOLDEN VIEW from The Tower
From The "We're-up-to-our-eyeballs-in-cash" Department

The volatile action of the stock markets seems to have inspired the movement of sufficient cash funds into such channels as savings accounts...providing banks with an influx of reserves beyond their minimum maintenance requirements. So even with the first of the longer repos established in October beginning to come off today, banks suddenly found themselves with dollars of the worst kind...earning no interest. The Fed obliged the banking system's desire to put these extra funds to work through $8 billion split evenly between overnight and 7-day matched sale-purchase agreements.
+
With the various repos maturing set against the rate of currency write-off, predictions of Fed action defies prediction. Some analysts today actually were calling for the Fed to add reserves instead of the matched sales drain of reserves. Carol Stone, senior economist at Nomura Securities International, told Reuters "There's a great deal of uncertainty about any of their operations these days."

From The "I-should've-bought-some-gold" Department

How many of the twelve-and-a-half million people of Ecuador are saying that these days? The Ecuadorian currency, the sucre, lost 67% of its exchange value last year, and has already lost 18.3% in the first four trading days of this new year. With the sucre losing another 4% on Thursday, Reuters reported that the country is growing "increasingly distrustful of the government's ability to lead it out of a crushing economic crisis," with some protestors calling for President Jamil Mahuad to step down, but getting a state of emergency declared instead.
+
How can gold help you keep what you have when the system fails? Take a look at these numbers...
Right now, the sucre is of such limited value that 25,575 are required to buy one dollar. Should you throw them all into a travel trunk and sail to some port of stability, you'd find your sucres to be ill received, if they survived the length of your trip, that is. If an Ecuadoran were to have been parking his savings into physical gold, these would be the figures that would be familiar:
Exactly one year ago, one ounce of gold could be bought or sold for 2,000,000 sucres.
By the arrival of June, this price would have risen 50% to 3,000,000 sucres.
With the arrival of October, the price of gold had climbed to 5,000,000 sucres.
And now, three short months later, the going rate for gold in Ecuador is 6,500,000 sucres. Set sail with your gold, and you can be sure you'll be well received in any port of call. Get the picture?

From The "Gold-in-Euroland" Department

For the benefit of those gone on vacation during our last GOLDEN VIEW of 1999, here's an excerpt from our December 30th report regarding Euroland's gold assets:
+
"For what it's worth, we did some preliminary number crunching to get an idea in advance of the next European Central Bank financial statement what to expect in regard to the value of the ECB's official gold assets. At the last ECB quarterly gold revaluation, we were on the cusp of both the Washington Agreement and the IMF's plans to revalue their own gold holding to market prices instead of conduction "sales." Gold had recently risen to $300 per ounce, each euro was going for $1.07. That translated into European System of Central Bank gold reserves being officially valued during this quarter at �280 per ounce. Turning to today's values, the London market closed with gold priced at $290 and the euro was priced approximately at $1.01. This translates into an increase in the ECB's per ounce book value to �287 per ounce through the next quarter. The ECB gold assets continue their track record of higher valuation each quarter...exactly as it should be when priced by a fiat currency. Can you see the beauty of this system, and can you project that someday all currencies must be valued this way? We knew that you could."
+
Here's the news we were anticipating. Yesterday, the European Central Bank released its weekly financial statement for the week ended December 31st, which has significance to us for two reasons. First, the numbers reflected the 27 million euro reduction in gold assets as a result of the three tonnes of Dutch gold that was moved that week through the Bank for International Settlements. Second, and more significantly, the quarterly revaluation of the remaining gold assets more than compensated for this 3-tonne reduction. Despite this sale, the total gold assets of the European System of Central Banks rose by a net 1.765 billion euros, now at 116.483 billion euros.

On the other side of the Atlantic, Canada's gold holdings at December's end were were unchanged from their previously reported level, standing at 1.8 million ounces.

From The COMEX Department

Spot gold finished marginally up today (25�), and was last quoted in NY at $281.00. February gold futures derivatives traded on New York's COMEX climbed 30� to $282.40, nearly the top of its $282.80 - $280.20 range for the day. David Meger, senior metals analyst at Alaron Trading indicated in a FWN report that physical buying is expected to provide support below $280, and that hedge funds are less likely to press the market below this level.

Yesterday 1,903 ounces were withdrawn from Registered COMEX stocks, but today saw no changes.

OIL

There was plenty of bullish news today, but traders were apparently in the mood to sell. February crude closed down 13� at $24.78 in the face of several instances of extended refinery downtime, export problems in Nigeria, and surveys showing OPEC compliance with supply cuts remaining high... 86.8% in December, compared with 86.7% in November.

And that's the view from here...after the close.
Gandalf the White
(01/06/2000; 22:51:07 MDT - Msg ID: 22437)
HELP ORO --- The Hobbits beg you to SLOW down !
You said in ==> ORO (01/06/00; 14:06:32MDT - Msg ID:22408)
Equity market out of kilter -- "The January effect in beaten down value stocks is in full bloom. The advance decline line looks better than it has in quite a while, yet the SP futures have been under heavy selling since the last trading day of last year."
******WHOA -- I see that the $PREM (S&P futures -- I THINK) has been manipulated by the PPT to the greatest extent of the level during all of last year! Look at where they start it most days, +25 or so! AND when they wish to kill a downdraft -- pop goes the $PREM +10 or so, with the market drop then slowing down and going up for a while. Please advise what you are looking at to see the picture that you are discussing.

THEN you say, "The indexes are so laden with low float tech stocks that the selling of the SP500 and ND100 futures is having a strong negative effect on these stocks (where the selling is receiving the same leverage on the way down that had exaggerated the move up)."
****THIS is confusing to me, as the futures have no direct relation to the individual stocks that are being sold because of the rush to lockin some of that "profit" from the irrational run-up of those stocks, to which you refer.
Please go slow and explain this to me in more detail. TIA
<;-)
Gandalf the White
(01/06/2000; 23:02:22 MDT - Msg ID: 22438)
Howdy Stranger !!
The Hobbits loved your "Wizard of OZ" story and you are making it difficult to start out the new "Serial" with a story like that!! BTW -- WELCOME BACK to the TableRound!!!
<;-)
lamprey_65
(01/06/2000; 23:44:03 MDT - Msg ID: 22439)
January 7, 2000 Remember this date!
Lucent (LU) warned after the market closed yesterday, they will miss earnings by a country mile. This is it, folks...let the true correction commence. Up until now we've had a few days of profit taking with a little bit of recognition of rising interest rates - the LU warning is a bombshell (for those not expecting it). LU means internet...we are now in fundamentals land, my friends...look out below! Add rising rates into the equation and it could be very, very ugly. Don't be surprised to see the FED turn around and start ADDING liquidity again if it all starts to fall apart too quickly.

Lamprey
lamprey_65
(01/07/2000; 00:11:22 MDT - Msg ID: 22440)
January 7, 2000 Remember this date!
(Reposted to get on today's board)

Lucent (LU) warned after the market closed yesterday, they will miss earnings by a country mile. This is it, folks...let the true correction commence. Up until now we've had a few days of profit taking with a little bit of recognition of rising interest rates - the LU warning is a bombshell (for those not expecting it). LU means internet...we are now in fundamentals land, my
friends...look out below! Add rising rates into the equation and it could be very, very ugly. Don't be surprised to see the FED turn around and start ADDING liquidity again if it all starts to fall apart too quickly.

Lamprey
Gandalf the White
(01/07/2000; 00:35:32 MDT - Msg ID: 22441)
First Serial
(Forward � The Hobbits were helping me clean out the lower catacombs at the bequest of the Queen of the castle, when they unearthed an old file with a silver ribbon around it. I had not seen that file for a few decades and it brought tears to the eyes of the Ol�e Wiz, as it had been given to me by a friend about a year before he had died. That older friend was a man of class, who showed me the correct road of both business and adventure. He was also a precious metals advocate and loved to prospect wherever he traveled. The file contained his research and documents together with field notes and data relating to his exploration trip, during which he had fallen down a steep rise and broken his leg. He had intended to return to that area, but time and age changed his plans, so he gave me the file to enjoy. That file contained a story that he had found in a magazine many years ago. That story was titled, "Mystery of the Lost Ozarks Silver", and I have the privilege to share it with you, word for word, as it was printed.)

"Mystery of the Lost Ozarks Silver"
Written by Tom Bailey and illustrated by Al Martin Napoletano
(oh Goldfly, for that scanner to show these pictures and drawings)
Published in the FRONTIER TIMES, Austin, TX -- Summer, 1961.
----
"A SILVER mine in the Missouri Ozarks?" "Lift that other eyebrow, Hombre, and listen well." Documentary evidence proves there is silver in the Ozarks � BUT whether it is native to the land or imported is a question you can argue down around Cassville, Missouri, and Eureka Springs, Arkansas, until the cows come home. Most anybody you talk to will tell you there's a whopping big mine buried from thirty to forty feet under the backwaters of the Table Rock Dam on the White River which was completed in 1959.
If what the Missourians say is true, you would need a skindiver's rig to go looking for it, and then you might not find it considering the fact that men have been searching for it for 200 years.
There is general belief in the area that the silver is native to the Ozarks and with some justification , for silver ore has been mined at Fredrickstown, Missouri, for several years. However, from a study of the old documents and the history of the early Spaniards, it would seen that the cave in which the silver is said to have been found was used by the Spaniards as a depository for the metal they brought from what is now Colorado and stored there against the day it could be shipped to Spain.
Proof of this is to be found in the diaries of two men who inspected the cave. Both said they carried away silver bars; certainly native silver would not be found in bars unless melted down and moulded as the Spaniards are known to have done.
How much silver the cave contains is anybody's guess, but if we look closely at the old diaries and maps, we must conclude that there is quite a bundle of it.
If the silver is buried beyond man's reach, as the Missourians say it is, lost-treasure hunters will see no useful purpose in the publication of this account, yet it's a story worth the telling, because the Missourians may be wrong. The cave might not have been buried by the waters of the White River, now impounded by the dam.
For many years the story of "the lost silver mines of the Ozarks" has been a growing legend in that hilly country. Descendents of pioneer families, some now in their eighties and nineties, heard it when they were children and have passed it along to their children and grandchildren. Any version that does not conform to the one that has prevailed all these years is considered not worth listening to by the natives.
======
END of the First Serial �
<;-)
el St.One
(01/07/2000; 02:31:40 MDT - Msg ID: 22442)
FOA
FOA Have you noticed the open interest in EURO fx futures contracts. Do you have any thoughts as to why they are mostly March.

March 55,546
June 163
Sept. 97
Dec. 0..............el
Mr Gresham
(01/07/2000; 04:05:02 MDT - Msg ID: 22443)
Peter's HOF proposal: Second!
I, too, am suffering "Oro-lag". During the Fall I kept up fairly well by maintaining my own ORO document and clicking over to Word each time I wanted to capture his posts (along with his partner in dialogue.) Haven't had time yet to re-read that document.

A quick check shows 55 pages from 9/21 to 10/23, ending with the Yellin of Troy replies. That's not very up-to-date. If others are duplicating the same type of work, then perhaps a Room d'Oro could be a work in progress, as I remember he is seeking feedback from us all.

I've copied all of the Forum from November into one document, hundreds of pages, not yet sorting by poster I want to retain. But at least it's searchable. December's document is still awaiting completion.

I want to do justice to the stimulating learning opportunities being presented here. But I had to get away from the computer for two days with two cartons of paperwork sitting for too long untouched on the desk. I also needed time to enact the investments we discuss here. My lifelong tendency is to "study it to death" and miss the move.

Being a contrarian (to myself) I catch myself thinking "Aha, now with Y2k out of the way, I'll have time to ______ ....". That's just when it will probably rear its head. But most of my preparations were for a depression scenario anyway. Perhaps Unemployment shall be Nature's way of saying: "Hey! Catch up on those Forum months you skipped over so lightly!"

The problem, as most of you are fully aware, is that you bring out the best in each other, and in my five months here I have seen each of you shine many times with golden brilliance.
ss of nep
(01/07/2000; 04:43:06 MDT - Msg ID: 22444)
P.A. MsgId 22423
Taken from Kitco + fixed some typosDate: Tue Jan 04 2000 20:24
JESUS FREAK (Dow) ID#25193:
Copyright � 1999 JESUS FREAK/Kitco Inc. All rights reserved
I found this and thought it was a good time to re-post this.
My name is Jean Comeau from Quebec, Canada and I am a commodity trading advisor registered in Chicago. I have studied the stock market in a technical way for over 25 years and with a detailed technical analysis which follows, I have come to the conclusion that a stock market crash in the year 1999 is inevitable.
The Dow Jones Industrial average should hit 11550 to 11600 points on an intraday basis and a crash will then be triggered. Since we are almost there, I took that liberty to write the following as to perhaps help others to make a decision in regards to whether stay in or bail out of the market before the iceberg finally hit. . .
In order to understand more clearly the main core of the following analysis, I shall begin by referring to pioneers in terms of researchers in the technical analysis field.
ELLOIT ( Wave Theory ) : a market trend usually moves in 5 waves UP and then 3 waves DOWN and so on. . .
FIBONNACCI ( Perfect Numbers ) : .382 and.618 1-2-3-5-8-13-21-34-55-89-144 etc. . . These numbers play a major role in technical analyses of any sort when it comes to mathematical calculations.
W.D. CANN ( Square Rule ) : Time and price ( space ) meet at a turning point or as in this case the square root of 34 as it will be demonstrated.
Now, let us go back in 1929 to possibly obtain a better comprehension of the last major WAVES DOWN of the crash that occurred then and realize why the enormous potential for it to repeat is just around the corner.
CRASH OF 1929 - 3 waves down
October 1929 = High or end of previous major 5 waves up = Dow touches 382 points or Fibonnacci .382
Then,
CRASH - Wave 1 = Within 2 months from the high ( 382 ) , the Dow touches 200 for a total move down of 182 points.
CRASH - wave 2 = Within the following 6 months, the market recovered to 290 or 90 point gain. Here, notice that half of the retracment is made back up from the original 182 point down ( wave 1 )
CRASH - Wave 3 = Finally in June 1932 ( after 34 months from the high ) the market touches the 43 point level and establish the end of the major bear market
NOTE: Form any wave to be confirmed as fitting the picture the market will usually and normally retrace half of the last move either up or down from the previous major low or high which it actually did in Crash - WAVE 2.
NOW, ON THE WAY UP. . .
WAVE 1 = ( last quarter ) D.J. hits 1051
WAVE 2 = ( last quarter ) D.J hits577
In this case, the total move down is 474 points or half retracement form 43 ( 1932 low ) to ( 1972 hgh ) 1051.
WAVE 3 = 1987 ( August ) D.J hits 2746 ( inrtaday basis )
WAVE 4 = 1987 ( October ) D.J. hits 1616 ( intraday basis )
In this case the total move down in 1130 points or half of the retracement form 1974 low or 577 or high of 2746.
WAVE 5 = WHEN DOW JONES HITS 11550 TO 11600 POINTS. END OF MAJOR BULL MARKET PERIOD.
We achieve our goal by using Fibonnacci numbers as follows:
Wave 1 or 1972 = Fibonnacci number 3 times 339 which is the total down move of the last crash ( 1929 ) totals up to 1017 plus 43 ( crash low ) equals 1016 and the actual hight in 1972 was 1051
Wave 3 or 1987 = Fibonnacci number 8 times 339 equals 2712 plus ( crash low ) equals 2745 and the actual high in 1987was2746
Wave 5 or 1999 = Fibonnacci number 34 times 339 equals 11526 plus 43 ( crash low ) equals 11569
Also note: W.D Gann Square rule is now in full strength 34 times 340 ( square root of 34 ) = 11560. Note that the number 339 was rounded up to 340 When that number is hit, the 3 waves down will be in affective mode. We are to expect then that I MARKET WILL DROP FROM 5560 TO 6000 POINTS within the following 2 months ( has retracement of full move from 43 to 11569 ) which will signal the very next GREAT GREAT DEPRESSION and a rendez-vous with destiny and Y2K. . .
What was the high in the Dow??
ss of nep
(01/07/2000; 04:43:57 MDT - Msg ID: 22445)
Gann Square Rule ?


Can anyone explain it to me ?


714
(01/07/2000; 05:22:37 MDT - Msg ID: 22446)
Asher & Gresham re: Oro's posts
Grow up, Ye Knights of Ye Round Table. Learn to use the scroll button on the right hand side of your web browser.

Oro adds quite a bit to this forum, which help to bring it up to snuff, IMHO. Compared to the "other" forum (I won't mention any names), posts here are rather sparse. Although I do not read everything Oro may post, I look forward to his posts as much as anyone's here, perhaps more so. He is among the most knowledgable and analytical posters, and it would be a shame to relegate him to some backroom here at USAGold.

p.s.--What happened to Y2K? Has it hit yet?
Cavan Man
(01/07/2000; 06:35:53 MDT - Msg ID: 22447)
The Stranger & "The Great Commoner"
Thanks so much. What is your reference for the allegory?

A good bio of Bryan has been done by Louis W. Koenig. It is a good read and many here might have an interest because of Bryan's involvement in creating the Federal Reserve System and the Federal Income Tax. He was not a "hard money" advocate as his "Cross of Gold" speech might imply.

TR thought him to be a very dangerous man; anarchy incarnate. Although Bryan did author and support much legislation ameliorating social conditions of the time, IMO, he was a classic opportunist an advocate of big government. He would have prospered in this day and age.

Pat B. couldn't carry water for this guy.
Usul
(01/07/2000; 06:51:27 MDT - Msg ID: 22448)
"Jean Comeau from Quebec"
http://forums.cosmoaccess.net/forum/y2k/The following was found on an Alta Vista search on
"Jean Comeau from Quebec".
The original link has disappeared and there don't seem to
be any postings from Jean Comeau currently.
The text "My..." matches the start of the article posted
below, so it seems very probable that it was posted on
May 10, 1999. It does say a crash in 1999, but then
waves can vary in timing.
But what if Godzilla was looking at the waves,
decided he didn't like those ones, and proceeded
to stomp about on them?

1. Rendez-vous: Market crash and Y2K
Rendez-vous: Market crash and Y2K. [ Follow Ups ] [ Post Followup ] [ Year 2000 Forum ] [ FAQ ] Posted by Jean Comeau on May 10, 1999 at 17:47:52: My...
URL: forums.cosmoaccess.net/forum/y2k/messages/1711.html
Last modified on: 21-May-1999 - 10K bytes - in English
Peter Asher
(01/07/2000; 07:23:34 MDT - Msg ID: 22449)
714 (1/7/00; 5:22:37MDT - Msg ID:22446)
Hey, young whippersnapper, careful how you talk to the senior citizens. Us old folk you told to "Grow up" even know how to use 'edit' and 'find in page' (on the upper-left BTW) Beats the scroll button all to ---. Perhaps you need another pot of that morning coffee. Also, when did the Hall of Fame become a "Back Room"???

Maybe you have misunderstood the HOF. Posts are ALSO viewed there, not "Relegated" to it. The Hall is a place of honor where one may read in quite contemplation, undisturbed by the confused and distracting chatter that occasionally erupts in the main hall.

As to where Y2K is, perhaps you missed last nights post here on the credit card billing that ran amok. or yesterdays mainstream news about the eastern half of the USA sitting at the Airport going nowhere while the "Non Y2K computer glitches that happen from time to time" kept everyone grounded for many hours.


714
(01/07/2000; 07:41:17 MDT - Msg ID: 22450)
Peter Asher
(;^)I'm glad to see you have a sense of humor. Mine has been tested quite a bit this week. I'm the computer guy for a small business and we've had our accounting software bug out this week after being told it was Y2K compliant. The patches we're getting from the software company are simply replacing one problem with another. We're working around it though and will be replacing it by the end of the month. It's hopeless, but fortunately, it is nothing serious!

p.s.--You got my goat. Can I have it back now?
Peter Asher
(01/07/2000; 07:58:13 MDT - Msg ID: 22451)
714
Oh, that was YOUR Goat? Sure can. Now that Y2K is over, we can get milk at the store.

Seriously, though, do you see that the HOF, besides being a collection of best posts, is a way to seperate them out from this 6000 page Archive. If one hasn't culled along the way, as Mr G has, it would be a day long task to put anyone's thread together, and sometimes almost impossible to sort out and align coherently.

Try locating something even with "Find" over a one week Archive period, and you'll be ready to tear your hair out. Or spring for the latest instant high-speed download technology.
714
(01/07/2000; 08:13:08 MDT - Msg ID: 22452)
Peter
I certainly have been to the Hall of Fame, but I must admit to suffering from "information overload". Posters such as FOA, Oro, & Aristotle are unique, and although Kitco has posters of similar (and not-so-similar) quality (rhody, dabchick, sharefin, etc.), USAGold is a quicker read on a busy day. I do enjoy the earthiness of the other forum when I have time though. I am grateful from what I glean from such knowledgable posters. And speaking of busy days, I got to go...more patches for some funky software.

p.s.--I left out my favorite, Holtzman. Sorry, Holtzman.
nickel62
(01/07/2000; 08:36:49 MDT - Msg ID: 22453)
Lamphrey's earlier post
Just wanted to thank you for youe earlier heads up on the significance of the Lucent shortfall.Thanks
nickel62
(01/07/2000; 08:36:57 MDT - Msg ID: 22454)
Lamphrey's earlier post
Just wanted to thank you for your earlier heads up on the significance of the Lucent shortfall.Thanks
USAGOLD
(01/07/2000; 09:05:01 MDT - Msg ID: 22455)
Today's Market Report: Gold Recovering from Post Y2K Syndrome
Market Report (1/7/00): Gold began to recover from the post- Y2K
syndrome today registering gains in most international markets. The
Yellow started to go positive toward the end of yesterday's New York
session then picked up support as trading progressed around the globe.
FWN reports "one large NY trade house" being the featured buyer. $280 is
viewed by many traders as a strong support zone. Reuters reports one
Swiss dealer as saying, "At the moment we're trading a range between
$278 and $282 but we could go above that on short covering before the
weekend." A London trader added this observation: "The pressure on gold
earlier in the week was coming from positions taken out as insurance
against millennium problems being unwound, it wasn't indicative of a
longer-term trend." We'll close today with this from Standard Bank of
London: "Gold has now survived three forays below $280 with physical
buying a feature and its ability to hold above this key level could
prompt a return to the $285 resistance." So we go into the weekend on a
positive note.

That's it for today. We'll see you here Monday. Happy Weekend!!
goldfan
(01/07/2000; 09:17:40 MDT - Msg ID: 22456)
PH in LA (01/06/00; 21:21:49MDT - Msg ID:22430)
http://www.usagold.comPH in LA
In your post last night re silver manipulation you said"How long do they think they can keep doing this before people start to notice?"
I don't understand the mechanism by which this manipulation is being effected. What people do you think would notice, and what could they do about it?. I have read and believe that there is a great silver shortage, sufficient to drive the price sky-high. I own a lot of silver out of that belief. But, going by the market, there seems to be no shortage at all. How is this done? In particular, how can the price be artificially held down for so long on something that is in great industrial demand? Sure, I understand doing this for a while by short selling, but for years?? Maybe someone like Buffett with a big stash of the stuff could do this, but why would he?

INMHO the manipulation in Au and AG however it is being done, will not be ended by any government or legal action, in spite of the good and valiant efforts of the morally upright such as GATA, but only when the people get so scared of the possible loss of their wealth they start buying PMs in large quantities out of that fear.

Would sure appreciate any comments anyone could make.

Goldfan
JCTex
(01/07/2000; 09:40:51 MDT - Msg ID: 22457)
Martin Armstrong letter
The following letter was sent to Chris Powell, GATA Treasurer/Secretary, from Martin Armstrong.

Dear Chris:

Obviously this latest bit of news posted by Bill has had its usual backlash of inquiries and emails headed my way. Though this posting is interesting and I would love to be free to comment on the current subject, I am restricted by law. The receiver appointed by the court has also banned me from writing and the US government now seems to have claimed that they now control my First Amendment rights as well. I think things would have been fairer if we didn't have a constitution.

In any event, I am at liberty to speak about subjects other than my own case. To set the record straight, I have disagreed with GATA that the depression of gold has been an organized manipulation on the part of central banks. I have never denied that there is a cartel of "private" groups, funds and individuals who do herd together to manipulate as many markets as they possibly can.

At the start of the silver manipulation. I was flat. I had taken all profits and closed out all short positions. Silver was trading around $4.29 when PhiBro walked across the ring and handed to my broker an order to buy 1,000 lots of silver every penny down for as far as you could see. They intentionally showed me the Buffet order. Later, Bob Gotlieb from Republic Bank call me and tried to get me to join the manipulation. He said "something big is coming down in silver" and when I asked who was behind its he said "your friends in CT."

After being approached several times to join the manipulation, I reported to our clients that "they" were back. I would not have used the term "they" if it had been someone other than the same crew as in 1995. I was told that the target was $7. I reported that information on our website. I was NOT short. I knew what they were capable of doing. I left the country for my usual fall tour. I was invited by the government of China to discuss the Asian Crisis. I visited the government there in December of 1997. Upon my return, silver was at $6.40 and everyone indeed had been led to believe it was me because the orders were routed through Republic to give the marketplace the impression that it was me buying the silver. In fact, it was Republic buying the silver itself and moving it to London.

It is true that I was very mad. I did not like being accused of doing something I did not. I would have to have been crazy to be short silver after reporting to the world that a manipulation was underway and that the target was $7 and then leave town for 3 months.

I was not short 700 tons of gold and never was. My own forecast called for a June low and a rally into October. I made forecasts of hunreds of different markets. I does not mean that I must also have a position in that market. I have been bullish on stocks since the turn in 1994, but by law I am also prohibited from owning any stock and have not owned anything since 1980.

Just because someone has a long-term forecast that disagrees with your own does not mean that I must have been also short. I view the world from a global correlation perspective and it just doesn't seem possible to achieve a raging bull market in metals when stocks are the flavor of the month. Bull markets are historically created when capital concentrates and that focus is in the stock market for now. When that concentration breaks, capital will then look around for the next great investment. That should be the commodity cycle between 2002-2007 and perhaps extend out as late as 2012.

For now, either the metals make their final lows in 2001 or 2002. Either way, they should be contrasted by a bubble top in stocks.

As it stands now, indeed the government intends to put me in jail tomorrow because I am taking the 5th Amendment. I must do so to protect my defense until trial. They are using a civil action of contempt arguing that I have no 5th Amendment rights. I will go to jail tomorrow willingly before I bend before this corrupt thing we call government.

Keep in mind one thing. If the government is intent upon silencing you, you suddenly find that they are no better than Russia. They need no proof. They strip you of your assets to prevent you from defending yourself. They attack and threaten your attorneys with jail for contempt and try to take back any money they have already spent even though it was unfrozen by a judge previously. In other words, the US has become no better than Russia. They even threaten your family, your employees and your friends. This is what America is now all about.

They know my life has been threatened and quite frankly the government most likely cheerishes the thought of me being killed while in prison. That way, everybody wins. The truth will never come out and my name will be forever tarnished as some two bit crook who defrauded clients but strangely never diverted a single wire out of $3.1 billion.

Sincerely:

Martin A. Armstrong
JCTex
(01/07/2000; 09:53:28 MDT - Msg ID: 22458)
goldfan: manipulation
You could be right that legal action may not work. You are probably right that the gummit won't enforce any laws against people as powerful as these. The so-called mainstream media damned sure won't be any help in exposing the manipulation.
BUT sometimes just opening the door and shining the light on them will make the cockroaches and rats run for cover.
Goldy Locks Guy
(01/07/2000; 09:54:59 MDT - Msg ID: 22459)
Goldfan and Silver
Hi,

One thought that was put to me last night concerning Buffet is that although is has a big bunch of silver, most of his ungodly wealth is in stocks...And perhaps he is holding out right now on taking possession on the silver because he's waiting for the stock market to correct. Making a big play in silver at this point would most likely tip the scales in some area's that would endanger his wealth outside of silver....just a thought. At some point, surely he will make a play, or why else would he even ownt he stuff?
Chris Powell
(01/07/2000; 10:55:55 MDT - Msg ID: 22460)
Martin Armstrong knows too much; pray for him
http://www.egroups.com/group/gata/332.html?There are lots of market manipulations.
Will he live to tell about them?
Chris Powell
(01/07/2000; 10:56:24 MDT - Msg ID: 22461)
Martin Armstrong knows too much; pray for him
http://www.egroups.com/group/gata/332.html?There are lots of market manipulations.
Will he live to tell about them?
Chris Powell
(01/07/2000; 10:56:37 MDT - Msg ID: 22462)
Martin Armstrong knows too much; pray for him
http://www.egroups.com/group/gata/332.html?There are lots of market manipulations.
Will he live to tell about them?
PH in LA
(01/07/2000; 10:56:47 MDT - Msg ID: 22463)
Silver manipulation
Goldfan:

As you probably know, the writings of Ted Butler have focused on the current humongous deficit in the silver market. For centuries, civilized man has accumulated and hoarded silver, which for most of human history was utilized as money. Until recently, the US Government had one of the largest strategic stockpiles of the metal in existence which was further enlarged when silver was withdrawn from the US currency. As it turns out, silver is not even a particularly rare element. It is found together with many other even more common metal ores and its production is mostly a by-product in the mining of copper, zinc, magnesium, etc. (That's why it is so hard to find a pure silver mining stock.) For this reason, the silver market has always been a highly manipulated market and highly susceptable to the vagaries of public perception.

However, according to Butler, much of this traditional underlying fundamental reality has been profoundly changed by the practise of leasing. For example, the US Government admits that its gargantuan strategic stockpile has been largely liquidated. The same goes for other nationally-inspired strategic hoards. By selling short far more than the annual production of new silver, the so-called "manipulators" have kept the price of silver falling for decades and appear to be in the final throes of this process (which I personally do not pretend to fully understand from a technical trading point of view) which is manifesting itself in virtual rigormortis in the silver market. As long as this unnatural state of affairs is allowed to persist, the pressures build and the eventual price breakout is expected to be just that much more dramatic.

This is the point at which FOA's expectations with regard to the demise of the LBMA and Comex marketplaces interface with Ted Butler's thoughts. As the situation becomes more and more surreal, ie prices refuse to reflect the actual fundamentals in the markets and rather reflect a derivitives market gone berserk, FOA forecasts (hopefully?) that investors will gradually recognize the true situation and stop participating in what has become a fantasy world. The derivitive world will give way to a physical world and prices will finally be allowed to reflect a sane reality. Ted Butler harbors no such illusions and expects supplies to be literally exhausted unless the authorities exercise their responsibilities in time; something they have steadfastly refused to do, (in large part to protect the illusion of value in the dollar). Either way, silver (and gold) will someday be much more expensive.

Nobody knows how this will resolve itself. Traditionally, the laws of supply and demand have always mandated that consuming more than can be produced results in higher prices. From this point of view, those standing in the way (cabals, bullion banks, politicians... all the usual suspects) appear to be subverting the natural order of things. Their efforts are seen as manipulation, although the perpetrators call it a "new reality" and profit from it in all the usual ways. But their days are numbered!

Your observation that "manipulation will (only) be ended when the people get so scared of the possible loss of their wealth (that) they start buying PMs in large quantities out of that fear" fails to take into account much of the hard evidence presented here daily by FOA, ORO and others pointing to even more potent undercurrents in the precious metals/foreign exchange markets that serve as the foundations of our modern civilization. People's fear of the "possible loss of their wealth" will manifest itself soon enough as these powerful forces take hold. Investors will all jump together onto the wagon that has been prepared for them!

At least that is the theory.

Chris Powell
(01/07/2000; 11:05:01 MDT - Msg ID: 22464)
Pray for the man who knows too much
http://www.egroups.com/group/gata/332.html?Martin Armstrong is starting to talk
about the many market manipulations
he knows about.
silent runner
(01/07/2000; 11:15:55 MDT - Msg ID: 22465)
ORO
thank you for your input regarding prpfx
The Invisible Hand
(01/07/2000; 11:32:06 MDT - Msg ID: 22466)
Y2K: no problem?
http://news.bbc.co.uk/hi/english/world/americas/newsid_594000/594698.stmWhy is Clinton today speaking about computers today?
As I got rightly reprimanded for the inference I made on December 31, I will not draw any conclusions from this.
I do however want to use the opportunity to apologise for my newyear's eve Y2Kraziness.

US crackdown on cyber-terrorism

snip
(Clinton) said the feared threat to computer networks from the Y2K computer bug - a problem ,caused by the millennium date change - highlighted just how much the country was dependent on computers and their increasing inter-connection.
beesting
(01/07/2000; 12:06:56 MDT - Msg ID: 22467)
From Verdigris at Kitco: HSBC UPGRADES GOLD MINING STOCKS!!
http://biz.yahoo.com/rf/000107/tr.htmlNote, this article has a follow up with more information.

Comment:
The article is not complete-ly accurate, but the headline is IMHO!!
HSBC(Hong Kong Shanghai Banking Corp, doing business in 79 country's) The huge international bullion banking conglomerate headquartered in London, that recently took over Republic Bank of New York( a bullion bank) has upgraded the entire worldwide Gold industry with this announce-ment.
Which means mainstream stock buyers worldwide may become very interested in the whole Gold mining industry.
Again In My Humble Opinion, it also may mean the big players have had time to sort things out since the Ashanti/Cambair debacle, to let the "Spot" price of Gold follow a normal supply-demand price ratio.

Special Note;
This announcement was not made by Goldman Sachs, Merrill Lynch or the other brokerage houses, it was announced by a higher authority and should have very positive effects for the entire world Gold industry....For What It's Worth.
Those in the Know.....Buy Gold.....beesting.
RobertG
(01/07/2000; 12:35:37 MDT - Msg ID: 22468)
ss of nep - Forget about Elliot and Gann
The ideas of dead market gurus such as R.N. Elliot (Elliot Wave Theory) and W.D. Gann (Gann Lines) never seem to go away. Neither of these men made any money in the markets and neither will any of their followers. For an interesting and objective discusssion of market gurus read Trading for a Living by Dr. Alexander Elder, Winner Takes All by William Gallacher, and The Dow Jones Guide to Trading Systems by Bruce Babcock. These books reveal the many scandals that seem to be associated with most gurus.

As Dr. Elder accuratley states: "The public wants gurus, and new gurus will come. As an intelligent trader, you must realize that in the long run, no guru is going to make you rich. You have to work on that yourself."
beesting
(01/07/2000; 12:48:56 MDT - Msg ID: 22469)
Singapore and BIS to host Central Bank meeting on Monday!
http://biz.yahoo.com/rf/000107/eh.htmlThe meeting is to provide Central Bank Governors and senior officials an opportunity to exchange views on current economic developments.(???????)
Participants are:
Reserve Bank of Australia.
Reserve Bank of India.
Bank of Japan.
Peoples Bank of China.
Bank Negara Malaysia.
Bank Indonesia.
The Bank of Korea.
The Hong Kong Monetary Authority.
The Federal Reserve Bank of New York.
The European Central Bank.
The South Africa Reserve Bank.
The Bank of Sweden.
The Bank of England.

Comments:
Look at the names attending this meeting.
Besides banking most are major players in Gold, one way or another.
Does anyone beside me think Gold is going to be discussed bigtime?
Was this a spur of the moment meeting,I haven't heard anything about it before?
Does this meeting have anything to do with todays announcement by HSBC?
Goldhearts want to know, WHATS UP!!!

Those in the Know.....Buy Gold.....beesting.
PH in LA
(01/07/2000; 12:59:57 MDT - Msg ID: 22470)
"Como dec'amos ayer..." More notes on manipulation
I think it was the Spanish intellectual and writer Unamuno who was imprisoned for years by Franco. When he was released and returned to teaching at the University, his first lecture was standing room only. He began matter of factly with the now-famous phrase: "As I was (we were)saying yesterday..." ("Como dec'amos ayer...")

(From Kitco today:)

Date: Fri Jan 07 2000 01:48
GO GOLD (Ashanti news) ID#428144:
Copyright � 1999 GO GOLD/Kitco Inc. All rights reserved
I was lucky enough to spend some time over Xmas with a Standard Bank employee who told me that as primary lender to Ashanti, they were very close to going under. The bank that is. If the BOE had not stepped in to underwrite Standard, in return for them not calling in their debts from Ashanti, then Standard would no longer be around. Standard had no option other than to comply, since the BOE made it clear that they would have had to have stood in line with other creditors, and they would never get all there money back.

Now. Why would the BOE involve itself in corporate issues like this? unless they were sh*t scared of Ashanti not being around any more to deliver that lovely gold into the market. I just think the whole thing STINKS. I just cannot believe that the powers that be out there are quietly manipulating the market while publically and very loudly pushing the open and free markets. What a bunch of A***HOLES!!! I eagerly await their downfall.

Date: Fri Jan 07 2000 12:18
ted butler (GO GOLD@01:48) ID#317184:
Copyright � 1999 ted butler/Kitco Inc. All rights reserved
Thanks for the profound post. While we debate all sorts of aspects of the markets this ongoing business with Ashanti (and Cambior) is clear-cut current proof of manipulation in the gold market. In fact, I can't imagine it being any clearer and I wonder why all participants and students of the markets, be they bull, bear, or agnostic, aren't outraged.

The nub of the issue is this: after months, Ashanti's short position has not been closed out. (Even if corrupt Goldman Sachs has closed it secretly recently, it doesn't change the fact that the short wasn't covered when it should have been). What this means is that Goldman and all the other crooked counterparties, with the sanction of the BOE and the Fed, blatantly interfered with the most basic workings of the market. When you or I have a margin call, we must meet it. That Ashanti was allowed to avoid covering a short position, that by the rules of fairplay had to be covered, destroys beyond question the very integrity of the market. Just because they didn't want the price of gold to rise, as Ashanti's covering would cause, doesn't give them the right to suspend and change the rules midstream. Where the hell were they when the short was put on? It's OK to short your ass off to beyond any measure of being able to complete the transaction, but not OK to have to fess up to the truth and buy back. This is a billion times worse than what they did to the Hunts in 1980.

By openly and brazenly flouting the most basic rules of the market, the banksters have fouled the water for all. They have collectively decided that this crisis warranted the destruction of the rules we thought we were all playing by. The reason I can publicly malign Goldman Sachs, Chase Manhatten, Republic, AIG, JP Morgan, UBS, et al, with no fear of reprisal ( of the legal kind at least ) is the open and obvious proof of their criminal activities. These firms are truly scum.

The broader issue revolves around this - that this manipulation in gold and silver is allowed to continue so openly casts doubts on the integrity of all markets (stocks and bonds) . These firms that I continue to label as criminals are at the very top of the food chain. They are the prime players in all markets. Their obvious criminal activity in gold and silver diminish all of us.

Here's a tip to my friends at GATA - stop publicizing the scumbag Armstrong and his lies that silver was ever manipulated up in the past 15 years, and use your press contacts to question why a known public short position is allowed to remain open when the basic rules of the market demand it be covered. Just because it will cause the price to go up ain't good enough anymore.

CM
(01/07/2000; 13:00:18 MDT - Msg ID: 22471)
Manipulation of gold and silver
Just a few thoughts on the "failure" of supply and demand to reflect the true value of gold and silver.

The normal context of supply and demand is that an ongoing stream of demand must be fulfilled by an ongoing stream of supply. The market price then acts to bring these two streams into balance.

For most commodities, this context holds true. However this is not the case with gold and silver, which have large above ground stockpiles that can be used to secretly (or sometimes not so secretly) increase the supply stream and thus hold down the price.

As to who owns these stockpiles of gold and silver and why they want to hold down the price, the usual suspects include the US government, among others.

Regarding my ill advised posting to PERMFROST, I want to apologize to that person and this forum for my bad behavior. Most people are quite proud of their beliefs and do not take kindly to some stranger poking fun at them.
beesting
(01/07/2000; 14:05:14 MDT - Msg ID: 22472)
Another second (of Steve H's motion)for Sir ORO if needed.(need 3 seconds??)
I see ORO as a true-ly gifted contributor, along with many of the others here, and sure-ly deserves special recognition in the USAGOLD Hall of Fame!!!....beesting.
Twice Discipled
(01/07/2000; 14:37:04 MDT - Msg ID: 22473)
Day Dreaming
With gold in such short supply according to the physical deficits shown by the WGC (1000 tons short supply each year), I was trying to figure out if a single investor could make a dent it this price situation. When I tried to calculate how much money someone would have to have to buy just a ton, it blew my mind.
$280 / ounce * 16 oz / lb * 2200 lbs / ton = $9,856,000 / ton
10 ton = $98,560,000.
Being extremely na�ve, I don't think that there are a fair number of people out there with this kind of money. Are all of the gold bugs, just small time people like you and me?
Even so, they would probably laugh at 10 tons and this probably would not effect their ability to manipulate the price, BUT then I thought of a few billion people in China who will now be able to legally purchase gold. My perspective changed and I thought, maybe the Chinese government is trying to accomplish the same thing I was in my mind.

I guess I have been sitting here too long trying to figure out how I could make a difference in this game they are playing with us.
Twice Discipled
(01/07/2000; 14:49:24 MDT - Msg ID: 22474)
Day Dreaming (cont)
Are there any PM investment funds which invest in physical (take delivery) instead of buying paper?
Now that might be a place which would have the capital to buy $98 million worth of physical or maybe a lot more. Anybody ready to start a fund where it invest in nothing but physical?

Just have to get these off the wall thoughts out of my head so I can concentrate at work.
ORO
(01/07/2000; 15:04:27 MDT - Msg ID: 22475)
Putting it all together
Thank you all for the kind words. I do appreciate it. Quite flattering.

The postings come out to quite a chunk and have links to charts, data, and articles that are not always working. Some of the sites I use do not store the charts etc. for more than a day. Putting all the stuff together would make for as difficult a browse through as the current format. I have to say that it would be nice to have someone else redo the threads so that I can check my own collection for completeness.

One more thing is that there is an evolution of ideas and the view of history in my postings. I avoid the error of consistency, though many are driven up the wall by the kind of contradictions I am willing to deal with. Some of the postings would be contradicted by other postings as a change in view may occur.

So...Would I like to have all the threads I participated in put together? Yes, of course.
I would rather have a searchable database of the postings as at the Kitco site. Though I understand it would not be a profitable effort on MKs part due to the simple fact of there being no way to charge for it. The CD-ROM concept is nice, but us net surfers are way too used to free stuff to pay up for anything, much less a CD-ROM that would need to be updated repeatedly.

If anyone would like an ORO corner or an FOA or ANOTHER or Stranger or a somone else's corner for the threads of ideas we communicate in (something I would find very useful), I would say, go ahead to MK, if he wishes to do so. However, MK would still face the lack of incentive, as it is unlikely to be profitable. One of the problems, though, is that it is difficult to browse through the messages by ideas because they do not have a live links. This is because the messages are not stored seperately but grouped by date and don't have direct access. This is a technical difficulty that has stymied many. In some boards, such as Yahoo's chat sites, you can do searches and get title lists, also one can browse through the messages in sequence of response, but can not look at a whole day's text at one go. Hopefully, someone will find out a way to put all these options together in a workable, cheap, and easy way. It may be out there but I have not seen it yet.
Jon
(01/07/2000; 15:10:51 MDT - Msg ID: 22476)
Oro's suggestion of a "corner"
I would be interested in seeing a running commentary on inflation, strength of US$, and POG by the Stranger.
Jon
(01/07/2000; 15:13:30 MDT - Msg ID: 22477)
Msg to Twice Disiplined
I believe the Central Fund of Canada, listed on Amex will be of interest.
Broken Oak
(01/07/2000; 15:17:48 MDT - Msg ID: 22478)
Monday BIS meeting, 10th January 2000
Occuring the last day of the 21 day forex transaction holiday set in place by the BIS (Dec 20th through Jan10th) because of Y2K concerns.

I doubt they would convene this meeting if there was nothing to talk about. I would speculate that there IS something to talk about at the highest levels of these organizations and it has nothing to do with 'business as usual'.

More to come. Watch those Forex markets very, very closely.

BTW Deutchs Morgan Grenfeld tried to run their 'Y2K' ready forex system on Dec 1st in a live transaction environment and it spewed crap into the system for ten (10) hours before they shut it down. 100,000 bad transactions occured. They had to roll back to their old non-ready system.

But I doubt THAT has any significance, do you???

Remember the rule is if it didn't happen at the very stroke of midnight 12/31-01/01 then by definition it is not a "Y2K" problem. Call it anything else that you like, but don't call it a Y2K problem lest the lawyers smell a trace of blood.

Where there's smoke ...
RossL
(01/07/2000; 17:10:01 MDT - Msg ID: 22479)
Twice Discipled - Msg ID:22473

I'm going to be a little nitpickey about your figures so I regret to inform you of a slight error in your Msg ID:22473.

The Gold price is in Troy ounces. There are about 14.6 Troy oz. per pound. Also, those who talk about "tons of gold" refer to metric tons, which is 1 million grams. There are about 32151 Troy oz. per metric ton. So,

$280 x 32151 = $9,002,280 per metric ton.

I noticed Jon in Msg ID:22477 called you "Twice Disiplined" Haha I got a chuckle out of that one!!!
JCTex
(01/07/2000; 17:25:51 MDT - Msg ID: 22480)
ORO (1/7/00; 15:04:27MDT - Msg ID:22475) Putting it all together
MK,
If you need to charge us something for this site, it is a bargain, and I would like to be the first one signed on. The worst thing about this site is that I think my wife is beginning to suspect [or prefer] another woman.
Twice Discipled
(01/07/2000; 17:32:52 MDT - Msg ID: 22481)
Physical PM Fund
Thanks Jon,
I have printed all of the material out from their web site and will consider this. This is an alternative for those of us who have money tied up in 401k or IRA accounts, but want to invest in physical.
I have talked to several peers at work who say, yeh investing in gold is a good idea, but all of my net worth is tied up in my 401k or IRA. I now have an alternative to offer.
Does anyone have any pros/cons experience with this fund?

MK, I hope you do not see this as a competitor and we can discuss options like this for those of us with money tied up in retirement accounts.

Thanks,
TD
Twice Discipled
(01/07/2000; 17:39:37 MDT - Msg ID: 22482)
RossL
Thanks for your correction on my math. I'll write these down so I don't get disciplined in the future. This makes it a little easier for some wealthy investor(s) or investment fund to take physical delivery of a few tons (if they can find them) and start making a difference.

Twice Disciplined is how I feel sometimes.
TownCrier
(01/07/2000; 17:45:59 MDT - Msg ID: 22483)
Sir JCTex and all
Thanks for the kind sentiment. You needn't worry about a charge of any kind for this or the additional services that are currently in the works. All we ask is that when you at least contact Centennial Precious Metals / USAGOLD when you feel the time is right for you to add precious metal to your portfolio of wealth. We're sure you will like the friendliness of service and the exchange rates (prices). It is your decision to purchase through CPM/USAGOLD that nourishes this site. It is our mutual desire to keep the fire blazing upon the hearth.

The comments about refinements have been welcome, and The Tower has taken them under advisement. (In regard to better service, it's been a busy day of computer-oriented administration and coordination here at The Tower...brick, stone, mortar, and information technologies wrapped together in copper wire.)
tedw
(01/07/2000; 18:11:07 MDT - Msg ID: 22484)
Exposing Gold Manipulation
http://www.usagold.com
I would like to suggest a course of action.

Last weekend I heard a radio interview by worldnetdaily columnist/reporter JR Nyquist with David Tice of The Prudent Bear Fund. Mr Tice was asked if the FEd was manipulating the POG and he said "I dont think its the Fed,but I think the Bullion Banks and Hedge funds are manipulating POG."

Mr Nyquist seemed to be intrigued and he has a platform on the #1 internet site in the world. I suggest that people like "Go Gold" in the post below contact Mr Nyquist and ask him to do an expose in Worldnetdaily. They do investigative reporting and its right up their alley. Anyone with any information regarding illegal manipulation should contact Mr Nyquist, and maybe it would help if a lot of us e-mailed him asking worldnetdaily to do some investingating into the alleagations that illegal Gold anti-trust activity is going on. At any rate,its better than sitting on your hands.

Mr Nyquist can be e-mailed at www.worldnetdaily.com
TownCrier
(01/07/2000; 20:14:37 MDT - Msg ID: 22485)
The GOLDEN VIEW from The Tower
How many times have you heard Wall Street described as a wild ride? Forest Gump's mamma would surely liken it to a box of chocolates..."you never know what you're gonna get." Swings that in one breath exclaim "the end is nigh!" and are recanted with the very next breath "jump in, you CAN'T LOSE!!" In daily trading that defies rational explaination, the DOW ended the week up 0.23%, enough to claim a new record high by 25 points. The Nasdaq ended the week down 4.6% from Monday's record level, and in the process it set new records for both the largest daily point loss AND the largest daily point gain. NOT the signs of a fundamentally healthy market.

That's why we like physical gold in our wealth portfolios, especially in times like this. "You ALWAYS know what you've got," (to take literary license with Mamma Gump.) And because gold is our sturdy alternative to a house of cards, in it rests the potential to surprise us to the upside...because card houses aren't know to transmogrify into brick and mortar, but they are known to collapse without fair warning (assuming the fore-knowledge of the ways and means of card houses isn't fair enough.) We are seeing this even now in a small Andean country known as Ecuador, as we described in yesterday's GOLDEN VIEW. The local price of gold since last January has lept from 2,000,000 sucre to 6,500,000 sucre. Got savings?

Closer to home, the gold market has held nicely through the determined post-Y2K sigh-of-relief selling. Although today's overall gold trading activity was described by Reuters as thin due to the past holidays, the price has found its preferred upward path again. Spot prices last quoted in NY were up 50� at $281.50, as were the February futures on COMEX, which settled at $282.90. Traders there said it was significant that gold held above the $280 support level in this environment. In the Republic National branch of the COMEX gold depository, 2,025 ounces of Registered gold were called home...by someone weary of chocolates?

The newswires apparently looking this far ahead to include it in their reports, but in light of the question raised at the Forum yesterday, we'll continue to give you the "Head's up" and repeat our answer that the next Bank of England auction is scheduled for January 25th. Because "players" were suprised by the strong figures posted in the September auction, they set themselves up for a disappointment in November. Now that they have their expectations properly grounded, their reaction to this next auction should be a positive one. Any emotionally detatched assessment of the nature of these auctions (occurring parallel to what is supposed to be a fully functioning spot market) would beg the conclusion that these auctions are being used to supply a very vital supply to a strapped market where not all is as it appears.

Housecleaning at Ashanti...

Bridge News reported today Mona Caesar-Addo, Ashanti's group treasurer in charge of the mining company's hedging committments, gave notice of her resignation at the end of November, and has now left with the entire treasury staff.

Bridge News also tells us that the good people of the world continue to take their share of gold...because they can. According to a statement from the Ministry of Finance, Taiwan's gold imports for this past December tipped the scales at 7.651 tonnes, a 7.5% increase over the same month one year ago. (Do you think the Ministry of Finance reports on such things as rice and beef imports, too?) Ahhhh....gold. Good stuff. It knows no boundaries.

OIL

February crude futures traded on the NYMEX ended down 56� at $24.22 per barrel. Traders were said to be anticipating that inventory drawdowns ahead of Y2K were significant, and with that hurdles seemingly past, stockpiles will likely rebound in subsequent API reports.

On another note, we're happy to see Venezuela calling their own tune, after months ago seeming to be acting more as a puppet at the end of a long arm of the American government. Those days of suggestions for price bands and whatnot seem to be behind them, and they seem to be more comfortable now singing the OPEC song.

Venezuela's oil minister Ali Rodriquez hosted a meeting in Caracas today with Mexico's oil minister Luis Tellez, reaffirming their commitments to supply cuts through March as had been agreed, and beyond if necessary. What constitutes "necessary"? In an FWN report, Mr. Tellez said, "What we want is stability at good prices." Mr. Rodriquez himself echoed his president's earlier assurance that Venezuela would not seek to increase their production ahead of the March deadline. He had himself floated a trial balloon that with OPEC's blessing Venezuela might seek to raise production to provide disaster relief funds in the wake of that country's devastating flooding. It would seem that OPEC has orchestrated some admirable degree of solidarity...and it should be remembered that Mexico is not even an OPEC member.

Here in The Tower we see this as not an issue of oil producers versus oil consumers, but rather an organized act of entities having valuable goods and looking for a valuable return in a world where value has been hard to come by. Gold, anyone?

And that's the view from here...after the close.
Cavan Man
(01/07/2000; 20:21:12 MDT - Msg ID: 22486)
William Jennings Bryan
I mentioned earlier that Bryan, briefly a champion of bi-metalism was instrumental in passing into law the Federal Reserve Act and, The Federal Income Tax. Of course, he is better known for having run for President four times a loser coming closest I believe in 1896 vs McKinley. WJB had a tremendous impact on this nation. He was I believe, along with TR, the dominant political figure of his generation.

"Bryan's own philosophy of monetary policy was rapidly evolving. This philosophy was by no means limited to silver and carried him away from old positions, in which as a good Jeffersonian he once called for a minimum of government. In the crisis of depression, he took new positions which accorded government an ever-larger place in monetary management. His changed thinking is evident is his moves against a bill to repeal the ten per cent tax on state bank notes. He launched a counterproposal that the federal government alone issue paper money. He objected to the existing system of banks of issue-state and national banks-and its effect of placing in the hands of interested private parties the power to regulate the volume of currency and through it the market value of all other property. Also, he contended, banks of issue become interested in preventing the circulation of any money that might operate to the disadvantage of their currency and resisted any public regulation of their control over finances. He recalled Jefferson's remark to John Taylor, "I sincerely believe with you that bankin establishments are more dangerous than standing enemies".

"What would Bryan substitue for private banks as a source of currency? He urged that government adopt a "managed currency", as many other nations had. In rhetoric that would become familiar four decades later in Franklin Roosevelt's New Deal, Bryan proposed that government put paper money into circulation to pay for public works. This pump priming as the later new dealers would call it, would jog the economy from the doldrums of the depression. Government as currency manager could render "complete justice" by inflating the currency sufficiently to restore the balance between prices that were in wild disarray since the "Crime of 1873". All government money, according to Bryan, should become legal tender, and contracts calling for payment only in gold should be banned. Again, he anticipated the New Deal."......................

In the ongoing context of discussion here, I find this bit of history particularly relevant and thank everyone for their indulgence of band width to post this.

From: A Political Biography of William Jennings Bryan by Louis W. Koenig.

Recommended as a good read by Cavan Man who borrowed the book from Cavan Man Sr. many years ago.
Cavan Man
(01/07/2000; 20:30:48 MDT - Msg ID: 22487)
the Stranger, Aristotle and all
http://www.micheloud.com/FXM/MH/crime/carricat.htmWorth a visit
TownCrier
(01/07/2000; 20:36:27 MDT - Msg ID: 22488)
A liberal application of White-Out
"The newswires apparently **AREN'T** looking this far ahead..."

Gads. Sometimes it is just better to post and then never look back....

It must be break:30
Cavan Man
(01/07/2000; 20:39:59 MDT - Msg ID: 22489)
http://www.micheloud.com/FXM/MH/Crime/carricat.htm
Try this. If unsuccessful, do a search @ Yahoo for "Crime of 1873"
Cavan Man
(01/07/2000; 20:41:20 MDT - Msg ID: 22490)
(No Subject)
http://www.micheloud.com/FXM/MH/Crime/carricat.htmSorry.
DIRECTOR
(01/07/2000; 21:42:00 MDT - Msg ID: 22491)
Physical PM Fund
TWICE DISCIPLED
Hello to you Sir.Would you please post what the Web Site Address is for the Central Fund of Canada. I am in the same posistion as you concerning my IRA. Having sold out of my Equity Funds some time ago, I have been trying to decide on the best place to put my cash which is still in an IRA. Looking for a good safe place to put it for the rough road that is just around the corner.
Thank You.
canamami
(01/07/2000; 22:19:04 MDT - Msg ID: 22492)
Some Thoughts/Possible Discussion Points
Here are some theories and ideas I've come across lately, some with spins of my own.

1. Apparently, a Japanese investor would have done better last year in Japanese government bonds than in the Dow, because the rise of the yen relative to the dollar more than compensated for low rates on the JGB and the rate of return on the Dow. This puts the US stock markets'performances in a somewhat different perspective.

2. Foreigners' holdings of US dollars (except for foreigners' holdings in the US equities markets) have probably declined as a percentage of foreigners' overall portfolio holdings, because of economic growth in those countries plus perhaps the decline in the relative value of the US dollar (this would apply outside Europe). This would appear to make the US current/capital account deficits less serious than they would otherwise appear to be. In any event, foreigners still appear to be willing to hold US dollars and assets. (Further, the global nature of many of the US large caps means that they reflect the values of many countries and currencies, not just the US or the US dollar.)

3. Greenspan's theory is that the Japanese asset deflation (particularly stock market deflation) caused or led to the Japanese general deflation. Greenspan fears deflation as the ultimate evil. Therefore, the equities markets will not be allowed to fail as a means of avoiding general deflation, and this is now the central focus of central bank activity. Thus, if the markets begin to fail, liquidity will be added to prop them up. Recent infusions of liquidity have not appeared to cause inflation as measured in prices. (I disagree with part of this theory, in that at some point an excess infusion of dollars must result in price inflation, somehow and eventually). However, I do believe the stock market will be saved at all costs. The number of stockholders now greatly exceeds gold or bond holders. I'm viewed as a near-demon at work for not cheering the markets and for fixating on gold. Some outrage is expressed for my allegedly wanting a market failure so that gold will rise. The majority will cry for their salvation, and fairness for holders of other asset classes will not be a consideration. Gold-holders have been victimized by government, the courts and the general society more than once last century in the Western world; there is no reason to believe it won't happen again.

4. Bonds (especially long term bonds) may now primarily be a long-term hedge against what little risk the equities markets are still perceived as possessing. In a sense, it could be argued that bonds will serve the role that gold once served - hedge against systemic failure.

Generally, if the failure of the US equities markets is a sine qua non of the decline in the dollar, both of which are theorized to be sine qua non of the gold bull, how can the gold bull start if the US equities markets will never be allowed to fail, i.e., if preserving the equity bull is now the ultimate goal of CB and government policy?












3.
Solomon Weaver
(01/07/2000; 22:22:01 MDT - Msg ID: 22493)
think in grams
RossL (01/07/00; 17:10:01MDT - Msg ID:22479)
Twice Discipled - Msg ID:22473

I'm going to be a little nitpickey about your figures so I regret to inform you of a slight error in your Msg ID:22473.

The Gold price is in Troy ounces. There are about 14.6 Troy oz. per pound. Also, those who talk about "tons of gold" refer to metric tons, which is 1 million grams. There are about 32151 Troy oz. per metric ton...

----------

Wouldn't it just be easier for all of us just to remember that there are 1 million grams in a metric ton and forget about the ounces???

I suggest that the knights at this round table take upon themselves the mental training of quoting the POG in Euros per gram....like when someone you know says "Did you see the price of gold lately?"" "Yes, it is up above 10 Euros per gram, if it gets to 10.8 per gram it breaks resistance."

Knights always train their skills for surviving in future battles.

Der alte und aerme Solomon
ORO
(01/07/2000; 23:27:09 MDT - Msg ID: 22494)
Canamani - JGBs
The JGB investor in Japan would have lost nearly half his capital earlier this year, when the tiff between the Ministry of Finance and the Bank of Japan brought down the JGB from yielding less than 1% to more than 1%.

Shorting the JGB was one of Jim Rogers favored concepts trades for 99. A damned good one, together with oil and oil stocks. I wish he'd stop with the travels and get back on the financial talk show circuit.
pdeep
(01/07/2000; 23:43:38 MDT - Msg ID: 22495)
Market Rotation
It was an interesting week. Watching the lambs jump the fence from bonds to equities, back and forth. Led by the sheep dogs, of course....
canamami
(01/07/2000; 23:57:32 MDT - Msg ID: 22496)
Reply to Oro
Thx for your reply.

However, if one thinks of the JGB in terms of US dollars, would not any decline in the face value of the JGB in yen terms due to the rise in rates (still a very small difference, perhaps unlike the effect of interest rate changes on the face value of bonds in the 1970's or early 80's) be offset by the decline in the US dollar relative to the yen? I'm not up on this field, but my gut instinct would suggest that, at such low rates of return, the JGB is not really held or valued for the .25 % or 1% rate of return, but because it is perhaps a more secure store of value than an account in a Japanese bank - thus, would one see a 50% decline in its face value due to these sorts of tiny interest rate fluctuations in absolute terms?

In any event, I just found it interesting to assess the "gains" in the US market by converting them to other currencies, where the decline of the $US re the yen makes such gains look less impressive.

Just my speculation; like I said, this is not my field.
ORO
(01/08/2000; 00:08:17 MDT - Msg ID: 22497)
Gandalf - an answer to the Hobbitses on spoos
Gandalf the White (01/06/00; 22:51:07MDT - Msg ID:22437)
HELP ORO --- The Hobbits beg you to SLOW down !
You said in ==> ORO (01/06/00; 14:06:32MDT - Msg ID:22408)
Equity market out of kilter -- "The January effect in beaten down value stocks is in full bloom. The advance decline line
looks better than it has in quite a while, yet the SP futures have been under heavy selling since the last trading day of
last year."
******WHOA -- I see that the $PREM (S&P futures -- I THINK) has been manipulated by the PPT to the greatest
extent of the level during all of last year! Look at where they start it most days, +25 or so! AND when they wish to kill
a downdraft -- pop goes the $PREM +10 or so, with the market drop then slowing down and going up for a while.
Please advise what you are looking at to see the picture that you are discussing.
---------------------
The observations are correct. The $PREM is what I look at. What I saw was that up to today, the premium on the SP500 was spending way more time in negative territory than usual. Today the rescue ops kicked in, together with the broad public and kicked the $PREM through the roof for a few key moments, causing the reversal in techs we saw over the last two days.
Before this, we had a stretch of futures selling coupled with individuals and institutions buying last year's losers that were sold down to the ground for tax loss generation.
It is one of the oldest distortions introduced to the markets by the tax code. The second is the capital gains preference that equates to a 50% preference to a dollar earned in long term capital gains vs. a dollar earned in dividend of interest.
$1 in capital gains leaves you with 83 cents
$1 in interest gains leaves you with 65 cents

In normal times, one had a rough equivalence or a preference of income over capital gain.
Instead of say 5% interest rates being the equivalent of 5% of capital gains, the interest is taxed at a higher rate, so 5% of interest return is equal to a 4% return by capital gains, both provide you with the same income, $0.035 per $1.
Once state and local income tax chime in, you have some 20% on capital gains and 42%, so that the 5% from interest is actually more like $3 and equivalent to a 3.6% return from capital gain.

Given a stock with a P/E of 20 (5% earnings yield, negligible dividend) with some growth prospects, and a bond yielding 5%, the taxable investor would happily shell out for the stock and ignore the bond. Instead of the current 6.54% long bond yield implying a P/E of 15.3, it actually implies a P/E of 21.

On top of this, the Federal "Grabit" lowered the holding time for long term capital gains from 1.5 years to 1 year.
If it ever occurred to you that the government is trying to drive the stock market higher, know that you were right.

THEN you say, "The indexes are so laden with low float tech stocks that the selling of the SP500 and ND100 futures is
having a strong negative effect on these stocks (where the selling is receiving the same leverage on the way down that
had exaggerated the move up)."
****THIS is confusing to me, as the futures have no direct relation to the individual stocks that are being sold because
of the rush to lockin some of that "profit" from the irrational run-up of those stocks, to which you refer.
Please go slow and explain this to me in more detail. TIA
<;-)
--------------------
The index futures that are traded are arbitraged by the trading desk sellers, as are the options. They care only about making their time premiums, and will borrow to do the hedging for the arbitrage, or just push the market away from what they sold. Right now, they (trading desks of the banks) are selling SP and ND futures and creating some of the selling pressure by sending the arbitrageurs that buy the options and futures when they sell well below fair value, to lock in the arbitrage profit by shorting the individual stocks. This is what is often referred to as program trading. These are kicked in automatically for arbitrageurs doing the futures gig and those doing delta hedging on index options sold to the public or sold OTC.
ORO
(01/08/2000; 00:42:08 MDT - Msg ID: 22498)
canamani - JGBs
canamami (1/7/00; 23:57:32MDT - Msg ID:22496)
However, if one thinks of the JGB in terms of US dollars, would not any decline in the [market] value of the JGB in yen terms due to the rise in rates (still a very small difference, perhaps unlike the effect of interest rate changes on the [market] value of bonds in the 1970's or early 80's) be offset by the decline in the US dollar relative to the yen? I'm not up on this field, but my gut instinct would suggest that, at such low rates of return, the JGB is not really held or valued for the .25 % or 1% rate of return, but because it is perhaps a more secure store of value than an account in a Japanese bank - thus, would one see a 50% decline in its [market] value due to these sorts of tiny interest rate fluctuations in absolute terms?
---------------------
Unfortunately for the Japanese investor, the only way to enjoy the drop in the US $ is to go out and buy US made products. The more sophisticated Japanese investor would have been able to just short $ futures in Tokyo, or short Treasuries in London or NY. The loss for a holder of long term bonds is pretty much proportional to the interest rates. If they went from 0.75% to 1.5%, the value of your 10 yr zero coupon long bond went from 92 to 86 on a 30 yr bond, you lost 18%. From peak to bottom, I think there was a loss of 10% on your 10 yr, 34% on the 30 yr, (all zeros) since that bond nearly touched 2% earlier in the year (if I remember right).
If one bought long bonds in the US in the panic of the Russian default and LTCM, the capital loss was near 20%, 14% on a total return basis.

The formula:
Present value of income stream R (the income stream from the bond's coupons) =
[1-1/(1+i)^n]/i * R
i is the interest rate as a fraction
n is the number of years to maturity.

For a zero coupon:
1/(1+i)^n * Face value
Gandalf the White
(01/08/2000; 00:51:03 MDT - Msg ID: 22499)
ORO -- The Hobbits thank you for your education !
It is marvelous what you, ORO the GREAT, with good eyesight and the broad understanding can see in the same figures that the Ol'e Wiz sees with foggy vision and sinility. -- Thanks for going slow and explaining your visions. -- NOW tell us all, what does your crystal ball look like in timing of the "pop" of the bubble, as to mine, it looks as if next week should be another DOW and NAS downleg.
<;-)
Gandalf the White
(01/08/2000; 01:49:46 MDT - Msg ID: 22500)
Serial #2 of the "Mystery of the Lost Ozarks Silver"
RECAP -- At the END of the First Part of this Serial, we heard the question, "SILVER in the Missouri Ozarks?" --was a question you could have argued down around Cassville, Missouri, and Eureka Springs, Arkansas, "until the cows come home". The story of "the lost silver mines of the Ozarks" was a legend in that hilly country. Descendents of pioneer families had heard it when they were children and have passed it along to their children and grandchildren. Proof of this is to be found in the diaries of two men who inspected the cave. How much silver the cave contained is anybody's guess, but if we look closely at the old diaries and maps, we must conclude that there is quite a bundle of it.
--
"Mystery of the Lost Ozarks Silver" � PART Two --
Written by Tom Bailey and illustrated by Al Martin Napoletano as Published in the FRONTIER TIMES, Austin, TX -- Summer, 1961. (Please read carefully as it is transcribed just as it was written, and my spellchecker is not conversant in 1960's Texas English.)
--
Mrs. Ola Farwell of Eureka Springs, Arkansas, has (1961 era) in her possession old maps and diaries which tell the story of the lost silver. They were found in St. Louis � or what was then the makings of the great city of the present day � in 1830 by a man whose name on one of the worn maps is now illegible, although the notation that he wrote above his signature is legible. It reads, "I found these maps in an old bun barrel while trading in St. Louis in 1830. I am going west and if I ever come back, I will look for the owner."
Apparently he never came back.
Experts who have examined the documents say they are as old as they appear to be. The paper, which is crinkly and falling apart has in no way been treated to give it the appearance of being ancient.
The story goes that two men named Pu Deville and Pierre heard of the cave of silver from a Choctaw Indian who drew a map of the region. In what year this all took place is uncertain for the papers are not dated, except the entries are listed as 'October 4� and so on without revealing the year. It must have been about the time of Lewis and Clark or possibly later � say about 1820.
From the Indian's description of the location, and the map he drew and to which the two men added names they apparently dredged up out of their own heads, they found the cave, just as the Choctaw had described it. They found silver stacked against the wall of the cave in bars. There also was some loose bullion on the floor of the cave.
Pierre's dairy tells the story. He and Pu Deville obtained financial backing, or what amounted to a grubstake, from a man named Leduc and a Dr. Smith at St. Charles. By October 8, they were ready to start. After making three new maps under the Indian's instructions, they had a drink with the Choctaw, Leduc and Dr. Smith, then shoved off. The third map showed the cave to be two-and-one-half miles South of "the Anderson house". There is no record today of an Anderson family living in the region; however, there were early settlers of which there is no written record.
The next notation is on October 10 when Pierre says they traveled forty miles and that it was an exceptionally fine day. The notation, "White Sin is a fine fellow." is not understood. Whether he referred to a third man with them is not known, but apparently he did. This man may have been an Indian guide.
End of Serial #2
<;-)
SteveH
(01/08/2000; 03:22:08 MDT - Msg ID: 22501)
repost
www.kitco.comReason for this repost is because it refers in multiple places to the Jamaica Accords. What is more, there appears to be an eary resemblance to the present here. Note the 20:1 leverage expected by gold players in 1975. And that is what happened four years later (long time to wait for gold to rise, but a 20 bagger is always worth waiting for):

Date: Sat Jan 08 2000 01:14
sharefin (SDRer - worthy of a full posting?) ID#284255:
-
Topic #1--THE INTERNATIONAL MONETARY FUND "GOLD SALE AGREEMENT"
AND THE DETHRONING OF THE UNITED STATES DOLLAR


At the end I also hope to mention some brief hints about what
you, the individual concerned American, can do to help stem the
tide and save our beloved land.

Topic #1--In my monthly AUDIO LETTER No. 2 for July 1975 I
discussed the setback which David Rockefeller experienced at the
June meeting of the "International Monetary Fund", or IMF.
Speaking through his agents in the United States Treasury, he had
expected to succeed in persuading the member nations of the IMF
to sell all of the IMF gold, and was ready to buy the IMF gold as
soon as it was sold. Much to David's surprise and chagrin he
failed in June 1975 because of French opposition based on their
own awareness of the true status of Fort Knox and America's gold
reserves. As I mentioned in that AUDIO LETTER, the Rockefeller
interests went to work in a feverish search for a means of
achieving their objective--that is, a decision to sell IMF gold
at the next IMF meeting in September, this month. And if you
paid any attention to the news early this month, you know that
this time the Rockefellers did achieve a hasty compromise
agreement. In a moment I will explain exactly what was decided
about potential gold sales at the early September meeting of the
IMF, but first I want you to notice the startling quid pro quo
which the Treasury accepted on behalf of David Rockefeller as the
price of selling the IMF gold.

For years now the United States Treasury has been debunking
the monetary role of gold as obsolete, barbaric, and no longer
needed. In this connection, the Treasury has been fighting for
years to bar Central Banks from buying gold on the free market.
The reason for this is to allow the interests controlled by David
Rockefeller to corner the gold for themselves while their
deliberately-produced runaway inflation ruins the rest of us
stuck with paper money that has no backing. But at the September
1975 IMF meeting this position which the United States has stuck
to uncompromisingly for years was suddenly abandoned. Why? What
was it that made the United States agree to let Central Banks buy
gold? They already had the right to sell it. What caused such a
total defeat for David Rockefeller and such a dramatic reversal
of a fundamental policy built up now for years?

My friends, what caused the result is the spreading effect of
our exposure of the Fort Knox Gold Scandal. The general American
public still doesn't know about it, thanks to the news blackout
imposed by CBS, ABC, the New York Times, the Washington Post, the
Los Angeles Times, and other major media which are controlled and
intimidated by the Rockefeller Brothers themselves. But the most
knowledgeable people in the financial community here and abroad
increasingly do know that something is very fishy indeed about
the United States Treasury Department. In short, the heat is on!

Since we revealed the existence of the Central Core Vault in
July and explained its role in the gold theft and fraud at Fort
Knox, the Treasury knows that we know exactly what they have been
doing, and how. The Conspirators know that if my associates and
I ever are allowed to present our evidence in a court of law
before a grand jury or in a Congressional investigation, their
fate is sealed. Their game, therefore, is to try to keep that
from happening by keeping the public fooled and unaware of the
truth. To this end, the Rockefellers made their big concession
at the September IMF meeting in order to get some IMF gold
returned to the Treasury.

Under the terms of the Agreement, five-million ounces of IMF
gold is to be returned to the United States, from whence it came.
This gold was originally promised for sale to the "insiders"
within the Rockefeller circle, but now they wanted instead to
display or use it in gold auctions to keep the public fooled. In
this connection, on August 21, 1975, shortly before the latest
IMF meeting, the Treasury even held a well-publicized meeting
with private gold dealers to discuss the question of holding
auctions. This was pure propaganda and bluff, and intended to
lend weight to any future auctions of gold obtained from the IMF.
The frantic maneuverings to snatch some IMF gold for propaganda
auctions is simply a replay of what they did last December to
have a little gold to auction off. On December 9, 1974, the
Treasury illegally emptied the tiny "Exchange Stabilization Fund"
of its two-million ounces of gold, as I have mentioned in
previous tapes. That was done simply to have something for the
Treasury to sell in small propaganda auctions, since the rest of
our gold reserves were long gone.

With this important perspective in mind, listen please to what
the IMF did on August 31, 1975, at the beginning of their
so-called September meeting:

No. 1--The widely publicized "Gold Sale Agreement" of the IMF
is an agreement in principle, a conditional agreement. The IMF
is to meet again in January 1976 in Jamaica to discuss the
Exchange Rate question. If, and only if IMF members agree on
that in January, then the conditional Gold Sale Agreement, which
has just been announced, will take effect. The stakes are so
high for David Rockefeller and his partners in crime that I
predict agreement will be reached at the January meeting in
Jamaica. The political will is there. The IMF gold will then be
officially released, although I am informed that steps are
already being taken now behind the scenes, illegally and
prematurely, to take possession of the five-million ounces of
gold and put it back in Fort Knox.

By the way, there have been rumors lately that Mrs. Mary
Brooks, the Director of the United States Mint, has tendered her
resignation, but that it has not yet been accepted because it
would look so bad. There are indications that her superior said,
in effect, quote: "Just hang on for a few more months, Mary,
while we get this whole thing about Fort Knox out of the way.
Then you can go, if you like." Be that as it may, we had one of
our sources contact Mrs. Brooks, and here is what she said,
quote: "There is nothing amiss at Fort Knox. I was there
recently. I have never tendered my resignation, and I don't
intend to do so. I don't know why these rumors keep coming up."
Asked if she knew about the rapid retrieval elevator system to
the Central Core Vault, she did not deny it but just replied,
quote: "Those kind of rumors come along all the time." Our
source suggested to Mrs. Brooks that it would be a simple matter
to open Fort Knox wide open to prove Dr. Beter wrong and, quote:
"put an end to this matter once and for all." Her reply--and
this is her exact reply--and I quote: "Oh, no! It would take
weeks." All I can say to that, my friends, is: "Yes, Mary, it
will take weeks to get the five-million ounces of gold back in
Fort Knox." That is why I am informed there is some activity
going on right now in Fort Knox. Meanwhile Mary Brooks is trying
to brazen it out.

Returning to the IMF Gold Sale Agreement though, I should
point out one other thing: Should there fail to be an agreement
about Exchange Rates by the IMF in January in Jamaica, an
unlikely event, than we will be back to Square One on IMF gold
sales. Should that happen, David Rockefeller and his fellow
"insiders" will have used the IMF gold sales decision as a scare
tactic throughout this fall of 1975 to run down gold prices and
take all the gold they can out of weak hands. Also, they made
billions of dollars going "short." When the public becomes aware
of this, gold prices will start up again.

No. 2--The interim or conditional Gold Sale Agreement
specifies the following:

Of the approximately 150-million ounces of gold now owned by the
IMF, one-sixth or 25-million ounces is to be sold on the open
market or to member Central Banks. The latter is what will
actually occur. True to Rockefeller tradition, by the way, this
IMF gold sale to suit their own purposes has been painted as a
philanthropic move to raise money to aid poor and developing
nations.

Another one-sixth or 25-million ounces is to be returned to
member nations of the IMF in proportion to the amounts of gold
each nation originally contributed. Each nation may then keep or
sell this returned gold, but you can bet they will keep it.
Their own citizens will hang their Central Bankers if they don't.

Under this clause the United States is to receive about
five-million ounces worth about $700,000,000 at current market
prices. This amount, I am informed, has already been promised to
the "insiders", but events may undo this when the Fort Knox Gold
Scandal breaks nationally and world-wide. It is this
five-million ounces of gold, equal to only about two percent ( 2% )
of what the United States Treasury officially claims to have,
that the Conspirators want desperately to get their hands on in
case they need it for propaganda auctions or even another
carefully-staged "peep show" at Fort Knox.

The remaining two-thirds of the IMF gold, or about 100,000,000
ounces, is to "stay put" in the IMF for the time being. There it
will remain as backing for the so-called "Special Drawing
Rights", or SDR's, of the IMF. The SDR is to become the new
international monetary unit or standard of measure, the
yardstick; and then the other strong currencies that now make up
part of the basket of the 16 currencies which constitute the
SDR's, will be the reserve currencies of the future, at least for
the next two years. The dollar, therefore, is giving up its
sovereignty as a sole reserve currency. The joker in this deck
is that over half of an SDR is made up of the American dollar and
British pound sterling, both of which lack gold backing. In the
tremendous inflation ahead, the SDR will therefore be hobbling
around on one leg with its only real support consisting of the
strong gold-backed currencies which comprise less than half its
face value.

No. 3--and very important. Beginning January 1976 the IMF
members have agreed not, repeat NOT, to affix an official gold
price for a period of two years, provided the January 1976
agreement on Exchange Rates takes place. This is exactly the
development I have been warning about for over a year, based on
information from my own confidential sources. They are behind
schedule in obtaining this agreement, but the agreement itself is
precisely on track. Once it is in place, they can easily make up
for lost time in their plan to visit economic catastrophe on the
United States and the world.

What the IMF agreed to in principle is to allow its members,
including the United States, to ask their respective governments
to abolish the official price of gold, which is now $42.22 an
ounce, once the Exchange Rate agreement is reached in January
1976. This means that for the following two years there will be
only a "market price" for gold, subject only to supply and demand
plus massive massages by the Rockefeller interests to cause the
price of gold to skyrocket. In other words, gold will be going
private for two years starting in January 1976. The gold zoom
signal of $180 an ounce, which I explained in my AUDIO BOOK
recorded in October 1974, will be penetrated and cataclysmic
inflation and economic chaos will erupt. After two years of
this, with the economy of the world and especially of the United
States in smoking ruins, David Rockefeller--the man who
orchestrated the whole thing in the first place--presently plans
to call an "International Monetary Conference" to at last restore
gold to its traditional monetary role. David's plan is to
officially repeg gold then at $2,000 an ounce--twenty times the
current official price of $42.22 an ounce!

No. 4--After the two-year period just mentioned, according to
the Gold Sale Agreement just reached by the IMF, Central Banks
will be allowed to buy all the gold they want. As I have already
pointed out, this complete reversal of a key feature of the
Treasury's long standing gold-debunking campaign is directly
traceable to the steadily building pressure of the Fort Knox Gold
Scandal and the desperate need of the Conspirators to keep it
covered up.

No. 5--Until January 1976 no sales of gold will be made by the
IMF to world gold markets or to Central Banks at market prices.
It would not yet be legal to do so, but I fully expect that
agreement will be reached at Jamaica in January, and that IMF
gold sales will then take place according to plans. Thus the
United States dollar is now way over-valued.

The United States Treasury is most anxious to get its house
back in order, in appearance at least, to prevent the public from
becoming aware that Fort Knox is truly empty of its gold. The
Treasury now holds less than 800,000 ounces of gold--a mere
pittance left over from the 2,000,000 ounces it illegally took
from the Exchange Stabilization Fund on December 9, 1974. The
rest was used for the propaganda auctions by the Treasury in
January and June of this year.

Gold fever will spread across the land in the near future as
soon as the full significance of the IMF action is widely
understood, and then the only questions will be not the price but
the availability of gold. The gold market today is very thin as
it is, and the "insiders" had to scare the weak sisters in order
to make them disgorge their holdings.

As of now, David Rockefeller still plans for gold to be pegged
at $2,000 an ounce, and for the new SDR's to be the standard unit
of measure. The United States dollar will lose its status as a
world currency reserve. Even now David Rockefeller's Chase
Manhattan Bank is already linking some of its loans to SDR's.
After all, who should know better than David that dollars are to
be avoided?

For the next two years after January 1976, those countries
having gold in their Central Banks will be able to enjoy a fast
markup in the value of their gold reserves of 20 to 1. Can you
imagine!--20 to 1. Therefore during that period, Central Banks
will buy up at market prices the 25,000,000 ounces that will be
for sale by the IMF. That gold will never reach the private gold
market at all. But the United States has been deliberately made
gold poor by the Rockefeller Brothers.

Having no gold left of any significance, we are now in the
same leaky boat as Britain. And look what is happening to
Britain, which is already on the road to advanced socialism!
Cataclysmic inflation, deepening unemployment, and social and
economic upheaval on the way to dictatorship are in store for all
of us soon if the gold situation is not rectified. And so, my
friends, we are in a race against time. David Rockefeller and
his collaborators in and out of the Treasury seek delay, delay,
delay. They want to use the IMF gold and other tricks to keep
the American people fooled until it is too late. Time,
unfortunately, is on their side. Those of us who would like to
see our nation saved, on the other hand, are pressing with every
means at our disposal for a full, open, honest INVESTIGATION of
the whole thing without further delay.

In this connection, I want to read some telling words from the
front page of the Daily News Digest for the week of September 1,
1975. ( Their address, by the way, is: P. O. Box 27496, Phoenix,
Arizona 85061. ) The headline is just one word: "WHY?" I now
quote:

"The Fort Knox gold story is far from dead. There is something
rotten, and the stink has spread across the land like a fog.
Thousands of readers have followed our series closely. Like
them, we have waited in vain for satisfactory answers to
questions raised by Dr. Peter David Beter and his associate, Ed
Durell. An exchange of letters with the United States Bureau of
the Mint has produced nothing but double talk.

The key question regarding the Central Core Vault still remains
a mystery. Is the gold there or isn't it?

Why is it so difficult to send a delegation to Fort Knox, open
the Vault and reveal its content--or lack of content? Why have
no members of Congress taken it upon themselves to settle this
matter? Is courage such a missing virtue in Washington that this
can't be or won't be done?!

Why has the nation's press avoided the story with an intensity
that is amazing? Is this not perhaps the biggest news story in
the civilized history of the world? It certainly has that
possibility. An evil group of individuals that can loot a
nation's Treasury, as has been charged, to the tune of
$11,000,000,000 certainly deserves some attention, doesn't it?

And the radio and TV industry didn't even mention the initial
charges, and covered only the "peep show" staged at Fort Knox
last September.

But the newspapers, where are they? Why the blackout on the
Fort Knox story? Is there some powerful force that scares them
into submission? Or would they lose so much advertising that
they can't run the story? Or do the major editors think the
story is so outrageous as to merit no attention? Outrageousness
certainly didn't prevent Jane Fonda and others from getting
front-page coverage!

Yes, something stinks. IS THE GOLD THERE OR ISN'T IT? Which of
our Congressmen has the guts to find out?"


From:
ftp://ftp.trawna.com/pub/misc/Dr_Beter_Audio_Letter/dbal04
Goldfly
(01/08/2000; 06:25:38 MDT - Msg ID: 22502)
Cavan Man
http://www.micheloud.com/FXM/MH/Crime/carricat.htm
What a great link! I had never heard of "The Crime of 1873" before.

That bit about Oz was great too. A golden axe with a silver handle!
RossL
(01/08/2000; 06:52:19 MDT - Msg ID: 22503)
Solomon Weaver - think in grams

Yes, sir. Think in grams. Good idea. But a lot of my coins were manufactured in units of 31.103 grams. Such a clumsy denomination to remember. I will have to put up with it until the paper market fails, I suppose.
Cavan Man
(01/08/2000; 07:11:19 MDT - Msg ID: 22504)
Thank you Goldfly
Yes, that is an excellent link. Now, I am really intrigued with the monetary history of the $USD from 1792 to 1933. Does anyone know of a timeline depicting critical events along this path at the very least?
Jon
(01/08/2000; 07:19:00 MDT - Msg ID: 22505)
Central Fund of Canada
www.centralfund.comHere's web site. E-mail sspicer@nas.net for add'l info.
Jon
(01/08/2000; 08:06:18 MDT - Msg ID: 22506)
Msg to Invisible Hand
Re: your msg # 22466 - shows a lot of class. I'm glad to be amongst those who lurk and post here.
Twice Discipled
(01/08/2000; 08:25:37 MDT - Msg ID: 22507)
...
DIRECTOR ...
Jon has provided the link below, it was a long week so early to bed and late to rise last night.

Solomon Weaver ...
Interesting notion, I will have to break out the spreadsheet to accomplish this task. Most sites quote the price in ounces. But my biggest hurdle will be mental with this one. As discussed by many people, gold (money/wealth) has meaning in what we can exchange it for when needed. I have no personal correlation between Euros and what a Euro can purchase at my grocery store, Wal-Mart, etc. Although I realize the current exchange ratio is ~ 1/1.04.
Interesting thought though.
Thanks and relaxing weekend to all.
TD
Tanglewild
(01/08/2000; 08:54:01 MDT - Msg ID: 22508)
Re: Cavan Man
http://www.ex.ac.uk/~RDavies/arian/amser/chrono.htmlThis site is pretty vague but may help you a bit as to the chronology of money. ttyl
nickel62
(01/08/2000; 08:56:30 MDT - Msg ID: 22509)
Twice Displined The following URL is about the average ownership
http://www.gold-eagle.com/editorials_99/madhok081999.htmlof gold in India. It is written by Suni Madlock an excellent analyst in Abu Dabbi that has written many articles on the current gold situation. The Indian population have a long tradition of knowing they can not trust either their national currency or their banks so gold savings are very high. Almost 25% of total world supply.
ORO
(01/08/2000; 09:00:33 MDT - Msg ID: 22510)
Wiz - Please don't call me names..;-
Thanks for calling me "great". A treat. Not deserved, and an exaggeration. Keep it for people who do deserve it. We do get rather effusive here. Lets keep it under control.

In my crystal ball is red snow, witches on brooms and silver slippers (for three left feet), and Santa Claus' back end flying his sled home.

However, the gold mining industry is running out of grading tricks, the banksters and their Grabit partners (I don't remember which was the broom and which the witch) do not have many hoards left to tap and will need to take out reserves. Since the latter is very risky, they are unlikely to do so. The Fed has been backed into the corner by the ECB's success in eating the dollars liquidity pie. Considering the numbers from the previous quarter relative to end year numbers, I think that the end of 1999 saw a strong displacement of dollar debt issuance out of the markets. I believe that during the Q4 the Euro debt issuance was at 50% and the dollar issuance at 40% or slightly below. Since Brady bonds and their Asian equivalents require the borrowers to hold a portion of the funds in the form of Treasuries, that means that as bond debt is rolled over into Euro, treasuries get dumped. The elimination of new dollar debt issuance without the death of the respective currency by IMF and now British action means that while liquidity is being squeezed, the Fed is pushed to grow the monetary base even beyond the IMF's work. This increases the ratio of cash dollars to gold and will show up quickly enough in a higher POG. The lag time from monetary growth passing the 10% annual growth rate to a significantly higher POG is some 6 to 9 months. That brings us to March as the time frame by which we should see a significant rise from this level.

At $280 - $300 assuming no significant global dollar price inflation, the calculations show the miners reducing output by 4% per year beginning next year. That increases the supply deficit by nearly 10% per year. The funny thing is that if prices rise, the output would be reduced further. The current growth in Asian buying is at about 10% per year, raising the deficit another 15% per year, for a total of 25% annual growth rate. The result is a 1250 ton deficit rate by the end of the year. The 400 ton per year sales from ECB members + Swiss and BOE would need to be supplemented by another 800+ tons, there are only 4000 tons left in the hands of CBs outside the Washington agreement and USA. This has been tapped already (Jordan, Kuwait etc.), and little should come out of this source in future.

Phos
(01/08/2000; 09:01:15 MDT - Msg ID: 22511)
Gold leasing
http://www.individualinvestor.com/tbd/anfdt_frm.asp?ff_id=786rAn article on gold appeared on the Individual Investor Website by John Tompkins. The comment below was in the text.
--------------------
"Morgan Stanley Dean Witter's gold analyst, Douglas M. Cohen, comes down on the bear side of the fence. No crisis seems able to trigger a rise in gold and continued central bank lending are his principal negatives. Indeed, he says that Venezuela, Germany, Portugal, Austria, and Switzerland are new entrants into the gold lending market. "
---------------------
I thought Germany and Austria were party to the Washington aggreement to stop gold leasing. Has anyone else heard anything about this situation? Is Cohen all wet or has leasing started up again?
De Ronin
(01/08/2000; 09:02:05 MDT - Msg ID: 22512)
An Elliott Wave Perspective on Pending Oil Price Dive
http://server3.ezboard.com/fdownstreamventurespetroleummarkets.htmlFor those of you that think gold and oil prices should correlate....

Oil prices seemed to have topped out on too much stockpiled y2k fuel and a warm weather pattern. Here's some technical analysis that seems to confirm these bearish fundamentals. Its from an ezboard forum on oil markets:

I can't cut and paste or link in because its a passcoded subscription deal in Adobe but here's the jist of Bob Precter's Elliott Wave analysis on oil. Its his featured commodity perspective in his general financial newsletter because its just completed a classic 5 wave pattern.

Prechter's got a graph of crude prices which does depict a pretty classic 5 wave pattern from a Feb '99 low of $12.81 to a Dec '99 high of $26.85. He's now expecting a 3 wave decline to $19.83 - $21.49 area basis Feb.

The fifth wave of this past bull move forms a diagonal triangle- which is an ending pattern occuring after a substantial move and calling for a sharp swift return to the original pattern. So in addition to a likely decline to $19.83-$21.49, we can also say the drop shold occur by the end of April. Key resistance for this bearish outlook (point for stops) is $26.85-$27.88.
nickel62
(01/08/2000; 09:18:07 MDT - Msg ID: 22513)
Can gold continue as money if a price rise of sufficent proportion
raises it to such a price level that mining is tremendously stimulated and productions soars? I was involved in a discussion of this nature with several other posters several weeks before Christmas when other events took me away from the Forum and I never was able to find the answers from the other maembers if their ever was one. Could someone throw in any information about this matter.
ORO
(01/08/2000; 09:20:08 MDT - Msg ID: 22514)
Continued
Next mark up fot Euro gold reserves is at the end of March. So as the Euro goes, so gold should track. The Euro would not wait beyond the 15th of March, so I would be fully in by then.

I would not wait too long for the COT to turn super bullish.

Watch Plat and Silver to see whether they turn. Gold should follow or precede by at least bottoming.

Without convincing changes in the gold arena, such as people massively converting back out of paper gold to dollars and currencies, I do not see any way for the bullion bankers to put their hands on enough gold to make their survival a possibility.

I still see a threat from the IMF selling its hoard, but do not believe they will do it because they have the precedent of using their new money pump, which is way more valuable for their future survival as an organizations than the dollar, which they seem to expect would fail.

Overall, the stable consolidation period for gold can not last for more than 2 years anywhere near this price range.

The slow treck upwards for gold as driven by the Euro, should accumulate to significant gains so long as the EU hangs together. If there are problems of solidarity, then it may skyrocket along with the dollar.

I expect Plat to bottom within 4 weeks and gold to start moving up after the next BOE auction.

Watch for lease rates for 3 or less months beginning to go up, while 1 year rates are stable.

So... I expect a bottoming within 4 weeks, and a significant rise by the end of March (that swing to begin mid March).

Gold may start moving earlier than that.
nickel62
(01/08/2000; 09:24:55 MDT - Msg ID: 22515)
ORO could you elaborate?
Please shed some more light on the concept that production will decline if the POG rises.
Nightrider
(01/08/2000; 09:44:18 MDT - Msg ID: 22516)
Are the Blind leading the Blind?
It was reported yestereday that 315,000 new jobs were created and wages moved Up 6 cents per hour and the unemployeement numbers stayed at just 4.1% And the Markets rallied on the News??.

Wand is going on ????
nickel62
(01/08/2000; 09:55:50 MDT - Msg ID: 22517)
Nightrider I have been wondering what has been going on for the last seven years.
I continually am amazed at the ablility the US markets have to gyrate in ever higher circles despite the bewildering fundamentals. Either no one in America has gotten any wage increases or the government reporting is failing to pick it up for some reason.
nickel62
(01/08/2000; 10:00:38 MDT - Msg ID: 22518)
Derivitives? Or the wonders of limitless money creation?
Or magic? I don't know. I have watched as the stock market has not only exceeded any realm of reality but then doubled from there. It is tempting to call it a massive mania or maanipulation but that does little to explain it and nothing to expose it. And even less to protect us from the aftermath of its collapse.The answer could probably be uncovered collectively from the minds assembled here at this table. So lets hope they are able to begin to unravel the mystery wrapped in an enigma.
Gandalf the White
(01/08/2000; 10:01:46 MDT - Msg ID: 22519)
Thanks ORO for the view of your Crystal Ball
AND you are "GREAT" !
<;-)
TheStranger
(01/08/2000; 10:06:26 MDT - Msg ID: 22520)
Cavan Man, Gandalf, canamami
Cavan Man - The "Oz" allegory was related to me by my daughter who is at the London School of Economics. She says she read about it in one of her textbooks.

Gandalf - Hello to you, too, my friend.

canamami - Your Socratic questioning of the room last night has got me thinking. You asked:

"Generally, if the failure of the US equities markets is a sine qua non of the decline in the dollar, both of which are theorized to
be sine qua non of the gold bull, how can the gold bull start if the US equities markets will never be allowed to fail, i.e., if
preserving the equity bull is now the ultimate goal of CB and government policy?"

What you are, in effect, asking is: Have we entered a period where the creation and allocation of capital have become so efficient that we can now expect to avoid the kinds of imbalances which have lead to economic dislocation in the past? I think your answer lies in the excessive speculation we are experiencing today. In recent months, Dell, Intel,
IBM, Hewlett-Packard, and Compaq have all lately failed to meet analysts expectations, indicating the pace of growth in computer sales is likely slowing. Other important technology names, such as Xerox, Lexmark, Amazon.com, CompUSA and now Lucent have either failed to make money at all, publicly indicated a slowing in their markets or actually prewarned of declining earnings. Yet the party continues, with many investors perversely opting for the stocks with the most overinflated market caps.

Meanwhile, the 60% of the NYSE which declined last year, many of them solid money makers, can't seem to catch a wind.
If this isn't misallocation of capital, I don't know what is. We had some hopeful signs early this week when market leadership appeared to be shifting, but Friday's rebound in the techs is not encouraging in my view. Perhaps the aborted shock in the Nasdaq was just a foreshadowing of things yet to come. I don't know. But I don't think the Fed is out in front of this curve, not by a long shot.
mike55
(01/08/2000; 10:18:18 MDT - Msg ID: 22521)
Twice Discipled & DIRECTOR, Re; CEF
In addition to holding physical PMs, I stay diversified in stocks, bonds, cash, real property, etc. As you've learned, CEF is a stock backed 100% by physical gold and silver at an almost 50/50 split. I have held CEF over the last year+, where it has traded in the US $3.75 to $4.25 range. Its five year performance has been similar. If you're in a 401K or other fund and are limited on where you can direct your investments (like many folks are, especially those who work for large companies, me included), then you might consider CEF if you want your contributions backed by physical. Stocks, of course, are not the same as holding physical, but this one's about as close as you can get in the paper (electronic) markets. That being said, I liken CEF very much to holding physical gold -- its price/value goes up and down in a relatively narrow range, it pays no dividend to speak of, but it's always there and will always be worth something. If you're looking at it for stability, honesty, etc., it's good. If you're looking for growth or dividends, you need to look elsewhere.
Gandalf the White
(01/08/2000; 10:26:31 MDT - Msg ID: 22522)
Serial #2 "ERRATA" -- Lost Ozarks Silver
See, I told you that my spellchecker does not work on 1960's Texas Angrit. A MAJOR error is contained in the #2 Serial!! -- It totally changes the meaning and is very laughable!!!! -- It is the quote of the written note from the unknown man who found the maps in St. Louis in 1830. The correct passage is restated below:

"I found these maps in an old GUN barrel while trading in St. Louis in 1830."

Sorry for the error, but you have to admit that in was "a funny one". Maybe I should not write late at night.
<;-)
nickel62
(01/08/2000; 10:29:42 MDT - Msg ID: 22523)
The stranger Great Post
Very good analysis of the market.I wonder (since after thinking about this problem for most of the last decade I clearly don't know)If this stock market situation isn't similar to a swimming pool being refilled constantly with a fire hose. The pool has massive cracks and they keep growing but as long as the chief can still turn on the fire hose(monetary easing)whenever the liquidity gets too low the pool never really empties and all the various rubber balloons can continue to float along on the water like inflated toys.Lucent might disappoint (which shows real weakness considering how lax the definition of proper earnings has become) and plunge beneath the waves for a day or two.But the liquidity in the pool is so grat and so permanent in apperance that any real money being lost by the collective players.(After all with 3.4 billion shares outstanding a $25 dollar hickey is serious money-$85 Billion)They see a coressponding increase in their other stocks that offsets that.As long as you own all the right stocks the boys in the know keep from getting too badly burned on any one.If you don't own the in group you are toast.Portfolio managers if nothing flexible have in general learned this truism and learned to play follow the leader after a smaller and smaller number of nifty stocks.All these stocks have prices in relation to their fundamental value that make a mockery of the word over priced so in effect they have become the perfect gambling chip. They are so far removed from economic fundamentals that the manipulators don't have to worry too much about reality asserting itself. After all if you will buy Microsoft which has revenue of under $20 billion for over $500 billion you clearly don't know how to do a proper net present value or more likely are smart enough to know that NPV doesn't matter.So to return to my leaking swimming pool analogy. The various balloons all are bubbling along. One or two sink beneath the waves but since the surviving money managers have learned to follow the leadership blindly a new one is inflated just as quickly to take its place.Lucent shareholders lose $85 billion in two days all the more reason to clutch at the next new idea brought to you by Goldman et all. To run to the sky with your clients money.Don't catch this one you won't have anything to divert your clients attention from Lucent's loss at the next client meeting.
PH in LA
(01/08/2000; 10:34:39 MDT - Msg ID: 22524)
Beter Audio Tapes and FOA
Bravo SteveH!
for recognizing the references to the Jamaica monetary meetings (which all seem to refer to the accords before they took place) in the Beter Audio Tape N� 4. I too stumbled across them, also via the SDRer thread on Kitco last night, (even though I have been aware of the Beter Audio Tapes for some time) and intended to bring up the subject here (again), and/but you posted about them first. The references seem to corroborate similar references by FOA to Jamaica Accords, which on first glance does seem to reinforce FOA's credentials as an insider. To my knowledge, the existence of these accords have been, in large part except for FOA's references, otherwise unsubstantiated and almost mysterious.

Another point that caught my attention was the very title of Dr. Peter David Beter's book, "The Conspiracy Against the Dollar" (found at ftp://ftp.trawna.com/pub/misc/Dr_Beter_Audio_Letter/overview). The thesis and description of the book reminds me of FOA's comment long ago to the effect that "the crumbling of the dollar was expected to take place as early as the 1970s in the aftermath of Nixon's default on gold payments and support of the dollar... but eventually was not allowed to take place until there was something else to replace it... " (ie. the Euro)

All of this fits perfectly with the Beter premises, even as the Jamaica references do.

There is a little more to my thoughts on this that I would be glad to share with you off-line. Contact me at: PH@PROdigitalRecords.com.
Peter Asher
(01/08/2000; 10:46:09 MDT - Msg ID: 22525)
http://www.theunionleader.com/articles_show.html?article=5576
Will no-one rid us of these miserable Priests?
Page 1 Editorial:
We Apologize


If readers or New Hampshire viewers of last night's Republican event in Durham are upset this morning, it is no more so than this newspaper.

We co-sponsored this Presidential primary program, as we did Wednesday night's Democratic one.

Unfortunately, last night's moderator did exactly what many of his brethren in the national media often try to do � decide the contest before the New Hampshire voters have a chance to do so. NBC's Tim Russert apparently decided to make this his own two-man show with candidates George Bush and John McCain,virtually ignoring the four others for much of the questioning. No wonder the two are ahead in the polls!

The national media have it all figured out for us. Bush the name versus McCain the hero. No others need apply. Talk about a self-fulfilling prophecy!

But as candidates Orrin Hatch and Steve Forbes attempted to remind
us, the real poll will be taken Feb. 1 by New Hampshire voters.

As they have done many times before, we hope the voters will set the national media straight. That's the New Hampshire way.
-- JOSEPH W. McQUAID Publisher
Peter Asher
(01/08/2000; 10:58:10 MDT - Msg ID: 22526)
Methinks the Larry doth protest to strongly
http://news.excite.com/news/r/000108/11/economy-goldSummers says U.S. not selling any gold reserves

Updated 11:11 AM ET January 8, 2000

BOSTON (Reuters) - The United States has not sold any of
its gold reserves and has no plans to do so, U.S. Treasury
Secretary Lawrence Summers said on Saturday.

"I categorically deny assertions that U.S. gold reserves were being sold off or that there is any plan to sell them off," Summers told reporters on the sidelines of an economics conference.
ORO
(01/08/2000; 11:15:34 MDT - Msg ID: 22527)
High POG = low production
Gotta go, so a short word:

Intermediate term phenom:
Low POG, mine high grades, more gold produced fewer dollars earned
High POG, mine low grades, less gold produced more dollars earned

As prices go up, the mine will tend to use progressively worse grades that are not economical at lower prices, and preserves high grade ores for last.

This is part of the reason for excess volatility in gold and the sharpness of intermediate term market swings.
Gandalf the White
(01/08/2000; 11:47:40 MDT - Msg ID: 22528)
Serial Part #3
(Forward �Serial #3 of the story titled, "Mystery of the Lost Ozarks Silver".)
RECAP -- In Part #2 of the Serial, we learned that a pioneer, headed west had found some documents in the barrel of an old GUN he had obtained by trading. (Most likely trading a very small amount of GOLD for the weapon.) We then learned of the financing of the search party and the starting of the search expedition by the pair Pu Deville and Pierre.
(Editor's note: The style of dehumanizing attitude, greed, treachery and journalism displayed in this document may also be interesting to the TableRound armchair sociologists.)
Part #2 ended with the entry -- On October 10, which was an "exceptionally fine day", the expedition party of three had traveled "forty miles".
(OK enough editorial � on with Part #3 of the Serial.)
-------
"Mystery of the Lost Ozarks Silver" � PART Three --
Written by Tom Bailey and illustrated by Al Martin Napoletano. Published in the FRONTIER TIMES, Austin, TX -- Summer, 1961. (Please read carefully as it is transcribed just as it was written, and my spellchecker is not conversant in 1960's Texas English.)
--
But on the next day (October 11) the pair (Pu Deville and Pierre) seems to have been traveling separately, obviously to avoid the possibility of both losing their lives in a surprise Indian attack. Pierre says in his diary, "Indians on hill. Lay still and hope they don't see me. Indians going north again."
Apparently the two partners agreed upon splitting up to keep a daily record of what happened so that if one were killed and the other found him, he would know what had transpired.
Pierre's next entry on October 16 is confusing, "Indians again. Found the hands and stones." By "stones" he could have meant that he had found stones with which the Indians ground corn, apparently at some point along the way the Choctaw had mentioned.
On the following day Pierre was still hiding. He wrote, "Looks like a bad fix."
October 18: "Indians gone. Map works great."
October 19: "Found the place. Two hours work. Great Scott, what a wealth of silver. Each bar weighs about five pounds. I am rich. To hell with the other fellows."
His reference to the weight of the bars ties in with the size of the bars the early Spaniards moulded, which averaged from four-and-a-half to more than five pounds as they used their flintlock pistol barrels to cast the moulds in clay. The silver bars were all the same size in circumference but the difference in weight was determined by how much of the pistol barrel was used in casting the clay mould.
On October 20, Pierre recorded, "Took bars and closed cave. Worked all day to clear away marks."
At this time Pierre apparently was joined by Pu Deville, for in the next line he mentions that they separated again, and he added "Damn. The same band must have found my trail. About fifty warriors going on."
October 21: "Found my trail. Hot on. Evenin."
October 22: "Give them hell. Left horse. Buried silver."
October 23: "Mountain top. Evenin. Indians in south. Two arrows in my leg. Up to me."
October 24: "Arrow in my shoulder. Last stand. If nothin� happens bullet for me."
October 24: "Indians all around. Can't move. God help. Red spot is point. Two-and-one-half miles from point on map. God help. Oh, little dearie."
===
End of Serial #3
<;-)
Peter Asher
(01/08/2000; 12:03:12 MDT - Msg ID: 22529)
Stranger, nickel162

I think that yesterday's activity took us out of the stratosphere and into the ionosphere. Fundamentals such as earnings dividends, market position, patents, performance history, all left behind in the earthly envelope.

Only by analyzing the phenomena as the "Tulipmania" that it truly is, can we clearly understand it. Stocks go up because they are going up!

The investing/speculating (Gambling) public has decided, in a classic incidence of mob psychology, that this is a one way phenomena. Reversals are the status quo pattern for buying into, it just naturally goes higher afterward. "Everybody" knows this and all contribute to it. The penultimate self-fulfilling prophecy; ---- until what??

That is really the only question to be answered. What will be the equivalent of the Dutch farmer, who when shown the exotic bulb his friend sold a townhouse for, said: "But this is only an Onion."

Even my thesis that the Market will soon outweigh the support of the money supply seems in doubt. That quantity has become as illogically inflated as the market it sustains. At some point, there should be a realization that the values are truly ridiculous, but we are seeing a phenomena of irrational perception, not optimistic computation.

Either a consensus will build that equities are no longer the agreed upon depository of 401K etc. funds. Or some major event will slap euphoria "up the side of the head." Or, the same ultra-insiders that are holding the PMs down will pull the plug on the operation, in whatever profit making scheme is undetectably underway.

Got comments??
Peter Asher
(01/08/2000; 12:40:20 MDT - Msg ID: 22530)
Years Ending in '0' Are Zeros for Stocks
http://news.excite.com/news/r/000108/00/business-stocks-weekExerpt:

Still, there was a creepy feeling of deja vu about Tuesday's
selloff. For the past 100 years, the first days of the years that
end with "0" have signaled the start of some nasty bear
markets.

In fact, since 1900, stocks have made important highs at the
start of most of those years before heading lower.
TheStranger
(01/08/2000; 14:13:01 MDT - Msg ID: 22531)
Phos on Cohen, Peter and Nickel
Phos - re your:

"Morgan Stanley Dean Witter's gold analyst, Douglas M. Cohen, comes down on the bear side of the fence. No crisis seems
able to trigger a rise in gold and continued central bank lending are his principal negatives. Indeed, he says that Venezuela,
Germany, Portugal, Austria, and Switzerland are new entrants into the gold lending market. "
---------------------
I thought Germany and Austria were party to the Washington aggreement to stop gold leasing. Has anyone else heard anything
about this situation? Is Cohen all wet or has leasing started up again?",

I believe Cohen is all wet. I don't know what he is doing now, but he was replaced as precious metals analyst just last month. Among his trespasses was the publication in April 1998 of his very untimely "100 Reasons to Buy Gold" (Gold was at $300/oz on its way down to $250). Then, when gold was at $250, he was bearish. Among his favorite stocks were TVX, which went from about 4 during this period to less than 1, and Cambior, which went from about 8 down to about 1.

I called Cohen in September of this year to ask why his research never included comments about hedging. I pointed out that such information could prove very important in the event of a gold price melt-up. His response was to say that hedging would make no difference. All the gold mining stocks would rise at about the same rate. Honest!

Finally, I might add, his office was right down the hall from the bullion banking boys. So, you can make of this what you will, Phos, but I guess my point is that everybody gets it wrong sometimes.

Peter and Nickel - The bond market is the ticking time bomb that will bring all of this to its rightful conclusion in my view. I do not think, however, that a general market crash is necessary or even probable, but I do expect some very serious sector rotation.

canamami
(01/08/2000; 14:14:49 MDT - Msg ID: 22532)
The Stranger, Oro
The Stranger,

You said it all! Straight, simply and to the point: This is a problem of misallocated investment. Talk about clearing away the cobwebs with a direct explanation.

To cite the somewhat related example of poorly used court time. In England, the Bar was traditionally split into two branches: Solicitors and Barristers. Solicitors did the non-courtroom stuff - corporate/commercial, wills, etc. One role was sending briefs to barristers. Some frivilous lawsuits were weeded out this way, in that they would never be sent to barristers. The Barristers probably did some further weeding out, such that the court's time was not spent on matters that should never go to court. In Canada, before the explosion in the numbers of lawyers, the "unified" Canadian Bar (all are both barristers and solicitors) weeded out frivilous matters, saving the courts' time. However, the explosion in the number of lawyers led to a decline in professionalism, plus the resulting economic exigencies resulted in almost anything going to court. Consequently, the courts get flooded and backlogged. Also, the rise of Small Claims Court means that no professional vetting takes place at that level.

I went through the above song and dance because the misallocation in investment is due to the rise of the self-directed investor (no professional vetting), coupled perhaps with the pressures on fund managers to meet the index on an annual basis, which inhibits the capacity of financial professionals to exercise independent professional judgement. This phenomenum may in turn may tied into the rise of self-directed investors, who look to annual performance in determining their fund investments. Thus, the rise of self-directed investors and the diminished professionalism of fund managers (decreased ability to exercise independent professional judgement) have led to this misallocation of investment. One need only look at the mess I made of my investment portfolio to see the dangers of amateurism run amok. I was going to muse on how this might end, but I have to scoot out in a couple of minutes. (P.S. thx for reiterating the distinction between the "market" and the "indexes", which I often forget. As you said, most of the market is not booming.)

Oro,

Thx for your further reply. I am impressed by the breadth of your intellectual interests, and I regret I have not been able to keep abreast of the majority of your writings. I look forward to your book. Have you come across Raymond Aron's "The Imperial Republic" in your researches? Although now dated, it touches on many of the same points as your writings. Further, if you are willing to disclose such facts, what proportions of your investment portfolio are in gold, gold mining shares, other commodities, equities, etc.? One gets the impression that your investment interests are quite broad, and you are obviously an aware investor who takes gold seriously. I was just curious as to your investment mix, as a baseline against which to assess my own, but again only if you wish to disclose such facts.

Gotta go. A plus tard, tout le monde.


Lafisrap
(01/08/2000; 14:25:58 MDT - Msg ID: 22533)
American Gold Eagles

I took the opportunity today to speak at length with the largest coin dealer in my area. He is buying back 1-ounce American Gold Eagles by the hundreds, many hundreds, all from people who purchased them on account of Y2K fears. His buy-back price is now at 2 dollars over spot, selling price at approximately 20 dollars over spot, depending on quantity, etc.

He said that in the last 3 weeks of 1999, several individuals each purchased in excess of one hundred 1-ounce American Gold Eagles, and that in the last few days most of those people sold them all back to him.

Lafisrap
Chris Powell
(01/08/2000; 15:32:06 MDT - Msg ID: 22534)
Treasury secretary feeling the heat about gold
http://www.egroups.com/group/gata/333.html?Friends of GATA, let's keep it up.
canamami
(01/08/2000; 16:26:59 MDT - Msg ID: 22535)
Summer's Comments (on a Saturday)
Summer's comments could be viewed as bullish for the POG -categorically stated "no plans to sell". Too bad it was made on a Saturday, instead of even on a Sunday, where there might have been more bang for the buck.
NORTH OF 49
(01/08/2000; 16:40:36 MDT - Msg ID: 22536)
Canamami, on the other hand---
Isn't there an old "rag" around that states that generaly "an official government position is usually confirmed once it has been officially denied"? Maybe he does "protest too loud"!

No49
Usul
(01/08/2000; 16:41:01 MDT - Msg ID: 22537)
The Oil Embargo and the Kreinin Letter
Let us hark back to the 1973-1974 period.

1973- was the year of the oil embargo.

From "Richard M. Nixon":
http://library.thinkquest.org/12587/contents/personalities/rnixon/rmn.html
"OPEC raises oil prices 400 percent (1973)..."
The rising cost of oil caused a major crisis and
shortage of petroleum products.

Popular Music of 1973:
Walk on the Wild Side- Lou Reed
Hocus Pocus- Focus
Dead Skunk- Loudon Wainwright III
Bad, Bad Leroy Brown- Jim Croce
Brother Louie- Stories
Crocodile Rock- Elton John
Killing Me Softly With His Song- Roberta Flack
Let's Get It On- Marvin Gaye
Midnight Train To Georgia- Gladys Knight & the Pips
My Love- Paul McCartney & Wings
Tie A Yellow Ribbon Round The Ole Oak Tree- Dawn
Top Of The World- The Carpenters
You're So Vain- Carly Simon

1974- Was the year Nixon resigned over the so-called
"Watergate" scandal [announced on August 8, 1974]
Earlier in 1974, [Nixon's] Secretary of State, Henry
Kissinger, negotiated disengagement agreements between
Israel and its opponents, Egypt and Syria. [see above URL].

A successful end... but how did they get there?
What price was paid?

Meanwhile, fighting continued in Vietnam between the
South and the North.

Popular Music of 1974:
I Can Help- Billy Swan
I Honestly Love You- Olivia Newton-John
Kung Fu Fighting- Carl Douglas
The Loco-Motion- Grand Funk
Seasons In The Sun- Terry Jacks
The Streak- Ray Stevens
TSOP- MFSB
The Way We Were- Barbra Streisand
(You're) Having My Baby- Paul Anka

From "Oil Price History and Analysis":
http://www.wtrg.com/prices.htm
"Yom Kippur War - Arab Oil Embargo
In 1972 the price of crude oil was about $3.00 and by the
end of 1974 the price of oil had quadrupled to $12.00. The
Yom Kippur War started with an attack on Israel by Syria
and Egypt on October 5, 1973. The United States and many
countries in the western world showed strong support for
Israel. As a result of this support Arab exporting nations
imposed an embargo on the nations supporting Israel. Arab
nations curtailed production by 5 million barrels per day
(MMBPD) about 1 MMBPD was made up by increased production
on other countries. The net loss of 4 MMBPD extended
through March of 1974 and represented 7 percent of the
free-world production."

Thus began the oil embargo of 1973 and a steep rise in
the price of oil!

These were pivotal times!

Saudi Arabia played a significant part in all this:

"The ARAB OIL EMBARGO of 1973-74"
http://www.forks.wednet.edu/high/SocialStudies/Giles/USHistory/USHII/assign/oilembargo.htm

"[The Arab-Israeli, October, Ramadan, or Yom Kippur, War]
...financed primarily by Saudi Arabia..."

"In late October, King Faisal of Saudi Arabia influenced
Arab oil producing nations who were also members of the
OPEC (oil exporting and producing countries) to agree to
an embargo of crude oil to Western nations who had
supplied weapons and other aid to Israel, as a punishment
to the friends of its enemy.

... the Arabs ended the embargo late in the spring of 1974...

...The Oil embargo of 1973-74 was a wake-up call for the
west, signaling an end to cheap oil, and demonstrating the
vulnerability of the developed world to such disruption in
supplies..."

These are lessons that have not been forgotton, you can
be sure.

Note especially the end of the embargo in late spring 1974...

The oil embargo led to [allegedly] consideration of use of
force:

"THE OIL WARS AND THE ONES THAT ALMOST HAPPENED"
http://www.africa2000.com/BNDX/BAO101.htm
"Shortly after the OPEC oil embargo of 1974, a special
committee of the U.S. Congress requested a study of U.S.
military options for seizing oilfields in several
countries. The report, which has never been released to
the public, was prepared to provide background material to
Congress about "possible military action against oil
producing states in the event of a crippling oil embargo,"
according to an introduction.

The document, titled "Oil Fields as Military Objectives: A
Feasibility Study," was prepared for the Committee on
Foreign Relations by the Congressional Research Service of
the Library of Congress, and is dated August 21, 1975.

Countries examined as potential targets included Kuwait,
Saudi Arabia, Venezuela, Libya and Nigeria.

"Analysis indicates that sustained sanctions by all or most
of OPEC's members would disrupt America's fundamental
lifestyle and degrade U.S. security, although survival
would never be at stake. By way of contrast, the vital
interests of our major allies could quickly be
compromised," the report advised"

What allowed the US to refrain from use of military force
to secure cheap oil?

From ANOTHER, Wed Mar 25 1998:
"What if, the US dollar was taken off the gold standard,
and gold was managed "upward" to say, $208 per ounce?
[Note: this is now the 'book value' of gold at the BIS]
The dynamics of the market would force oil to rise
and allow for much needed capital to search for the higher
priced oil that was known to exist! The producers would
find shelter in gold even as the price of oil was
increased in terms of a now "non gold dollar"! Price
inflation would rise, but gold and oil would also increase.
The dollar would continue to be used as the only payment
for oil, and in doing so replace gold as the backing for
this "reserve currency". All would be fair.
The war in 1973 and the Iran problem did make markets
"overshoot", but all did work to the correct end.
The result was "a needed higher price for a commodity that
was, as reserves, in much over supply by the wrong
countries"!
It was known that the public would never have accepted
this "proposition" as fair. To this end, we have come."

The New York Times of March 18, 1974, carried a front page
story titled:

"Arabs Again Fail to end oil Embargo;
Meet Today;
Price won't be changed"

"Sheik Ahmed Zaki al-Yamani, the Saudi Arabian minister of
Petroleum Affairs, said late tonight that
"You can say categorically the embargo will be lifted
tomorrow"...
"Production will be raised" he added...
Sheik Yamani said that the long meeting today had dealt
with issues "other than the embargo" but that full
agreement had been reached on ending the embargo and
restoring, at least partially, the cutbacks in Arab oil
production"

I wonder what the issues "other than the embargo" were?

This brings us to the Kreinin Letter... containing a most
interesting suggestion, that I will discuss later,
if there is sufficient interest.
FOA
(01/08/2000; 17:34:05 MDT - Msg ID: 22538)
Reply
To ALL: I'm trying to catch up now. More to follow.

Hello PERMAFROST,

Sorry to see you go (if you still are gone?). I'll reply to your comments, somewhat in order.

You write in :------------

PERMAFROST (1/3/00; 2:31:57MDT - Msg ID:22103)
FOA Msg ID: 21859 Part 1
Dear Sir, Thanks for your response.
--------You are advocating a global financial system predicated on the peaceful and mutually-beneficial "concubinage" of gold and the "new girl in town" fiat money the Euro which you unwarrantedly presume to be relatively more "chaste" than the Old Whore, the US dollar, ONLY
because it is not "backed" by as much debt as the dollar, and its "lovers" (the EU Central Bankers, the Rothschilds?; an assorted variety of Illuminati and various other power brokers playing both sides [the sheeple?] against the middle [more sheeple]) tip their hat at gold without solemnly
declaring their allegiance at sovereign money, PM etc. ------------------

No Mr. Frost;
I don't advocate that. I think this is your perception of future events. This transition will not be "peaceful" in any way. Any time one large official faction (Dollar/IMF group) has it's money power replaced by a new official faction (Euro / BIS), it's never peaceful and not without significant loss of wealth by some of the players. I add that both little and big players get hurt when these events happen. Usually, it's the little "uninformed" players that lose the most. Your observation that people are "sheeple" comes as they step in front of a train with no breaks. Then
you tell the world that "someone" is out to get them. My experience is that the average investor is much more intelligent than that and they can do a good job of "moving" off the tracks if it's pointed out to them that a train is coming.
The dollar is giving up it's reign as a reserve currency, not "only" because it has so much debt. It's being replaced because it's inflation (total money supply, dollar derivatives supply, dollar debt supply and the official liabilities foreign nations hold as reserves supply) has discounted so much future real US production, at a constant exchange rate, that it is losing the ability to function as a reserve currency. Every currency on earth has one day come to this end. We call it a "fiat money's timeline". At this point the users of this money begin to either "deflate it's supply" through debt and payment default, or the they devalue it by bidding up the value of real goods (price inflation). Once either of these begin, the money function of that reserve currency declines. Further, one will find
that deflation is only a choice is no other official world currency is available to run to. World citizens vote with their feet at this point and greatly discount unpayable debt thus causing said deflation. Inflation is the choice when people can "refinance" into another currency media. Leaving the old to contend with an ever increasing velocity of the useless money supply. This is the fate that waits the
dollar.
Is this some structure brought about by a New World Order? If you want to see it this way, then remember the world has been doing this from creation. I only add, why bother to put the "New" on it? Let's just call it "Next World Order"! Besides, it's only one peoples as a nation group (EURO / BIS) trying to protect their wealth because another nation group of peoples (Dollar / IMF) borrowed more that they could ever pay back! Still, I read this New World Order faction (NWOF) as loudly declaring the Euro as a fraud, yet they (NWOF) are hip deep the dollar assets of a country that "defaulted on it's gold delivery. Twice! Then they (NWOF) yell because no one is creating a new gold or gold backed currency. Why do that? So we can be defaulted again by the "NEXT World Order"?

You write:

-----------------
This fiat money is necessary, you say, because it will allow management [manipuation] of the economy without suffering the deleterious side effects that a rigid gold standard has saddled us with in the past. Would you care to draw for the benefit of the forum the the philosophical line that
separates you from, say, an Alan Greenspan, as per the gold/fiat money relationship? do we not have TODAY a fully-floating POG alongside the dollar? What shall we gain in re-baptizing fiat money with a different name, i.e., the Euro? except the prolongation of the Game? IF gold IS
money than nothing else is. Disagree?
--------------------------

No PM;
We don't have a fully floating price of gold today. This is the illusion (paper gold) that has many people (such as yourself) locked into a narrow view. Mr. Greenspan has always seen the gold money relationship from a US dollar perspective and holding the US as the only dominating
financial power. He knows that the dollar could never retain it's position if gold became a "separate settlement currency" through a true world free physical market. All of the dollar price inflation that is currently locked into the present dollar supply inflation would present itself. Dollar reserves held world wide would become useless unless they could be used to buy real US goods (at a non inflated price).
Truly, Mr. G. only sees gold from a Washington view and even that must be locked in the cellar. He manages a system built by others and must use the tools this system allows. The present paper gold market is as much a function of the dollar value as interest rates and it is controlled as such.
Today, gold is money, I agree! But, it is not and never can be a fluctuating (in supply) digital money of high speed settlement. For it to work it's past magic in this modern world, it must trade in physical form without derivative use. It will.
----------------------------

You write:

PERMAFROST (1/3/00; 3:02:19MDT - Msg ID:22104)
Reply to FOA Msg. ID: 21859 Part 2
Capitalism, this familiar but insidious term really stands for the willful confusion of a descripitive proposition [that private property exists] with a PRESCRIPTIVE one [that private property and the wealth that can be generated from it is GO(O)D]. -------------------

No PM, not at all.
This is the standard (higher level) teachings in modern Western education. History proves that "real private property" has and always has been both wealth and a purchasing power medium (money). Through the best of times and the worst of times, in war and peace, people have always had private property. Even in Russia of old, they had to allow people their things. Even if these positions weren't recorded "officially". A universal truth is that no form of
official ruler-ship can function unless people have some private wealth. Never has worked for even a short time and never will. Further, generating more wealth from private property (owned wealth) is only good if one can overcome the "RISK" that comes with it. This is nothing new to most of the world. It's just a different concept for modern Western man.

You write:
---------------
It's a logical fallacy that doesn't survive the glare of critical analysis. Omit the adjective "private" from the premise and what you end up with is the other side of the coin, or communism. Both systems are basically worship of materialism and humanistic (man is the measure of the universe) propaganda. Now, whereas communism theoretically aims at generating its "GOD", or 'goods and services' in economic parlance, via the sweat and toil of its fellow gods (the proletariat), capitalism is predicated on CONSTANT INSTABILITY [the insidious rhetoric of the bankers
notwithstanding] of the prices of these very goods and services, the [managed] fluctuations of which allow the people Greenspan works for to earn wealth they did not work for. -----------------

PF:
I'm glade you understand this ages old function of humanity. Through out time and space our life quest is influenced by others that try to control our desires. The successful time traveller lives his days in harmony by adapting to the "lay of the land". Today, it's time for gold and Euro assets. Indeed, what you have just written is the very action that has brought the dollar to the end of it's
timeline.
------------------------------------------

Again, your words,

PERMAFROST (1/3/00; 3:09:12MDT - Msg ID:22105)
Reply to FOA Msg. ID: 21859 Lastly,
As to even the 'emperor running to higher ground when he sees the flood coming'--if he were to do so, he'd be emperor no more for what makes an emperor an emperor is the "land" he rules. Without it he's nothing.That's why captains do not abandon their sinking ships; and why sometimes even emperors get their heads chopped off. To die an emperor is perhaps preferable than to live as a normal human being for some...You?--------------------------------

In addition PF, the history of gold shows how one may remain in their chosen land and retain their wealth. For gold needs not return to a native place to receive it's value. We do indeed chose the high ground, with or without our heads. (smile)


Further you add from :Msg ID:22104
-------------------------
Therefore; I find myself obliged to conclude that, due to your avowed devotion to the Euro and the "The King is dead; long live the King" tradition it propounds, the only difference between you and an "Alan Greenspan" lies in your respective handles. If you already are not one of them, you wanna join 'em. Incorrect?
------------------------------------

Very incorrect my friend. The difference lies not between myself and others, rather between the life experience of "you" and "I".
Somewhat like the movie "The wind and the Lion":
You like the wind hold the power of force in your words. I as the lion roar in defiance as the sand stings my eyes in a
land I cannot leave. Yet, as a lion, I know my place on earth while as the wind, you will never know yours!

Thanks much,,,,,,,,,,,,,,,FOA
Peter Asher
(01/08/2000; 18:00:01 MDT - Msg ID: 22539)
FOA, fan-tastic
WHAT A GREAT SEMANTIC HIGH!!You like the wind hold the power of force in your words. I as the lion roar in defiance as the
sand stings my eyes in a
land I cannot leave. Yet, as a lion, I know my place on earth while as the wind, you will never
know yours!
FOA
(01/08/2000; 18:04:52 MDT - Msg ID: 22540)
Comment
USAGOLD (1/2/00; 14:16:18MDT - Msg ID:22059)
Once in Golconda.....More Parallels: Soaring Averages a Rousing Spectacle/Decay Underneath
-----The persistence of the idea that all stocks were going through the roof in the autumn of 1929 is a monument to the power of popular myth." --------------

Michael,
Your Once in Golconda was wonderful. It speaks volumes of our present situation; the inflation of the dollar as it is presented in equity valuations. Mountains of currency supply with nowhere to go! The difference between now and then? Today, we have an alternative currency that unlike the
past gold standards will not force a "deflation effect". We will have our dollars and we will have them in good supply. To the end.
I (We) expect this to continue until the dollar is devalued thru a defaulted gold market (and soaring physical gold price) and further devalued from "settlement function" by the Euro. This is going to be an exciting time to witness. FOA

FOA
(01/08/2000; 18:06:38 MDT - Msg ID: 22541)
Comment
mhchuck (1/2/00; 20:29:16MDT - Msg ID:22082)
FOA
-------------There's an old saying that "A man with one watch, always knows what time it is, but a man with two, is never really sure."... I have discarded all other time pieces...you're it. It is not such a dangerous maneuver for me personally as some might think. You see, I "know" where the trail is going, but with your higher perch, I will improve my visibility. But whether or not any of your
"pre-vision" comes to fruition, matters not, (although it might matter to you for having put it forth)
....the fact is, I like the way you tick. ----------

Thanks mhchuck!

Watching the world turn with a physical gold watch will be an easy experience. And an educational one for us "regular people". The human interaction between "high standing" paper financial players will teach us all where the truth is. Indeed, they are not losing something they have. Rather something they perceive they have. A big difference. FOA
Cavan Man
(01/08/2000; 18:22:11 MDT - Msg ID: 22542)
FOA
Don't sugar coat it my friend!!!! What do you really mean?
Have you forgotten Cavan Man? Questions like; "...is Dr. Mundell's work just a coincidence from your perspective?" and, what is emperor AG up to? Will he take the high ground?

Kind regards this evening.....
Phos
(01/08/2000; 19:25:19 MDT - Msg ID: 22543)
Stranger - reply re gold leasing
Many thanks for for response. Don't here much from the hinterlands so we rely on commentary but you don't know what you can trust.

I also read that there is a 'special' BIS called central bank meeting on Monday in the Far East. Is there any significance to this meeting (some seem to think there might be)? Perhaps FOA is aware of it? There seems to be a lot of discussion about financial distress in some parts of the world such as South America (Ecuador in particular) and Indonesia. Russia remains a bit of a question mark, I would assume. I have also heard rumours that someone (the FED?) stepped into the market to buy S&P futures this week to settle the markets. Has anyone else heard anything about this.

Some time ago, I read on the Longwaves site that someone (a Fed representative?) stepped in when the Dow fell 500 in 1987 and started buying S&P futures and that was enough to turn the market and start the 13 year bull run. Perhaps, the Fed can keep the market rising by using derivatives periodically to calm fears. Does anyone know if there is anywhere one can check the S&P options trading data to see what is happening?
FOA
(01/08/2000; 19:55:11 MDT - Msg ID: 22544)
Reply
Hello canamami,

You write:
-----------------
canamami (1/2/00; 22:43:33MDT - Msg ID:22091)
Reply to FOA - Possible Demands re Gold Breach of Contract
FOA,
I believe the recent demands made against Germany/Switzerland flowing from World War Two, and the end of gold convertability under Bretton Woods, are almost completely disanalogous;I don't see any demands ever arising against the US flowing from August 1971. The demands against Germany/Switzerland are heavily tied in with moral questions relating to Holocaust-type issues, and all that that entails. Whether rightly or wrongly, portions of world
opinion (particularly important groups in the US, and the broader world community) continue to view a continuing moral culpability on the part of Germany and Switzerland. On the other hand, the end of gold convertability was a pure commercial matter, somewhat akin to a bankruptcy, not
giving rise to important moral issues. -------------

No Mr. C;
A great many people were impacted along with their lifestyles. The dollar was devalued through price inflation during all of the remaining 70s and this directly lead to much of the stress in world affairs. Many smaller countries saw their citizens almost starve because of the changing cost of goods.
Further, important people only recognize a wrong as a "moral issue" when a public door is opened for "resolution" of that issue. Regular people must wait for justice untill the force of reality comes into play. Just as the demands made against Germany/Switzerland were buried for decades,
that didn't mean they were concluded, nor would this repudiate other precedent setting actions that occurred later in time.

You write:
------------
Remember, every other country ended gold convertability, and some of these countries did not disestablish the previously gold-backed currency - for example, Canada kept its dollar and Britain kept its pound, though gold-backing ended for these currencies. ------------

Indeed, these countries held dollars "as their gold" by international treaty. Just as a person has no more money after being robbed, dollar reserve countries after 71 were forced to use whatever money existed (they had no gold because the law said the dollar was a contract for it). People are not so shallow as to accept your "disestablish" reasoning. Watch someone in a store, given a choice of two, they will purchase what offers the best value. Only when one item is offered does the obvious become a naive selection.
Canada and Britain did not later back their currencies with gold, did they. Nor will the US!

Your words:
---------------
Also, neither Germany nor Switzerland expressly stated - "no more claims will be recognized flowing from World War II". However, the US has expressly extinguished any demands
for gold against the Treasury, except for some very old issues of certificates and dollars. Thus, the US has made an express policy decision that no demands are to be made against its gold. This has not stopped the rest of the world from continuing to view the dollar as the pre-eminent currency.

Mr. C,
If the US expressly stated as policy that the sun will not rise are we to accept it? Again, a world pre-eminent currency is one accepted from a background of "choice". No other currency was presented for use in a major settlement function capacity. Today the Euro has.

I offer Journeyman's post (thanks Journeyman)as a further argument:

Journeyman (1/2/00; 23:41:12MDT - Msg ID:22095)
Stealing is not immoral? @canimami
The stealing of the gold from "foreigners" in 1971 by the US Gvt. in cahoots with the Federal Reserve by refusing to redeem redeemable notes, specifically redeemable in gold and as specified in the US Constitution was the SECOND biggest robbery in the history of the world. The FIRST biggest heist was pulled off by the FED & USA Corp. in 1933 when the same perps, this time headed by Franklin Delano Rosevelt, similarly stole the gold from its own citizens.
The question is, I guess, since these two events are the two biggest thefts in history, is "Is stealing immoral?" Well is it? Or do you excuse those organizations calling themselves "government," no matter what they do? Or is only when YOU are the beneficiary that anything goes? Regards,
Journeyman

Further from your post:
---------------------
The bottom line: the US will not entertain any claims against its gold on either a moral or legal basis, and I don't believe any claims will be made against it either. This matter has been resolved, and the US would disregard any attempts to make this an issue, though I doubt such attempts would even be made.------------------

Sir, you have spoken a very clear "Western viewpoint". Truly, it does look different from other directions.

Thanks FOA
FOA
(01/08/2000; 19:58:07 MDT - Msg ID: 22545)
Comment
Aristotle (01/03/00; 16:45:41MDT - Msg ID:22151)
Aristotle (01/03/00; 17:39:33MDT - Msg ID:22153)
----------- I look forward to FOA shedding more light on the potential for this protection of Gold being entrenched. It would seem that the ECB's (and others') Washington Agreement was a glimpse in this direction.--------------

Thanks for your presentation Aristotle. With your Thoughts, some can better understand where this is going. It may indeed become a rugged trail before all of this is over. We shall see better around the next turn.

FOA
canamami
(01/08/2000; 20:43:12 MDT - Msg ID: 22546)
Reply to FOA - #22544
FOA, for ease of reference, I will repost a reply I made to Journeyman, then I will add a few brief comments. First, here is the repost:

Of course stealing is immoral, and it would have been preferable for the US to comply with Bretton Woods, or to withdraw while it was still able to meet extant obligations, so there would not figuratively have been a "breach of contract".

That being said, we are dealing with the actions of sovereign states, which are indeed immune from the ordinary principles of contract law, including the principles of private international law as they relate to contracts. My post related to the assertions of FOA, that the US would face demands for the honouring of gold backing just as the Swiss and Germans faced demands relating to Holocaust-related matters, years after the fact. I countered that the two matters are too dissimilar for there to be a valid analogy - i.e., like comparing apples and oranges.

However, if obligations relating to 1971 are to be dug up, then the US is free to dig up the defaults of countries after WW1. Back then, basically all currencies were completely gold-backed. In the course of WW1, the major countries became indebted to the US. Except for Finland, all the Europeans defaulted on their official debt to the US. So, if some countries can dig up ancient breaches of contract like 1971 (at law, an ancient issue, and I would also say a breach that has already been waived even on a moral level), then the US can dig up the WW1 breaches of contract by European countries - with accumulated interest. Also, such demands for compensation are made against Ger/Swit because Germany/Switzerland are willing to listen to such demands. On the other hand, the Japanese have ignored demands to compensate Hong Kong veterans and others who were tortured, and to compensate the victims of the Rape of Nanking. Thus, few demands are even directed at Japan. This is how sovereign states generally operate. Given that most of the putative complainers concerning 1971 have "shafted" the US in the past, I doubt any demands for the honouring of the Bretton Woods gold backing will be made.



Thus, FOA, I disagree with your assertion that the US will ever face demands relating to the 1971 closing of the gold window. Subsequent to closing the gold window, the world agreed for a time to currencies directly pegged to the US dollar, and then that arrangement ended. However, the fact that the rest of the world adopted the US dollar as the baseline currency after the closing of the gold window suggests that most of humanity did not view that a great injustice had taken place by the closing of that window; in fact, that closing was seen coming for years prior to 1971. Remember, the US did not seek out the role as reserve currency to the world after WWII, it agreed to accept that role only after pleadings from other countries. Moreover, any country that distrusted US dollars could have demanded gold instead.

It is fanciful to believe that demands concerning 1971 will be made now against the US, and even more fanciful to believe that anyone would take such demands seriously. To use legal language, the limitations period has passed, and in any event the breach was waived. Further, a history's worth of demands could then be reopened. The US could demand repayment of WWI-era debts, with interest. It could demand reparations from Germany and Japan for WWII, against the Arabs for oil supply contracts broken during the Oil Embargo - it would never end. This is a can of worms the world will leave closed.
FOA
(01/08/2000; 20:52:00 MDT - Msg ID: 22547)
Comment
Only part of this post:
---------------
USAGOLD (01/03/00; 21:47:51MDT - Msg ID:22184)
Deja Vu...
I thought it a deja vu. This afternoon I read the following in Adrian van Eck's "Money Forecast Letter" for January which I received about two weeks ago and just got around to:
----"We are of the opinion that the Money he and the Fed have been creating in the past two months (going on $200 billion...an awesome amount ) reflects his efforts to avert a crisis situation that is being kept hush-hush."--------

Michael,
They may take some of this back, but only a small bit of it. All one has to do is follow ORO's posts to get a feel for what is happening. (ORO, I'm getting to your good stuff!) The dollar is being challenged by the Euro in a very big way. And it's happening even faster than expected. I think several other measures were available to the BIS if the transition had not already begun. It's possible that the dollar will come under massive pressure this year if we continue this way. The Fed has no choice but to cover the liquidity drain. Eventually, this will break the paper gold pricing grip on the physical metal. Truly, the ECB is letting the dollar system rip wide open from it's own hand.

FOA

FOA
(01/08/2000; 20:54:42 MDT - Msg ID: 22548)
Reply
Hello Beesting,

--------------
beesting (1/4/00; 10:00:31MDT - Msg ID:22242)
To FOA
http://www.bis.org/index.htm
Steve H- "Good one #22209!"
ORO- Great posts today--Thank You!!
FOA, I have researched the above URL "BIS" site, and my conclusion is, the BIS only conducts business with Central Banks. So, in the recent Dutch sale of Gold, and future Gold buying by the BIS, ALL that Gold would stay withen the Central Banking System, and have NO effect on world
"normal consumption" of Gold.----------------------

Actually Beesting, you hit the nail right on the head. The BIS is the only entity in the world that the dollar/IMF (and LBMA) worry about. That is because they can move gold between CBs at any value they want and do so without any supply passing through the paper markets first.
As this sinks into the minds of paper players, they will realize just how inflated the contract market is in relation to what physical gold is available to it. Remember, Euroland backed away from the dollar gold price illusion early last year. They would have stepped in and brought physical
to support the price. Instead they stood back and let it drop down to the $250 range, as they must have had the "Washington Agreement" in the works.
It no longer became a question of price, rather a question of when? I think it was because the Euro started out "too strong" in the beginning. They needed market acceptance and usage first, then begin the process of marking dollars to the gold price. I am expecting this year to produce some concrete moves in this direction.

You write:
-----------
FOA, do you agree with that analysis? Or, do you think the BIS could enter the world Gold market, replace the LBMA, and buy and sell non-paper Gold only? In My Opinion it would be a large European Bank that would first compete with the LBMA, and then after a collapse of paper Gold, join forces with The LBMA, sometime in the future. Your thoughts and opinions are always greatly appriciated ....beesting.-------------------

I think the ECB will eventually sanction a physical gold market in Europe that trades and settles only in Euros. The LBMA will eventually fall completely out of the picture as their product comes into question.

We shall see FOA

Cavan Man
(01/08/2000; 20:55:37 MDT - Msg ID: 22549)
canamami
..."it agreed to accept that role only after pleadings from other countries."

Could you please offer a reference to substantiate your assertion? After WWII, the world needed a reserve currency no? I think the $USD was the only currency able to fulfill that role. The upside potential for saying "yes" had to have US government and industry salivating. Why would the US refuse this request? What might have been the downside potential at the time for saying yes? Certainly there was popular support for withdrawing from the world stage in the late 40's. Although the rise of communism and HST wouldn't allow that, I suppose America could have feigned isolationism while assuming monetary and economic advantage. What country could have rebuilt Europe; Japan? Just curious. Thanks.
Solomon Weaver
(01/08/2000; 20:57:51 MDT - Msg ID: 22550)
by the way, did you know that the average brain is 3000 grams???
RossL (1/8/00; 6:52:19MDT - Msg ID:22503)
Solomon Weaver - think in grams

Yes, sir. Think in grams. Good idea. But a lot of my coins were manufactured in units of 31.103 grams. Such a clumsy denomination to remember. I will have to put up with it until the paper market fails, I suppose.
-------
Good point my Man. Now I know what kind of gold bug you are.
Just was pointing out that with a round million ounces in a ton, all of the folks who do these extended calculations to decide the value of a ton, would be easier served if they would be in a market where the price was quoted in grams...so what will the future hold???

1. Scandals and defaults close COMEX and the paper market crashes.

2. The gold Trading center of the world becomes EU...new and improved paper contracts...no naked contracts allowed...and quotes given in Euros per gram....

3. Price of gold rises in dollars due to both dollar devaluation and gold price rise in Euro.

4. American gold bugs still think in dollars per ounce when they sell their coins.

A rosy future??

Poor old Solomon
FOA
(01/08/2000; 21:08:07 MDT - Msg ID: 22551)
Comment
Peter Asher (01/08/00; 18:00:01MDT - Msg ID:22539)
FOA, fan-tastic
WHAT A GREAT SEMANTIC HIGH!!

Peter,
Thanks, I thought it made a point. (smile)

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

Cavan Man (01/08/00; 18:22:11MDT - Msg ID:22542)
FOA
Don't sugar coat it my friend!!!! What do you really mean?
Have you forgotten Cavan Man? Questions like; "...is Dr. Mundell's work just a coincidence from your perspective?" and, what is emperor AG up to? Will he take the high ground?
Kind regards this evening.....

Cavan Man,
No didn't forget, just trying to cover as much as I can. Dr. Mundell's work?? Well, I'm only one slice of a big information pie. As events progress, the opinions and thoughts of many will become reality.
No, AG cannot take the high ground. You read my other comments about him earlier? He is doing damage control, that's all.

Thanks, more later FOA


Cavan Man
(01/08/2000; 21:19:00 MDT - Msg ID: 22552)
the Stranger
http://www.micheloud.com/FXM/MH/Crime/WWIZOZ.htmMore on your allegory FYI.
Cavan Man
(01/08/2000; 21:21:39 MDT - Msg ID: 22553)
Thanks FOA
AG: Victim of Circumstances
Solomon Weaver
(01/08/2000; 21:27:25 MDT - Msg ID: 22554)
thinking in dollars
Twice Discipled (1/8/00; 8:25:37MDT - Msg ID:22507)
...
DIRECTOR ...
Jon has provided the link below, it was a long week so early to bed and late to rise last night.

Solomon Weaver ...
Interesting notion, I will have to break out the spreadsheet to accomplish this task. Most sites quote the price in ounces. But my biggest hurdle will be mental with this one. As discussed by many people, gold (money/wealth) has meaning in what we can exchange it for when needed. I have no personal correlation between Euros and what a Euro can purchase at my grocery store, Wal-Mart, etc. Although I realize the current exchange ratio is ~ 1/1.04.
Interesting thought though.
Thanks and relaxing weekend to all.
TD

-----

Twice Discipled

The first time I went into a cheese shop in Europe, I was stuck because I knew ounces would mean nothing...so I ordered 100 grams...when the slice was made I knew I'd rather have about 400 grams of the next type....not such a steep learning curve after all.

I would bet that at least 25% of the people in Europe would have a rough sense for what a dollar is worth in their currency. I would bet that less than 1% of Americans would have any idea of what any single foreign currency was worth in dollars.

The general attitude on this forum is that gold is the ultimate money. But, I think most people would agree that it will be very rare for people to "use gold" directly for transactions...so it is not very likely that you will see the prices of things you want to buy quoted in gold (ounces or grams).

The best of golden things to you.

Poor old Solomon
ji
(01/08/2000; 21:31:03 MDT - Msg ID: 22555)
money for nothin
In a letter to Thomas Jefferson in 1787, John Adams wrote, "All the
perplexities, and distress in America arise, not from defects of the
Constitution, not from want of honor or virtue, so much as from downright
ignorance of the nature of coin, credit, and circulation."

What was true then is even more true today.

If you write to the Secretary of the Treasury and ask where money comes
from you will get an answer similar to this: " The actual creation of money
always involves the extension of credit by private commercial banks." If you
write back and ask where the money comes from to pay the interest, you will
receive an answer like this: " It comes from the same place other money
comes from."

Credit (monetized debt) exist only in the mind. It is not a substance,
but an idea represented by bookkeeping entries and computer symbols.

A dollar is not money. It is the expression of money. A dollar is a unit of
measurement like an inch or a quart or a mile. The Coinage Act of 1792 fixed the dollar as a specific weight of silver in the form of a
coin and fixed the value of gold coin in relation to the dollar unit of
silver. If there are no gold and silver coins, there are no dollars of
anything.

Dollars cannot be money any more than quarts can be milk. A unit of
measurement cannot replace the "thing" for which it is the measure. However,
in our minds, this is exactly what has happened.

Under fractional reserve banking, banks lend money that did not exist
until they loaned it. Banks create money by monetizing debt-the debts of
government, business, and the people. Banks create money out of less than
nothing because a debt is a sum of money due. It is not possible to pay a
debt with a debt, but this is what the world is using as money!

Federal Reserve Notes are evidence of debts the US Government owes to
the owners of the Federal Reserve (a privately-owned corporation) the
payment of which is guaranteed by the collateral of all property and income
of US citizens.

When the US Government borrows money, the Treasury creates a bond,
which is a fancy word for an IOU and promises to pay a specified amount at a
specified interest on a specified date. This bond is evidence of debt.

This interest-bearing debt is the foundation for this nation's money
supply and its payment is guaranteed by the collateral of all property and
income of US citizens. The FED "buys" this debt by making a
bookkeeping entry for the amount and writing a check against no funds. In effect, the FED lends the US Government its own credit, our credit, and then charges interest on it.

Every Federal Reserve Note (FRN) created by the FED is debt for us, which the central bank collects interest on, in addition
to the interest from the bond created by the Treasury that put this
money machine in motion. Then the FED inflates the amount
of the bond in order to make even more loans and collect more interest on an
investment that costs NOTHING. Under fractional reserve banking, the amount
a bank can create is limited by the reserve ratio or fraction it is required
to maintain. For example, when the reserve ratio is ten to one, a bank can
create and loan ten FRN's for each one in reserve and charge interest on it.
The reserves of the FED is paper-nothing more than bookkeeping entries that
are a record of debt.

The absurdity of the situation is that if there were no debts, there
would be no money, since all paper currency and checkbook money is loaned
into circulation. In order to pay the interest, there must be another loan
because the banking system only creates the principle and not the interest.
In fact, the interest can never be paid because it is not possible to return
to the bank more FRN's than were created-making it inevitable that the FED
acquire title to all wealth in the nation.

The only source of inflation is the FED. Increasing the amount of
currency and checkbook money increases inflation. Creating new money reduces
the value of all money, resulting in higher prices.

Credit which is deferred payment, and debt, which is a sum of money
due, are the same thing, which is hidden by deceptive double-entry
bookkeeping where a debt becomes an asset by calling it a credit. Paper
money that redeems nothing only appears to have value because it can be
exchanged for things of value. When a piece of paper representing debt is
exchanged for wealth, someone has been robbed. FRN's expropriate wealth from
one person, then another, until the last person
who gets it will be stuck with it. What the first user gets for
nothing the last user will get nothing for.

The sole function of paper money that is not one hundred percent
redeemable in gold or silver coin is to get things without paying for them.
Those who issue and control bank credit as money get everthing for nothing.
Bank credit is a devise for confiscating wealth, where numbers of nothing are exchanged for things of substance and value. This theft occurs unnoticed because we accept pieces of paper with numbers on them in place of real money, not knowing the difference between the two.

When using wealth as a medium of exchange, government must receive
wealth from its citizens to pay for goods and services. When using credit,
government is independent of taxes and does not have to pay for anything,
which the illusion of taxes conceals from the people.

Though nothing is financed by taxes, consumption, the people's capacity
to use up goods and services is reduced. Subtracting credits from bank
accounts reduces consumption and eliminates previously created inflation.
Taxes regulate inflation.

The FED pumps money into the system and the IRS sucks it out. The tax
system reduces public allotment of credit in order to destroy some of the
bank created credit so that the bankers, and their government, can continue
to create more credit, and with this credit get unlimited goods and services
for nothing.


canamami
(01/08/2000; 21:38:55 MDT - Msg ID: 22556)
Reply to Cavan Man -#22549
From "The Imperial Republic: The United States and the World 1945-1973" by Raymond Aron, translated by Frank Jellinek, at pp. 202-203:

"Was the international monetary system, in the form in which it developed, with the dollar functioning as a transnational currency, concocted in advance and deliberately planned by the decision-makers in the United States with a view both to enabling the American corporations to make direct investments abroad despite the persisting deficit in the balance of payments, and to compel the central banks indefinitely to amass dollars which would ultimately become nonconvertable? No one would seriously make that assertion. At the time of the Bretton Woods negotiations the American representatives had opposed Maynard Keynes's far-reaching proposals put forward by the British, fearing that the burdens of their partners' deficits would fall on the United States if they consented to the creation of a central world quasi-bank for the whole of the free economy.....

........................

...We may accept - and it seems to me probable - that those responsible for United States policy in the early Fifties did not foresee the consequences of the role of the dollar when the central banks considered it equivalent to gold..."
FOA
(01/08/2000; 22:15:47 MDT - Msg ID: 22557)
Reply
More discussion, my friend:

-------------------
canamami (01/08/00; 20:43:12MDT - Msg ID:22546)
Reply to FOA - #22544
FOA, for ease of reference, I will repost a reply I made to Journeyman, then I will add a few brief comments. First, here is the repost:

Of course stealing is immoral, and it would have been preferable for the US to comply with Bretton Woods, or to withdraw while it was still able to meet extant obligations, so there would not figuratively have been a "breach of contract".

That being said, we are dealing with the actions of sovereign states, which are indeed immune from the ordinary principles of contract law, including the principles of private international law as they relate to contracts. My post related to the assertions of FOA, that the US would face demands for the honouring of gold backing just as the Swiss and Germans faced demands relating to Holocaust-related matters, years after the fact. I countered that the two matters are too dissimilar for there to be a valid analogy - i.e., like comparing apples and oranges.
-----------------------------

Mr. C.,
I ask, were not the Swiss and Germans also sovereign states? Were their actions allowed as related to international law? In addition, I'm not trying to draw an analogy as you perceive it. The precedent was that the dollar was a certificate for gold in storage, not a debt owed to someone else. The closing of the gold window in 71 was a "taking of physical property" in much the same
light as "taking someone's private property". I make this point not because the BIS "is" about to ask for gold, rather that the US will never again back the current US dollar with it's gold. They must create another currency medium first.

You state:
--------------
However, if obligations relating to 1971 are to be dug up, then the US is free to dig up the defaults of countries after WW1. Back then, basically all currencies were completely gold-backed. In the course of WW1, the major countries became indebted to the US. Except for Finland, all the Europeans defaulted on their official debt to the US. So, if some countries can dig up ancient breaches of contract like 1971 (at law, an ancient issue, and I would also say a breach that has already been waived even on a moral level), then the US can dig up the WW1 breaches of contract by European countries - with accumulated interest. Also, such demands for compensation are made against Ger/Swit because Germany/Switzerland are willing to listen to such demands. On the other hand, the Japanese have ignored demands to compensate Hong Kong veterans and others
who were tortured, and to compensate the victims of the Rape of Nanking. Thus, few demands are even directed at Japan. This is how sovereign states generally operate. Given that most of the putative complainers concerning 1971 have "shafted" the US in the past, I doubt any demands for the honouring of the Bretton Woods gold backing will be made.
----------------

Again, the closing of the gold window was not a debt issue. None of your above items are relevant. The US seized gold belonging to others by not shipping what was in vault storage.

You say:

------------
Thus, FOA, I disagree with your assertion that the US will ever face demands relating to the 1971 closing of the gold window. Subsequent to closing the gold window, the world agreed for a time to currencies directly pegged to the US dollar, and then that arrangement ended. ----------------
----------------------------------

My friend, the dollar reserves held in foreign banks were not these "pegged" holdings you speak of. Foreign moneys pegged through exchange rates to dollars is one thing. However, there were real dollars held as gold certificate reserves by these Central Banks. There was no arrangement on this issue. The US took their gold plain and simple.

Your words:
------------------
However, the fact that the rest of the world adopted the US dollar as the baseline currency after the closing of the gold window suggests that most of humanity did not view that a great injustice had taken place by the closing of that window; in fact, that closing was seen coming for years prior to 1971.
---------------------

In the same light, was the inaction on Swiss and German issue a sign of acceptance? Apparently not!

Onward:
------------
Remember, the US did not seek out the role as reserve currency to the world after WWII, it agreed to accept that role only after pleadings from other countries. Moreover, any country that distrusted US dollars could have demanded gold instead. ---------------

My point exactly. The very fact that the US shipped so much gold prior to closing sets the precedent that the dollar was a gold certificate, not a debt or IOU. It was payable on demand for many years.

Further in your thoughts:
------------------------
It is fanciful to believe that demands concerning 1971 will be made now against the US, and even more fanciful to believe that anyone would take such demands seriously. To use legal language, the limitations period has passed, and in any event the breach was waived. Further, a history's worth of demands could then be reopened. The US could demand repayment of WWI-era debts, with interest. It could demand reparations from Germany and Japan for WWII, against the Arabs for oil supply contracts broken during the Oil Embargo - it would never end. This is a can of worms the world will leave closed.
-----------------

I submit that it is "fanciful indeed" for one to think that the pre 71 dollar was a debt of gold. Clearly, all the evidence says it was not. The dollar represented gold held on deposit for any Central bank that requested it. Because most foreign citizens could own gold in their countries (US
citizens could not), they were free to ask for gold from their local banks in return for dollars. Thus, the US having taken the gold would become a private action if they ever backed the same dollar again Will this is a can of worms stay closed? Absolutely! The dollar will never be backed with deliverable gold again! Believe it!

Thanks FOA

ON to ORO!
Solomon Weaver
(01/08/2000; 22:27:12 MDT - Msg ID: 22558)
thoughts vs gold
A little philosophy tonight.....

Starting with a little science...

Thoughts are fluctuating patterns dancing on highly complex networks of neurons capable of inspiring insight and emotion. Thoughts are what we use to explore our jungle world, mapping, comparing, analyzing. Out of thoughts flow intentions and then actions...actions which change and build our world...our world now modified by our thoughts creates new insights..individually and collectively we shared these unstable patterns of belief and perseption.

Gold is a very satisfied metal. Chemically very fulfilled with a complete valence. Its molecules fall gladly into lattice arrays, leaving a dense and pliable matter which can he shaped into many forms, and always shines a bright yellow.

Gold is like the antithesis of our thoughts. Thoughts move and dance. Gold meditates. Our thoughts are like the wind. Gold is like a deep lake, almost motionless.

It is little wonder that prehistoric man was attracted by little gold nuggets at the bottom of a stream, or the shining gold vein in the caves where he may have dwelled. And the way thoughts go, one of them certainly tried to burn it in the fire. It is certain that little heirlooms fashioned by hand in gold far outlived the artist and became symbols of time gone by and of immortality.

Today, we have two currents which dominate in the world. Thought and Gold. Always they have been sisters. The two sisters have met one man, he is called "oil", and they have almost become enemies in their jealousy over him.

Gold as a political archtype is exemplified by Saudi Arabia. They are an old culture. Filled with thought structures which have been settled in over many centuries. Among them the love of and belief in gold and a distrust in the paper promises of anyone who does not hold gold. Also in these thoughts the fact that to acquire gold is to acquire wealth. When Saudis learned that they had vast quantities of oil, they started slowly to corner the market on gold.

Thought as a political archetype is typified by Japan. They are a young culture, an island nation changed dramatically by both China in the last 1000 years, and USA in the last 50 years. They love the order of social relationship. Wealth is primarily in the interconnections between people. Japan has no natural resources. They knew how to harvest the ocean. When they saw the technologies of the west sail into their harbors, and the famous and very liberal Emporer Meiji realized their power, he sent minions of men over to "learn" these new sciences. Using thought and all that flows from it, Japan has been able to go from rice patties to steel to microelectronics and they will probably be a powerful force in the exploration of space. There civil engineers have landed large contracts for bridges all over the world...they have built massive beehive cities and are talking about building a single building with the profile of Mt. Fuji (4000 feet tall).

Now back to oil. He is a lovely young muscular man, recently matured and full of potency. His desires can be channeled into beautiful forms, objects like chlothing, or fabrics...or they can be burned and harnesses to pull the yoke of a technological engine of thought. Both of these young women have sold their soul to him. Gold (Arab)craves him for the easy wealth he brings. Thought (Japan)craves him because she consumes him to light herself with millions of jewels and to pump her lifeblood. Gold owns oil, and Thought needs him.

But there is another young boy who has been discovered by Thought...he is quiet and gentle and patient...he is called Solar. He wakes up every morning and shines on all the world. He charges nothing and exacts no Gold. His fire is not as hot, and yet his energy has always shined on Thought. Thought has used his energy to grow her rice and bamboo...to eat and build houses with. The fish Thought loves to eat grow from gifts which Solar has let grow in the vast oceans. Thought now has learned how to harness the energy of Solar, to channel it into her body, and bend it to her needs. Thought has learned to change her body so that her needs for information and warmth can be more easily satisfied by solar.

Oil is strong today, but he is mortal, his fires can last another few lifetimes...perhaps a dozen lifetimes...solar is nearly immortal...

One day, or one season, Thought and Solar will make a final marriage. Thought will learn to love Solar more in time, how to hold his loving energy ever more tightly. Gold will be left counting her Oil and Oil will be left counting his Gold.

And this is how the story goes my dear fellows....perhaps just a bedtime story...perhaps a dream of our future...

Poor old Solomon
beesting
(01/08/2000; 23:26:29 MDT - Msg ID: 22559)
ji #22555 Money for nothin
Sir ji, that was such a clear post I'd like to nominate it for special recognition in the USAGOLD Hall of Fame. Remember to get it there we need 3 seconds from other Ladies or Knights.

Sir FOA, Thank you for your response to my previous question, give my best New Years wishes to ANOTHER.

Gandalf, love your adventure story.
Good posting by everyone tonight.


Here is a simple way to keep track of Grams of Gold in Dollars, if you travel abroad(metric country) write this on a small sheet of paper.

$280 per ounce Gold is a little over $9.00 per Gram.
$311.03 per ounce Gold is $10.00 per Gram.
$342.14 per ounce Gold is a little over $11.00 per Gram.
$373.24 per ounce Gold is a little over $12.00 per gram.
$404.34 per ounce Gold is a little over $13.00 per Gram.
$435.44 per ounce Gold is a little over $14.00 per Gram.
$466.55 per ounce Gold is a little over $15.00 per Gram.
$497.65 per ounce Gold is a little over $16.00 per Gram.
$622.06 per ounce Gold is a little over $20.00 per Gram.

When Gold goes over $20.00 per Gram, I'll post the calculations all the way up to $10,000 per ounce.
Those in the Know....Buy Gold....beesting.
FOA
(01/08/2000; 23:38:28 MDT - Msg ID: 22560)
Last post for a while
Hello ORO,

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

ORO (1/4/00; 8:09:17MDT - Msg ID:22235)
Talking Physically.
FOA (01/01/00; 14:42:33MDT - Msg ID:21993)
--->All the while, the bullion buyer slowly amasses a large "highly leveraged" position, just by channelling his would be trading loses into paid up physical and rare gold coins.

FOA has clarified the issue further, but I will post this anyway.

In the way of clarification for others, I think FOA is trying to tell us that the leverage is indeed there, just that when one buys bullion without leverage, the leverage you have is that put against you by the couner pairs to your "cash" position. Most notably, the counterparties in a typical gold transaction have claims traded among themselves and physical gold sold into the market. The trades involve a lender, a borrower, a bullion bank, and a physical buyer.
--The bank is both long and short gold denominated or gold indexed obligations. This is a complex multiple contract position. More on this later.
--The borrower is short "physical" which is due for delivery. This is a contract obligation. Gold miners and bank trading desks, as well as speculators hold these positions.
--The lender is long gold denominated obligations. This is a contract position. The contract is as good as the counterparty. If you own a gold account, or are long a derivative contract, this is what you have.
--The cash buyer holds gold bullion and is obligated to nobody. His holdings do not rely on anyone fulfilling an obligation.

The leverage built into the market, which we goldbugs will benefit from in the long run, is that of the many obligations denominated in gold. We need not buy leveraged instruments, because the leverage comes from the extreme volume of gold obligations issued within the "paper gold" trading arena described above. The same elements that make gold an attractive investment at this time and a long term store of value (over a lifetime), particularly during banking crises, make the various forms of leveraged gold unattractive. One should note the point of gold being protection from an environment of default on obligations. The same obligations that gold derivatives are.
-------------------------------------------------------

ORO,
Your presentation has described the leverage issue very well. This is the very essence of a gold run that manifests itself in the overflow "spilling out" from the paper arena into the much, much smaller physical arena. I doubt that very much paper gold will be forced into delivery before the
entire market stops contract trading. Still, some have said that official guarantees, insurance companies and the large financial reserves of players will be brought to play in making this market whole. In reality this is true. But further into reality, the more the resources become available to "cash out this arena" with gold delivery, the further away the physical gold price will run. The point
always was that no amount of contract supporting dollars could ever balance the gold owed. The more they try, the higher the price gets.
They could let it run, but at what price does it fully settle? $1000, 5000, 10000 ???? I have no doubts that it will be closed long before important people are killed (financially) in this. Further, before this comes to a head the total outstanding gold derivatives could double or triple in supply (building from the US side alone). All completely unbacked and issued in a effort to drive the paper price lower. We only know that in the maelstrom, just before the close, the paper leverage against each ounce could be unthinkable. This could impact your thinking in ORO #22236. We can discuss tomorrow.
I have but to add that there is another leverage issue that will take over once this one is resolved in a physical market trading at a much higher price. This later item is the leverage of a "true world-wide gold demand" in the format of gold being a settlement asset. It's effects on a limited supply, both mine and open market, would be incredible. Again, few of us understand how money gold would interact with the modern wealth of today. In no way has the world gold stocks increased in any form of proportion to the productive capacity we now know. Again, this view is taken across the valley where the dollar was butchered.

Further you write:

-------------
The most important aspect of gold as financial disaster insurance is that it is immune from default. The second point, particularly important for the gold mining investor, is that in financial crissis, desperate governments are prone to disregard the property rights of large holders of industrial assets. The most captive form of industrial asset are the mine and the oil well. The most attractive asset for taxation and expropriation in time of crissis is a gold mine. Very large hoards of precious metals may prove attractive to a government seeking survival. The small hoards remaining in the West are not attractive targets.
-------------------------------

Yes, sir. This seems as impossible as the question of the BIS going after gold rebacking the dollar. But, this is the way the world works and the dollar timeline is running out of it's future. The trick now is in getting some of your assets out of harms way, well before the fact. The problem is in the dreams of every gold mine owner; the spiking of gold! The next gold run will be caused from pressures far different in dynamics from price inflation. Indeed, it may rum so fast. so quick that every country closes it's borders to gold flow. Usually this is accompanied with foreign exchange controls. (Ever notice how gold is always included in these currency flows controls? Not silver, platinum, copper or oil. Just gold.). The next event would be an emergency 60% (or something to this effect) exchange rate tax on bullion that comes out of ore sellers pockets. Then, it's later made permanent in some form of "windfall profits tax" against the companies. Oh yes, the mines stay in
operation and the ore is milled, it's just that the costs (price inflation) and taxes do a number on the stockholders equety. This may not happen in every country. But that's another story.

Your words:
----------------------
The use of gold futures and options in the battle for financial self preservation during a financial crissis is equivalent to a knight charging at his enemy with a shaking kielbasa. Gold mining shares are similar to waving one's title to the land in face of the Mongol horde's charge. Wouldn't it be rather smart to hold a sword on top of the ramparts of a castle? Taking our little Midieval setting further, one does not complain of the building of the castle, though long after its construction came no attack. The expense of time and effort, of missed opportunities
and reduced performance will come to be appreciated when disaster strikes.

Ha, Ha! ORO, I sent your "waving one's title to the land in face of the Mongol horde's charge" to someone and they loved it! What better way to put it. Just great.

More much later, FOA
Netking
(01/08/2000; 23:48:13 MDT - Msg ID: 22561)
@De Ronin
Mr De Ronin (22512) - Good analysis, links & comment regarding oil. In terms of the link
between the two, there is no reason or in fact evidence why this should not still remain the
case (based on the historical models). During a collapse in the price of 'black gold' we
would see a lot of downward pressure on other precious metals (particularly white's) and
the POG would at best drift, particularly until we find a bottom in the equity market. As
an aside did you read about the huge discovery made by the Saudi's in the last week or
so...changes the reserve equation a little more. Generally a good time to go short.





Netking
(01/08/2000; 23:59:43 MDT - Msg ID: 22562)
U.S. Treasury Secretary Lawrence Summers "No plans to sell US Gold"
http://www.egroups.com/group/gata/333.htmlInteresting letter from Summers in this link...
(We have no, I repeat NO plans to sell your Gold, OK!?) (Don't mention Fort Knox)
JAS
(01/09/2000; 00:00:53 MDT - Msg ID: 22563)
Greetings to all (new poster)
Just like to say a word of thanks to many Legends. Another, for setting my feet to a path of reality to aquire the physical. My six year old son purchased his first
tenth oz. Most of the kids in his class have never seen a gold coin before. Indirectly Another; you can feel proud that you have made a difference to a small one. Someday you may see him on the big screen. Foa, you do have a fruit of kindness about you, perfect gentleman I'd say. Hard act to follow nowadays. A perfect man is able to bridle his tounge,and his whole body as well. James 3:2 Thanks for the ongoing knowledge you are imparting on the forum. Oro,beesting, I've read your postings as well over the course of 99, bravo!
It is interesting standing away and observing behaviour and seeing you all respond to the gold swings. I felt your pain as well. When BOE first announced, that was upsetting to say the least. I had a dream at that time, of a market crash due to a warlike event in the U>S> and sent a note to gata to watch for Feb.18 2000. In my dream ,I did get a date, but no year. I hear of terrorist arrests over the new years, so I wonder whats next? These money Kings think they are gods, and establish wealth in what they say is wealth. God in heaven already decreed that the silver and Gold are his along with the cattle on a thousand hills. He (LORD GOD) is the one that will catch (cabals)the crafty ones in suprise. I'd say this is about to explode. This fiat system is so fragile now. One mess up that they (MONEY CHANGERS) cannot put a spin on, and its all she wrote. They proved communism does not work, next the Us, US Capatilism or whats left of the Ponzi. Stir up a hornets nest and you will have need of real Tyrany. To all folks here and Mr.Kosares thanks again for the Round Table its like Starbucks in the morning refreshing!
We have won already Got some!
tedw
(01/09/2000; 00:05:18 MDT - Msg ID: 22564)
Bank of England Sales
http://www.usagold.com
Whatt is the B of E stated reason for these gold auctions?
Considering that many knowledgeable analys
ts say the POG should be $340 or higher, considering the average POG the last 18 years was $340, considering the recent price increase in October, how can the Bank justify
its sales? Why arent the people of England up in arms over these sales of Gold at prices everyone knows to be ridiiculously low?

Please explain.
Journeyman
(01/09/2000; 05:12:38 MDT - Msg ID: 22565)
BOE sales: Why aren't they up in arms?
@tedw

If you read back thru the archives, (only an Evelyn Woods champ would try) you'll find that many English are "up in arms" over the BOE sales (to the extent you can be "up in arms" when your arms have been stolen by the local "grabit.")

The glaring question these days is, "What do a people do when the elites who run the government which claims them gets way out of line?" I'm looking for a non-violent alternative myself. Anyone have any suggestions?

Regards,
Journeyman
Journeyman
(01/09/2000; 05:19:56 MDT - Msg ID: 22566)
BOE sales: addendum
@tedw
Ah, the consensus at this forum as to the REASON for the BOE gold sales seems to be that they are to keep the price of gold low so as to temporarily forestall the collapse of the world fiat money system, in particular to forestall the collapse of the dollar.

Regards,
Journeyman
714
(01/09/2000; 05:27:45 MDT - Msg ID: 22567)
Journeyman
"I'm looking for a non-violent alternative myself. Anyone have any suggestions?"

Buy more bullion...
RossL
(01/09/2000; 07:19:13 MDT - Msg ID: 22568)
Journeyman
http://www.founding.com/declare/index.cfm
Read this document if you need some inspiration.
SteveH
(01/09/2000; 07:49:31 MDT - Msg ID: 22569)
Repost with comments
www.kitco.comComments:

It isn't a coincidence that physical gold is not available to pay-off but a few gold contracts, that the US Stock Market is at all-time mania highs, and that the Euro stands ready to replace the US dollar as the world reserve currency.

These are all symptoms of the same disease: our past (US) leaders used a short-term solution to a long-term problem, that of defaulting on debt and staving off the inevitable greater correction under someone else's watch. After all, year 2000 was years away then (sound familiar?). I can see that our process of elections and terms of office often make tough decision be reactive and not proactive. Why stir the kettle and stand loosing the chance at another term whereby if I put the problem off it will 'their' problem to deal with and that will help my party. To heck with dealing with a problem that if not dealt with now, will most certainly come back later to roost at a much higher cost.

So now we find ourselves in a speculative bubble protected on the downside with little impunity to those who view the short-term gain their domain. We have a nearly defaulted paper gold market with virtually the only gold able to meet contract committments in the hands of Central Banks, the most of whom said it isn't leaving their vaults. Then we have the oil situation that by all accounts shows we have but 34 more years of oil remaining at current exploration and consumption rates. What is more, is those with the most oil don't want the dollar anymore because of the fiscal irresponsibility of the US over the last 29 years.

Then it seems that the investigative bodies whose job it is to monitor the markets to protect the investor has turned an eye or two away from the problem, whether by decree or by sheer number of problems to investigate.

Then we have the lawyers who feel their duty in life is to use the civil courts to line their pockets with frivolous law suits against corporations under the guise of public safety.

It is indeed a sad state of affairs whose outcome is politically extremely unpopular, so much so that the only place you will hear of such things is on the Internet but not on the keepers and guardians of liberty, the popular press. Is it because the message is so disheartening that they are in complete denial? Or, is it because they are so caught up in the euphoria of apparent wealth that the "if it ain't broke, don't fix it" mentality says hands off. Whatever the reason, the normal checks and balances seem to be broke or tilted.

Even though more people write their Congress more than ever about these problems, the Congress hasn't come to grips on how to read and filter the barrage of warnings and concerns from the very people they serve. Bill Murphy and I both sent a note to every Senator and Congress person via email that we could find and address for. Ninety-eight percent of the messages came back saying that due to the high number of emails they would only be able to respond if you included a regular mail address and only if you lived in their district and only if they managed to read the message (my words). I got back two messages in regular email that had nothing to do with the issues I wrote about. In other words, the Congress isn't listening to Internet email. So how could they know of these problems if they can't hear?

The Press is being manipulated because they have developed 'expert' sources of information who know they are the sources of information and only provide the information that suits their purposes. Any corroborating information seems by and large ignored by mainstream press. That this is most evident in the financial reporting today, doesn't find its boundries only their. No, recently an organization noted that on the issue of gun control, 10:1 articles in the major media centers were against or anti-gun in nature. It would appear that the uncomfortableness of the Second Amendment actually costing lives makes it an unpopular Ammendment to support. The media is simply owned by too view and serves the same few's best interest and this just isn't a healthy situation. It seems, gone are the days of Woodward and Bernstein. Now only those who Drudge up the news get to break up the scandals of our days.

That all of these events occur simultaneously isn't a coincidence. No, they are all symptoms of that greater problem of checks and balances, having been also manipulated for the sake of short-term political expediency. I am of the opinion that this next election for President needs to fought around the financial future of our country and the person most qualified to deal with a defaulting dollar, a crashing stock market, and saving the Second Amendment, the right of rights, need be elected into office. That the present candidates don't have an inkling of the above problems makes me greatly concerned. Since Nixon and Roosevelt (almost named Person of the Century) got us in this financial maelstrom and others failed to extricate us, I don't see the existing candidates any better at reacting to the mess we are winding up in. For their decisions will be largely partisen and largely made on a lack of in-depth understanding of the real challenges facing them.

I said before that this gold market may be elmered together until after the elections because if the Iceberg is melted prior to elections then the game will change dramatically as will the election results. I say vote for a candidate who has sound patriotic views with a mind to a great future for America who can deal with the above issues in a long and short term manner, no matter the political cost and someone who is a staunch supporter of the Second Amendment.

As Bill Gates spoke of in one of his books, let us hope that the spiral of our great country is not in a downward trend and one that can be reversed if it is. Here is praying for wise leaders and checks and balances that are turned back on, including a Press that does its job and does it well.
SteveH
(01/09/2000; 07:51:28 MDT - Msg ID: 22570)
Repost with comments
www.kitco.comHere is the repost (oops, btw, my point of this repost is that the author is right on but he too lacks the intricate knowledge of the gold dilema which makes the problem he talks of slightly more sever, imo):

Date: Sat Jan 08 2000 09:41
powmain (SOME ONE besides Kitco lurkers) ID#42251:
Copyright � 1999 powmain/Kitco Inc. All rights reserved
think that GREENSPAN and his merry leprechauns are supporting the
STK MKT
The Fed Should Act Now
It has let market speculation get out of hand

By David Rocker


The health and vitality of the U.S. economy have become dependent on a robust stock market. In an important speech at Jackson Hole, Wyoming, several months ago, Alan Greenspan indicated that the Fed is now sensitive to the potential for the stock market itself to cause an inflationary overheating of the economy. Based on the Fed's own model -- even after last week's selloff -- the market has never been as expensive as it is now. Not in 1929, not in 1987, never.

Much of the market's inexorable rise stems from the democratization of investing. CNBC, Bloomberg and CNN, among others, pour out a steady stream of stock-market information to homes, airports, bars and even the sides of buildings. The American people have gotten the message. Never before have so many invested so heavily, confident that the market cannot go down for any sustained period.


Investors have become increasingly complacent because there have been so few meaningful declines over the past two decades and markets have snapped back quickly from those setbacks. The assumption that past trends will persist, the essential analytical basis for the Dow 36,000 theorists, is a dangerous one. Long-Term Capital Management regularly earned nearly 40% a year. On that basis, one might have extrapolated a similar growth rate in 1998 with little volatility. They lost 90% of their capital in a month.

In the current feverish environment, it may be helpful to reflect on some traditional verities.

First, price matters in making an investment decision. While the Mercedes is a good car, it is probably not a sensible purchase at $500,000. While earnings of U.S. stocks have grown over the past decade, that growth rate has been unexceptional and P/Es have never been this high, even during periods of lower inflation and faster earnings growth.

Second, reported earnings are of sufficiently low quality that the Securities and Exchange Commission has become more vocal on this issue. Chief financial officers seem to have had at least as much to do with reported profit gains in recent years as chief operating officers. Corporations have been telling their shareholders a story far more optimistic than the one they're telling the tax collector. Federal corporate tax receipts were actually lower in 1999 than in 1998 and the Congressional Budget Office expects another decline this year. Investors have been piling into technology stocks to the exclusion of others because of their supposedly brighter earnings prospects, yet Dell, Intel, IBM, Hewlett-Packard, Lexmark and Xerox, among others, have recently had disappointing quarters.

Third, interest rates matter and they have been rising significantly around the world. Stocks have soared even though yields on long U.S. Treasury bonds have risen nearly 30% over the past year. Internet and other high-P/E stocks, which logically should have been the most adversely affected by rising rates because their multiples are high and their payouts more distant, have risen the fastest in this twilight zone of a stock market.

Fourth, as Long-Term Capital Management showed, leverage increases volatility. Investors have dramatically increased their leverage to maximize returns. Margin loans have risen vertically in the past several years to record levels. While it is not easily measured, it is also clear that large sums have been borrowed against homes and credit cards for stock purchases. Similarly, percentage cash reserves at mutual funds have been drawn down almost to all-time lows. Everyone owns the same small group of large-capitalization technology stocks. Investors are behaving like sheep on margin. The American public has committed the greatest percentage of its assets to the most expensive stock market in history at a time when the Federal Reserve is overtly tightening, our external deficit is swelling and cash reserves are low. This insensitivity to risk is dangerous.

The Federal Reserve and other government agencies have been significantly responsible for this euphoria because of the asymmetry of their policies. The Fed argues that markets should be free of government intervention, but it seems that such views are espoused only so long as markets are rising. When the market crashed in 1987, the Fed intervened. When banks and savings and loans were bankrolling wildly risky deals, the government looked on and did nothing. When this recklessness produced vast losses, the government stepped in to bail out the speculators -- at enormous public expense. When LTCM overleveraged itself, regulators sat idly by. When its collapse in 1998 led to a market decline, the Fed stepped in again to coordinate the bailout, cut interest rates and pump in money. Once again, the government stopped natural corrective forces from punishing speculators, as always cloaking its actions in the mantle of the national interest. The message to the investing public has been clear: "The government will protect you from the downside but will not restrain your upside." Why not speculate?

As the "buy the dip" mentality is now so fully ingrained as to prevent all but a sudden steep decline, the risk has risen that this market will end violently, threatening our prosperity. The economy would clearly suffer after a sharp selloff because so many consumers are now so heavily invested. Real-estate values would fall. With U.S. equities out of favor, the demand for dollars would shrink, forcing the U.S. to pay higher interest rates to attract foreign capital to cover our rising trade deficit. The combination of a weaker economy and rising interest rates would further depress the stock market. In essence, the whole positive cycle we have enjoyed in the past decade would be thrown into reverse. Of course, the Federal Reserve would then be expected to again intervene.

Fed officials have periodically expressed concern about market valuations and speculation, but then the governors reverse themselves with "new paradigm" speeches and commitments not to raise margin requirements. Each reversal has brought forth a new burst of unbridled investor enthusiasm. The 100 largest Nasdaq stocks rose 102% last year and are selling at over 130 times earnings. The IPO market has been on steroids. In a testament to these times, one magazine implicitly criticized Warren Buffett, who has made nothing but money, while another lionized Jeff Bezos of Amazon.com, which has lost ever-increasing amounts of money.

If the Fed is serious, it should send an unambiguous message to investors that excessive speculation is unwelcome. It should raise margin requirements and interest rates immediately with a clear warning that more increases will come in the future if this speculation persists. It is better to accept moderate pain now and reintroduce a sense of risk to the marketplace than to wait until a massive blowoff and subsequent collapse occur that could severely damage this nation for years.



DAVID ROCKER is general partner of Rocker Partners
Journeyman
(01/09/2000; 08:55:45 MDT - Msg ID: 22571)
Well, since it came up again @FOA, Canamami, all . . . .
http://www2.hawaii.edu/~rummel/20TH.HTMThere was a book by Reinhold Niebuhr entitled "Moral Man,
Immoral Society," which argued that while individual men
were required to be moral, society, in the incarnation of
the state, was not and could do those necessary dirty jobs
denied to individual men. I didn't find his arguments
convincing -- nor the results (which are easily observable
today as governments are and regularly have been run on just
this basis) desirable. You can see some of the more shocking
and high-profile of these results in the research of R. J.
Rummel:

New York, NY - An early July column in the Wall Street
Journal by R.J. Rummel confirmed what most libertarians
already know: that government is the biggest scourge of
mankind. According to Rummel's research, governments
of all kinds ... have killed 119 million people in the
twentieth century. The second runner up, war (also
sponsored by governments, usually) has killed "only"
35.7 million. -AMERICAN LIBERTARIAN Vol. 1 no. 2, Aug.
1986, pg. 8 [1]

This record has been "improved" since Rummel's 1986
research ---- in Afghanistan, Nicaragua, Bosnia, Iraq
(200,000+), Guatemala, Chechnya (100,000+), Somalia,
Rowanda, Grenada, East Timor, Panama, Kosovo 1999,
Yugoslavia 1999 (7000+), Waco (60+), etc. You can see
Rummel's research for yourself at the link above. Amnesty
International claims the government kill figure is now
closer to 200 million (200,000,000) men, women and children.

When placed in this context, Jefferson's remark that
"banking institutions are more dangerous than standing
armies" becomes an indication as to the relative degree of
damage done to the human race by "modern" economics if only
because armies are often used in behest of
industrial/banking interests. Incidentally, in this context
it seems clear to me that Keynes beats Hitler, Mao, and
Stalin combined, hands down.

I don't agree that a collection of individual men and women,
simply because they call themselves "government," (even
"United States Government") have any extra rights for doing
so. Thus I don't agree such groups can MORALLY claim such
rights. Stealing is stealing whether done by one robber, the
James Gang, or the US grabit.

I do realize these organizations do such murder and robbery
as a matter of course. And sure, governments like to claim
such things as "soverign immunity" etc. -- and the James
Gang would like to as well. For those blinded by the
dichotomy promulgated by Nehbur and ilk, and bamboozled by
such high-faluten legaleese, it might even work. But beneath
it all is the assumption that "might makes right," a very
dangerous operational precedent indeed for those of us who
wish to "secure the blessings of liberty to ourselves and
our posterity."

As for the claims that European countries owe the US as a
result of the Marshall Plan and WWI etc., they should indeed
be pursued as per the details of each particular agreement.
The US should pay-up the gold it illegally withheld
beginning with the closure of the gold window in 1971. It
should first redeem any "bearer on demand" gold certificates
presented at "the US Treasury or any Federal Reserve Bank"
for the gold they promise. The accounts should be cleared
and the books balanced -- or official bankruptcy (as opposed
to the current unofficial bankruptcy) should be filed.

Canamami: Indeed I wasn't referring to you personally as
benefiting by the US Government's 1971 hiest. What I had in
mind was the general tendancy of those of us who believe we
are benefitting in some way from the "Immoral Society"
embodied in some particular grabit, to find it extremely
easy to turn a blind eye to those inevitably damaged to
provide our perceived gain. This is well demonstrated by the
following interview:

Clyde Barrows' [of Bonnie & Clyde] sister says she
loved her bank robber brother Clyde because, "He was
just taking care of his family." Clyde bought her her
first bicycle and her first bedroom set. "We never
questioned where the money came from," she says.
-Interview after auction of Clyde's bullet riddled
death shirt. -CNN HLN, 04-15-97, 4:26pm EST

Regards,
Journeyman
Bonedaddy
(01/09/2000; 10:06:21 MDT - Msg ID: 22572)
Reply to Journeyman
The decision to seek non-violent opposition to grievances is a wise one. However, one should never fall prey to the idea that living peacefully is some sort of insurance policy against aggression. A government is not a thing to be feared more or less than any other force of nature. In dealing with governments, cetain types of behavior will get you killed. But, the same can be said of dealing with fire, flood, or cold. Never confront government with hostile intent. They will become annoyed and "Waco" your house down. It is far wiser to live simply, pay taxes, and wait for the storm to blow over. In recent times government is failing because the people have become self serving. Later, when all is blown asunder, there will come a time to make a stand for the cause of right. The current system will fail of its own weight and corruption.
But, when confronted on a personal level, violence requires a much different response. A criminal on your door step will demand immediate violent action on your part.


Gold ownership is the best defence against monitary violence.

Goventment violence is to be avoided at all costs.

The threat of personal violence is best met with a pre-emptive first strike that completely overwhelms and surprises your attacker.

May God bless you and keep up the wonderful posts. Yours in independence, Bd.
USAGOLD
(01/09/2000; 10:21:33 MDT - Msg ID: 22573)
Once in Golconda......The Babson Break and Mystery Declines
All mania have a certain sense of mindlessness, hence the title of the seminal work on manias -- "Extraordinay Delusions or the Madness of Crowds" written by Charles McKay in the 17th century. This is the book that Bernard Baruch claimed lay at the foundation of his legendary investment market thinking.

What is extraordinary in my mind about the current delusion is the re-occurrence of the nearly exact cultural patterns and individual mind-sets that occurred in the late Roaring Twenties. These alone should serve as warning. History repeats not so much because of any pre-determined human appointment with destiny, but because our natures lead to us to the same place in history time and time again. As Brooks points out in the excerpt below, the New York Times in 1929 was drawing parallels then to human behavior just prior to the Panic of 1907 -- the one arbited by J.P. Morgan and thereafter eventually laid the groundwork for the political acceptability of a central bank in 1913.

What is even more extraordinary in our own time is the re-visitation of the very same concepts that fueled the thinking of bulls in 1929 -- such concepts as a New Era ( distinctly different from all other eras -- a time where history is no longer a teacher but in fact has been defeated by New Man), and "investment trusts" wherein the public, it is believed, will automatically fuel an "endless boom" through contributions to the trust. Many believed then as now that old market measuring sticks like price earnings ratios, book value, price dividend and even profit were now unimportant. I was particularly interested to learn that then, as now, the Fed was dismissed by Wall Street as an essentially ineffective "annoyance" worrying granny-like about irrational market behavior needlessly. The only market dictum that had any relevance then, as now, was the "trend" and the sure knowledge that the Greater Fool Theory applied only to those less than fully committed to the market financially.

Brooks' reference to the "mystery decline" following the Babson Break is of more than passing interest to those of us who watched the stock market decline of the late 1960s and early 1970s. A few years back I had the pleasure of meeting with a veteran of those stock market wars from Kansas City. Unfortunately, he recently passed away. I asked him what precipitated that decline. He said he couldn't put his finger on any single event, announcement or forecast. "We came to work one day," he said, " and the market was down. It never came back. We started that day with 80 brokers in the office. By the end of it, in the late 1970s, there were only three of us still hanging on."

By the way, if I recall correctly, Adrian van Eck (Money Forecast Letter) who we referenced at the beginning of this series as raising the Red Flag on the current stock market (for the first time since 1987) claims fellow New England yankee, Robert Babson, in his intellectual lineage -- another interesting twist of historical fate.

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

From Once in Golconda by John Brooks:

But if a sort of slow, partial crash, invisible except to its victims, had been occurring over a period of at least three years, Tuesday, September 3, 1929 -- the day the market averages reached the all-time highs that were to endure for a quarter of a century -- was not a day when the public at large gave its attention to such a matter. It was the first day after the Labor Day recess, and thus by traditional stock market reckoning the start off the active season, almost the start of a new year. The fact that it was a record-setting scorcher in New York, with a maximum temperature of ninety-four degrees and brutal humidity, did not deter the mobs from thronging back to the downtown customers' rooms and trading in such volume as to set a September record. Thus unaware of its achievement, in the atmosphere of a steam bath, the market of the twenties achieved its Everest. Next day there was a general, if unsensational, decline. The daily column of market comment int he Times -- unsigned but presided over and often written in those days by the paper's justly celebrated financial editor, the learned Alexander Dana Noyes -- contained the sober remark, "The pace of advancing prices during the past week has been so rapid, and so regardless of the money-market position, as to inspire a growing sense of caution even among convinced speculators for the rise." The following day, September 5, there occurred the curious phenomenon ever-after called the Babson Break. A not especially well-known, and hitherto even less influential, financial adviser operating far from Wall Street -- a frail goateed, pixyish-looking man in Wellesley, Massachusetts, named Robert Babson -- said to an audience at a routine New England financial luncheon, "I repeat what I said at this time last year and the year before, that sooner or later a crash is coming." As Babson implied, his earlier warnings had been roundly ignored. He was, in fact, widely thought of as something of a nut. Evidently it was a slow day for financial news, because at 2pm Babson's words were quoted on the Dow Jones financial news ticker and thus read in brokerage houses across the country. Without the slightest hesitation the market went into a nosedive that carried Steel down 9 points, Westinghouse down 7, and Telephone down 6 in a frantic last hour of trading during which two million shares were traded. The tiny cause and the huge effect, by an logical standard were simply far out of proportion.

It was a prophetic episode -- and so recognized at once. After the Babson Break, the word "crash," entirely taboo a month earlier, suddenly became common currency in Wall Street. In its more conservative circles, the notion of impending crash came within days to be fully as much the received wisdom as the contrary notion of endlessly continuing boom. Babson was, of course, promptly and violently refuted by such New Era champions as Professor Irving Fisher of Yale; but five days later the Noyes column in the Times was still brooding on "the idea of utterly disastrous and paralyzing crash" in a most disconcerting way. The Times found certain parallels between the current situation and that of 1907, when unbridled panic had come totally unexpectedly. The best reassurance the paper could offer was that now there were the new forces of the Federal Reserve and the investment trusts, which would presumably serve to stabilize the market if necessary. Meanwhile, the market crept erratically downward until September 24, when there was another big break, this one unassignable to any cause at all and therefore dismissed as a "mystery decline."

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

Next time : October, 1929
USAGOLD
(01/09/2000; 10:25:29 MDT - Msg ID: 22574)
Once in Golconda...
Let me pass along a reminder:

"Once in Golconda" was not written in 1999, but in 1969.
canamami
(01/09/2000; 10:25:48 MDT - Msg ID: 22575)
Reply to Journeyman
Journeyman,

In reality, my personal position does substantially accord with yours, with respect to governments being bound by moral constraints.

My concern was with FOA's focusing on closing the gold window in 1971, to the exclusion of everything else in history. The bottom line: If that is opened up, the US can counter by opening up other events - for example, Europe's defaulting on its gold-backed obligations to the US after WWI, etc. Thus, I submit it won't be opened up. In domestic law, etc., limitation periods exist for various reasons. I submit they exist between nations because when there is no closure, everything that has ever happened is on the table, and then one has intercenine, centuries-old lunacies like the Middle East and the Balkans. Moreover, the US' closing the gold window is more like a commercial bankruptcy than the Holocaust. Moreover, even in Holocaust-type situations, the majority of countries simply don't allow such ancient disputes to be reopened. Only countries like Germany and Switzerland do so, and even then only in their own best interests, i.e., to keep peace with the Jewish community, which has a great deal of influence in the US, and also perhaps from a lingering sense of guilt, warranted or unwarranted. Most other countries' currencies were once redeemable in gold, and they closed their gold windows, so I fail to see the US' great relative (I emphasize relative) guilt in doing the same. I'm not going to belabour this point anymore - enough is now on the table for readers to ascertain whether they accept my position or FOA's.

HUM
(01/09/2000; 10:38:40 MDT - Msg ID: 22576)
FOA, ORO
http://www.usagold.comGreetings to everyone on this forum from a first-time poster. While I am grateful to everyone here for the informations and insights provided, I am particularly focused on FOA and ORO. Both are truly incredible. No false modesty should prevail there.

What prompted me to leave the lurker status are the following questions.

FOA
Somehow I don`t grasp, how you can be so positive for the EURO in comparison to the dollar. Myself being European I could see only 2 advantages for the EURO.
1. Because so many countries are behind it, by necessity it will be a big currency.
2. Because it is new it is at the beginning of ist lifeline, meaning, that it probably still has more capacity for debts.

But otherwise it is still just a fiat currency with some vague link to a relatively small amount of gold. Most of the countries in it`s formation continuously seek their small national advantages instad of seeing the greater common good. Thus there are lots of internal quarrels between these countries. There would be lots more to say, but I think I have made my point. Thus in my opinion there is even still the possibility of it failing altogether after a few years. Also, if the dollar really fails, which may well happen, I don`t see how the EURO could survive.
But assuming things work out as you predict, would you still recommend physical gold for me as an inhabitant of the EURO-zone as strongly as for those of the dollar-zone?

2. ORO
In your 22510 you take the annual deficit to be around 1000 tons. I have read this figure repeatedly on this forum, but wonder how it is arrived at. Now i am aware, that the annual production is roughly 2500 tons, whereas the annual demand is something like 3500 tons. What seems not considered is the annual supply of 600 tons gold scrap (reclaimed or recycled gold), thus leaving a gap of only 400 tons. Could you please clarify your numbers?


Thanks to both of you.
USAGOLD
(01/09/2000; 10:53:36 MDT - Msg ID: 22577)
HUM...
I happen to be here to answer your question about the gold deficit in behalf of ORO. I hope he doesn't mind...

Gold Fields Mineral Services estimates 1999 mine production at 3000 tons (2450 tons Mine Produciton + 550 tons Scrap reclamation)

GFMS estimates Demand at 4050 tons (including jewelry -- 3175 tons, electronics -- 450 and investment -- 425).

Estimated Gap = 1050 tons

In the past that gap has been filled by Mine Company Forward Sales, Gold Loans, Option Hedging (?) and Net Official Sector Sales.

It would seem that the ability to fill that gap has been injured by the Washington Agreement which limited sales to 300 tons annually for the next five years and capped leasing at the current levels (1998 leasing levels were 88 tons. Haven't seen a figure yet for 1999 leasing operations.)
USAGOLD
(01/09/2000; 10:59:28 MDT - Msg ID: 22578)
Correction:
Gold Fields Mineral Services estimates 1999 mine production at 3000 tons (2450 tons Mine Produciton + 550 tons Scrap
reclamation)

should read

"Gold Fields Mineral Services estimates 1999 "Total" production at 3000 tons (2450 tons Mine Produciton + 550 tons Scrap reclamation)"
FOA
(01/09/2000; 11:22:41 MDT - Msg ID: 22579)
Comment
Saturday, January 08, 2000
BOSTON (Reuters) - The United States has not sold any of its gold reserves and has no plans to do so, U.S. Treasury Secretary Lawrence Summers said on Saturday. "I categorically deny assertions that U.S. gold reserves were being sold off or that there is any plan to sell them off," Summers told reporters on the sidelines of an economics conference.
His denial came amid talk in the gold markets that some of the weakness in the gold price over recent years may have been caused by direct U.S. sales of gold. ---------------

ALL:
I posted once before that the US was not selling it's gold. Again, I completely agree with Mr. Summers statement and submit that it is a spoken truth in full context to the question.
Many reach for this easy reason (official gold sales) for our current low gold price. The reason this comes about is that without using this line of reasoning, one has to accept that: 1. the current gold price is mostly a paper contract fabrication 2. it's easily controlled as long as the "current price setting system" is functioning 3. this gold price everyone uses, could fall through the floor if the contract system comes into question 4. physical gold (dealers) prices could skyrocket in the future as no one accepts the credibility of any contract for derivative gold. Effectively destroying the paper equity of gold banking.
Most of the people in the gold industry do not want to hear this. For them, a break-up of the London gold market would destroy their financial partners and spike the physical gold price into uncontrolled levels. Most of the industry designed their business plan to embrace a "common
viewpoint" on gold. They expect, want and look for a return of a gold price that is in the range of $300 to $600. Something the paper marketplace can live with and their financing structure can survive "profitably". Above $600 and even ABX must post margin!
For one to embrace the knowledge that the "Washington Agreement" is real and that the other major nations are not selling into the market; we also must accept how the reverse leverage on physical gold will someday wipe out the entire dollar / gold marketplace. Clearly, this would imply the obvious, physical gold has more leverage than any of it's paper derivatives (gold stocks included). Truly, if you are selling a paper product, your income (and most likely your private investment position) depends on your finding another answer to the low gold price problem!
The sales of official CB gold must be the answer for many. We have for several years (longer than that privately) been discussing this gold market resolution and it's meaning to private physical gold advocates. Our position is that this is a long term evolution of the dollar reserve system. A system that was extended in life for a politically "fixed"
term by changing the very nature of the gold market. Further; Only recently (the last few years) has the timeline of the dollar begun it's final turndown from international "settlement use". Today, the signs are becoming increasingly clear that the Euro (for better or worse) is indeed breaking the grip of dollar financing and use. We expect this to continue and intensify it's effects on the very existence
of a dollar gold arena. As such, we now live in a period we call "the time for super gold". Perhaps our year 2000 marke the beginning od that change.
Prior to this, the accumulation of physical gold could only be viewed as a "long term , extremely secure saving account". One that would contain all the past investment gains an improving economy could produce. And represent those value gains in a future "money settlement roll" that only a free gold trading market would produce. Many have forgone the current financial craze with the complete security that the historical record of gold will not be broken. Truly, gold will later represent a buying power that makes current paper gains seem small!
We do not present this as an investment in the usual sense. Rather one should buy gold as the real wealth it has always been. No different that your car, house, etc. are real money wealth also. Only today, gold wealth does not reflect it's true dollar price value because the paper marketplace does not reflect the trading of real physical gold. Indeed, a clear advantage for persons that can step out from their "Western world" reasoning.

Onward:

Hello ORO,
Yesterday in my (FOA (01/08/00; 23:38:28MDT - Msg ID:22560), I mentioned how ""before this comes to a head the total outstanding gold derivatives could double or triple in supply"".
This is an extremely possible event that is in no way different from our current mania in US stocks. The final act out of a money supply inflation is always reflected in the trading of the "popular wealth" of that era. Weather it is "real things wealth" as seen in the past (price inflation) or our current "Western" fascination with "contract paper wealth", fiat money leverage always explodes right at the end. With the paper gold markets holding a base trading level around 1,000 tonnes a day, any rush of events could easily gun the creation of gold contracts into a much higher
level. And therefore increase the leverage for physical gold "after the fact".

You write:
---------------------
ORO (1/4/00; 8:16:45MDT - Msg ID:22236)
A (bullion) BANK NOTE
A note about the implication of the banker's situation: through the banker's borrowing and lending, all modern bullion owned outright has an equivalent part, nearly three times larger, of paper gold. The bankers have formed a 60,000-80,000 ton gold banking system using 20,000 tons of gold, most of which is now held by "cash" holders.

Common estimates of private gold bullion holdings available to the financial markets, most notably the one produced for the Fed in 1997 (estimated for 1995), put the gold at 20,000 tons. I have reason to believe that there are 10,000 tons more, bringing the total to some 30,000. I will not go
into the iffy details of the estimate, but note that one of the major components is "Yamashita's treasure", which has been in the gold markets since 1984, some of it even before that date. Whenever stories come up about the reappearance of that hoard to act as an overhang on the markets, you can rest assured that it has already been introduced to them in its entirety. These 10,000 tons are in "semi-official" hands of Royals of the Oil countries, the Vatican. Much of the
rest of the remainder (once the gold jewelry deficit is accounted for) sits in Rothchild vaults, and a few other large holders, "giants" much as described by FOA and ANOTHER.
------------------------------------------------

ORO,
I have no doubt that these figures are in line with reality. In fact, they are losing their relevance as the insanity continues. Most people only look at the "writers" (short) obligation to make good on the deal. Yet, few consider the implication that a market "shut down" would create. Literally, both sides of the deal would be looking for "GOLD". The short, of course! But, in addition, he may be drawn to buy his own position in physical and walk from further adding any "deal equity". In addition, the "long" would observe the obvious inability of the market to deliver and undertake a physical purchase outside his deal.
The point is that during a melt down, the entire human infrastructure of a paper market would be looking to buy. In other words, the gross total of world open interest times two (X2) running for gold. It does rather overload the little CB holdings, doesn't it?

You write:
--------------------
The volumes of gold paper traded by the LBMA become much clearer when taken in context of the gold banking system rather than in context of annual gold production. The 1000 tons traded daily are well proportioned to the normal trading patterns in currencies. Eurodollar interest
derivatives constitute about 5.5 $T traded on New York exchanges, and another 55 $t or so are traded OTC with 62% netting (figures are from memory so don't shoot me if I'm off a little) bringing it to 19 $t. This is equivalent to the estimated 21 $t in Eurodollar debt outstanding (my estimate). This comes to 7%to 7.5% of outstanding positions traded daily. Applying this proportion to the gold market's 1000 tons, one comes to 14,000 tons of net debt - the same kind of debt as Eurodollar debt. This is debt generated by the sale of physical gold in the four part transactions.
------------------------------

Sir ORO,
Prior to LBMA giving open figures, the trading was quite high. Even if one had no inside view of their arena, the fact that our 1,000 tonne figure didn't just arrive "overnight" should point to a long term trading build-up. We can be sure that from at least 1990 onward, the paper gold system was backing the dollar on a planned schedule of events.

You offer more:
----------------------
While the physical supply actually went into hoards of all sorts, the paper remained circulating in the markets. The gold accounts now stand at an incredible level of over 40,000 tons by my reckoning. Nearly 30,000 tons are owed by bullion bankers directly - without counter obligations
denominated in kind. They have only 4,800 tons in credible gold mining company obligations, and another 9,000 tons were borrowed by speculative funds playing the carry trade. The remaining reserves, some 10,000 tons, can not be used to pay off the gold denominated debt because the reserves are mostly borrowed and must be kept on hand to cover obligations to Oil Royals (the major lenders of these reserves). Of the other 20,000 tons in private gold hoards, only 6,000 remain in private hands outside of the Bullion banking system. 14,000 were supplied to the market over the years, and hang around the necks and in the noses and from ears of a billion people. The total commitments of bullion banks (including derivatives) are most probably around 60,000 tons, with an imbalance of some 35,000 tons, where gold was "borrowed" by the bankers (in reality only
dollars arrived at the bank for most of this, and the bank issued a gold denominated obligation),and the lending by the bankers was in dollars.
Their remaining gold denominated assets:
- Gold reserves are 10,000 tons, (I hope)
- mining company obligations are at 5,000 tons,
- Speculative fund obligations are 10,000 tons.
The remaining counters to the bullion banker's gold obligations are denominated in currency.
Physical gold lent TO bullion banks, about 25,000 tons.
Physical gold lent BY bullion banks, about 15,000 tons.
-------------------------------

Again, I agree, but ask the question "are these commitments becoming irrelevant in gold terms"? This is "gold banking" on a pure fractional reserve basis and very much reflects the dollar prior to 71. Years ago, we hit a point where the market place is just trading the price of gold, not gold itself. They have created a form of "gold currency" that is more a "gold price obligation" rather than
"gold supply situation". It simply could not function once real delivery was asked for. This is the corner the ECB / BIS have pushed the dollar into. Force a change in the need for "contract gold banking" and you break the credibility of the market. Break that credibility and the dollar is
exposed in a gold price move.
Here, we can get a sense of the massive effects a change in the use of the dollar would have on these liabilities. Once the dollar begins it's slide from trade settlement (happening now), a dollar gold currency is not needed. Any break in the gold banking market would render a "new price" for physical gold. That price would begin to reflect the past dollar money supply inflation.


Thanks ORO for your clear understanding. On to your #22237 later FOA


goldfan
(01/09/2000; 11:40:44 MDT - Msg ID: 22580)
Why no protests over Au sales, Tedw and others
http://www.usagold.comThanks to the many, particularly Ph In LA who responded to my query about Ag manipulation mechanics. Concerning the Au and Ag manipulations, Ted Butler says they're crooks and should be stopped. I certainly agree, and want to acknowledge him and the many others who have worked hard to shine a light on this fraud. But I'm afraid the crooks will not be stopped by legal action until the public leans on the politicians.

I think this won't won't happen over gold yet, because, in my experience, gold is an object of mystery and even fear for most people in the West. The public is afraid of gold. They haven't got any, can't afford it, don't know how to keep it safe if they do get it, aren't sure how to use it, how to resell it or whatever. They won't support goldbugs attacking the government. If they were asked about the Ashanti situation, they would say that holding off on foreclosing on Ashanti is just pragmatic, like offering aid to businesses and families ruined in a flood. Maybe if GATA or someone could mount class action suit based on some law that had been broken... but that would take years and cost millions and the outcome wouldn't bother the manipulators. Look at the Microsoft antitrust suit, an abysmal failure legally for MSFT, but it didn't affect their stock values or change their market place behaviors a whit. The really big guys are beyond government or legal control.

My guess is that the reason COMEX and other derivative markets don't shut down over this stuff is that the pro's who deal there know all about the manipulations, and just work around them..The way a professional poker player knows when a marked deck is put into the game by someone else, and just uses it to his own advantage.

So if someone tries to shut down the futures market by demanding delivery of an undeliverable, they'll just cancel his contracts, and carry on. Let him sue, they can bury him in legal costs, eventually settle out of court later, and then resume business as usual. The evidence they're not afraid to support the crooks is in the LTCM thing. These guys are right back in business, with all their major support systems in place. Look at the Canary Wharf guy, what's his name, Reichman, who screwed small and large investors for billions, went bankrupt, then got his buddies in the bank business to help him buy back in at fire sale prices and he winds up owning more of the action than he did in the first place.

I'm afraid gold won't be popular or priced much higher until the consumer society unwinds completely and we enter a long period of dreary economic winter. I'm aware of the argument that when there isn't any more physical available, prices will have to rise. But I'm suspicious of the statistics on supply, demand and inventories. Maybe all the numbers are being fudged. Who knows what the supplies really are?

I hope I'm wrong in that statement. I would welcome refutation.

I'm trying to get the data to prove to my simple-minded self, how close we are to a collapse of the "consumer-society". I believe this is the only way gold will be seen by Europeans and North Americans as a store of wealth and a standard for trade.

Somehow, I think the attitude of the "consumer" and the "goldbug" are incompatible. The consumer follows fashions and fads, even in investment for his/her pension. The "goldbug" reserves "fashion consumption" for disposable income. He/she makes investment decisions based on storage and husbandry of something of enduring value, always "in fashion".

As a woman friend of mine remarked when I talked to her about this, "it's a question of quality. Most people have got used to getting a lot at low quality, rather than having less, at high quality. So a lot of "paper" gold is worth more to them than a little physical. But in a fire, the paper will burn up, the gold will only change shape and be found unharmed in the ashes."
FWIW
Goldfan
Journeyman
(01/09/2000; 12:02:43 MDT - Msg ID: 22581)
Thanx @RossL, 714, Bonedaddy
Thanx for the feedback on nonviolent alternatives. And particularly, Bonedaddy, thanx for reminding me of the hazards of the alternative to nonviolent alternatives!!

Regards, J.
Gandalf the White
(01/09/2000; 12:13:01 MDT - Msg ID: 22582)
Serial #4 of the story titled, "Mystery of the Lost Ozarks Silver
RECAP -- In Part #3 of the Serial, we saw that indeed there was a cave having Spanish silver bars which was located by at least one of the two major persons of the expedition party, Pierre, by following a map. However, that cave was located in territory considered the property of others that did not wish to have trespassers upon their territory. It was also evident that there was a vast difference between the two groups (trespassers vs. territory protectors) in the level of means of weapons, being guns vs. the bow and arrows. Part #3 ended with the death of Pierre by his own hand. But now we look at Pu Deville's diary and the story can be seen much clearer. (OK enough editorial � on with Part #4 of the Serial.)
-----
"Mystery of the Lost Ozarks Silver" � PART Four --
Written by Tom Bailey and illustrated by Al Martin Napoletano. Published in the FRONTIER TIMES, Austin, TX -- Summer, 1961. (Please read carefully as it is transcribed just as it was written, and my spellchecker is not conversant in 1960's Texas style Angrit.)
--
Pu Deville did not date his diary and because of that, it is difficult to coordinate their activities. Apparently they traveled together at times and separated when danger lurked.
Pu Deville's scrawling hand tells his story after the same manner. "Ahead great care. Travel in creek. No Indians. Little creek came out of rocks with great noise. Not followed. Follow creek southerly, mouth of creek."
"Great river come up from southwest. Turn northwest. Camp. Pierre found good signs opposite camp. Horseshoe on mountain. One of the maps is wrong. All point across river. One points up a little valley northwest from the point on the map. Go over the river. Found ford on the map. Found the single rock. Found the red spot other map shows. Two-and-one-half miles northwest. Have to try both long and short. Long wins. Back to camp. Going in valley south and east of bluffs. Two narrow bluffs look like crackers. Pierre found ravine."
Pu Deville does not mention here that he and Pierre were back together again but obviously they were.
"All growth of brush. Some death signs. Some dead ones sure planted here." (Author added � Meaning Indians, no doubt.)
Up to this point the diary covers Pu Deville's movements while looking for the cave. Later he wrote: "Dug about half a day. Little opening. Made it bigger. Crawled in and slid down. Great big cave. All Indian stuff. Arrows. Lots of bones and human skulls. Silver lumps. Melted. Bars weigh about five pounds. Each take three."
Now here comes the part in Pu Deville's diary by which Missouri folk swear.
"Vein is over six feet high all around. Pierre says it is pure silver. At least we have found it. How far the cave goes we can not make out."
What could be better proof that the cave was a natural silver mine? Perhaps someone melted down some silver and cast it into bars. So what?
There are several reasons to suspect that the silver found was not native to the land. In the first place, the word "vein" in Pu Deville's handwriting is somewhat irregular, indicating it may have been changed by someone. Perhaps the original word was "wall" indicating a stack of silver bars, which was six feet high. Not the richest silver veins found on the Comstock were six feet high. Most of them ran from a few inches to a foot-and-one-half wide, no more. Finding a six-foot-high silver ore vein in southern Missouri would be most unlikely, especially in view of what the geologists and mineralogists say. There is no silver in Missouri in any great quantities, they contend, and shake their heads in disbelief.
===
End of Serial #4
<;-)

Journeyman
(01/09/2000; 12:14:10 MDT - Msg ID: 22583)
Old Debts @Canamami
You're right! Old debts can result in intractable problems. I'm relatively sure the land under the house I live in technically belongs to one "indian" tribe or another.

Unpaid debts get more stale and complex as time passes and can sometimes lead to violence. It's best to settle up as soon as possible. As Alan Greenspan has remarked, it's too bad there aren't bankruptcy protocols for countries -- but there aren't.

Regards,
Journeyman
tedw
(01/09/2000; 12:46:56 MDT - Msg ID: 22584)
B of E Sales
Htttp://www.usagold.com
I dont know that I find the answer that the B of E sales are to preserve a collapse of fiat money credible.

Could not the price of Gold rise significantly ($400,$500)
without fiat money collapsing. Gold has been that high before.

As for England what are the negative consequences of unloading their Gold at low prices? Or are their any?
Journeyman
(01/09/2000; 12:52:40 MDT - Msg ID: 22585)
"The Crime of 1873" -- an indirect indictment of gold
http://www.micheloud.com/FXM/MH/Crime/carricat.htm,
Peter Asher, Mr. Gresham, Farfel, Aristotle, TownCrier, FOA,
ALL

The above site from Cavan Man presenting "The Crime of
1873," is a real gem for many reasons. First, it's written
from the viewpoint of a monetarist and interprets history
from that viewpoint. It also, in my opinion, demonstrates an
inadaquate attempt to diss gold. It's a perfect opportunity
to examine a subtle and very good example of how historical
interpretation (or from my viewpoint, mis-interpretation)
can lead to all sorts of ultimately costly economic
experiments, in this case, monetarism. As Keynes himself
explained:

"It is astonishing what foolish things one can
temporarily believe if one thinks too long alone,
particularly in economics (along with the other moral
sciences), where it is often impossible to bring one's
ideas to a conclusive test either formal or
experimental. -J.M. Keynes, December 13, 1935 from the
introduction to his _THE GENERAL THEORY of EMPLOYMENT,
INTEREST, AND MONEY_

In the presentation of "The Crime of 1873," anti hard-money
(pro paper-money) advocates helped an inherent problem with
a FIXED RATE bi-metallic standard combined with an
unprecedented one-time historical "monetization" of human
interaction develop into an excuse to ditch official
currency disciplined by the realities of the physical
universe, that is, by the realities of mining, in favor of
paper money disciplined instead only by the whims and
desires of bankers and governments.

The implicit monetarist at the above website presents the
situation this way:

We see between 1875 and 1896 a deflation [currency unit
appreciation, remember -J.] of about 1% a year in the
general CPI. A[t] the same time the output rose by 6 %
a year. Economists reader should not say, < growth even with those declining prices!>>. It's
precisely this growth that made the prices go down.
With a fixed quantity of money if the number of
transactions rises and the velocity cannot rise
sufficiently, then prices have to fall.
...
All this led to a depression so great that you would
have to wait for 1932 to see the same again.
Unemployment peaked at 18 % in 1894. But some people
suffered more than others (more on this).
+
On the monetary side, this deflation made many bank
loans turn sour, as the debtors struggled to honor
their obligations with rising real value of their
debts. Some famous banking panics occurred (1892), but
globally the trust of the public in the banking system
increased. The ratio of deposits to reserves rose from
2 to 4 at the end of the period.
http://www.micheloud.com/FXM/MH/Crime/macro.htm

Particularly hurt were the net debtors, and among
them peasant class at most because they had to
face a rising value of their (generally heavy)
debts combined with a decline in agricultural
prices of about 3% a year.
http://www.micheloud.com/FXM/MH/Crime/crime.htm

Can we defenders of gold excuse such harsh conditions? Are
we able to defend hard money against these rather subtly
presented indictments?

Regards,
Journeyman
Usul
(01/09/2000; 13:02:51 MDT - Msg ID: 22586)
Extraordinary Popular Delusions and the Madness of Crowds
@USAGOLD (10:21:33MDT)- "Once in Golconda" is fascinating stuff to read, however, may I respectfully correct your aside regarding which century "Extraordinay Delusions..." was written in and contribute something to the discussion. Ed. 1 was dated 1841, Ed 2 was dated 1852. The author's name is Charles Mackay, LL.D.
For USAGOLD readers' information, here are some tidbits from the Wordsworth Reference print edition of 1995:

"Extraordinary Popular Delusions and the Madness of Crowds is important because it is an aide-memoire of the continuing folly of the human race and its institutions. It is said to be required reading in some of the literate Wall Street financial houses (along with that other classic masterpiece, Sun Tzu's The Art of War). Certainly, the great financier Bernard Baruch found it a useful reminder, much as a Roman general enjoying a Triumph is said to have had at his shoulder a slave whispering 'memento mori'."
From Introduction by Norman Stone, Professor of Modern History, University of Oxford, 1995.

Charles Mackay (1814-1889) was born in Perth Scotland. His mother died shortly after his birth, and his father, who had been in turn a Lieutenant on a royal Navy sloop (captured and imprisoned for four years in France) and then an Ensign in the 47th foot taking part in the ill-fated Walcheren Expedition where he contracted malaria, sent young Charles to live with a nurse in Woolwich in 1822. After a couple of years' education in Brussels from 1828-1830, he became a journalist and songwriter in London. He worked on The Morning Chronicle from 1835-1844, when he was appointed Editor of The Glasgow Argus. His song The Good Time Coming sold 400,000 copies in 1846, the year that he was awarded his Doctorate of Literature by Glasgow University. He was a friend of influential figures such as Charles Dickens and Henry Russell, and moved to London to work on The Illustrated London News in 1848, and he became Editor of it in 1852. He was a correspondent for The Times during the American Civil War, but thereafter concentrated on writing books. Apart from Extraordinary Delusions and the Madness of Crowds, he is best remembered for his songs and his Dictionary of Lowland Scotch.
lamprey_65
(01/09/2000; 13:06:32 MDT - Msg ID: 22587)
Market Thoughts and Gold
Don't be fooled by Friday's market action following Lucent's profit warning and subsequent explanations. The CEO's spin of "this is just a one quarter problem" just doesn't fly according to what I've read from Herb Greenberg (TheStreet.com), Olstein, Fleckenstein, and Tice. Granted most of the previous are bears, but their case makes more sense to me -- (Greenberg first warned this was coming with Lucent back in October) -- Lucent's problem is their long standing accounting shell game...something that is very prevelant in today's tech sector.

The markets wanted to believe Lucent's explanation - they immediately went out and gobbled up Nortel Networks, a Lucent competitor. This was a signal that the LU problems were perceived to be company specific. Be very careful, remember TYCO?...Tice broke that one and whispers are they WILL be fined by the SEC...another accounting issue. GTW, IBM, DELL, BMC -- they've all warned of problems recently...and remember, the Y2K boogey man can no longer be used as an excuse.

In order for the markets to truly correct, rallies like the one we had Friday have to fail...the buy on dippers are not going away without a couple of painful lessons.

As for gold -- did anyone pick up the extreme nervousness on the big point loss days last week in the markets? NOTHING HAPPENED - in percentage terms anyway. Can you imagine the panic if the market started taking some real hits? Panic in the streets would ensue, and where do people run to in times of panic? I think we all know the answer to that question.

Lamprey

USAGOLD
(01/09/2000; 13:15:08 MDT - Msg ID: 22588)
Thanks Usul...
I was going from memory. Don't have a copy of Mackay's book here. Also thanks for the background. Apparently, our Mr. Mackay had much going for him besides The Extraordinary Popular Delusions and the Madness of Crowds -- always thought that one of the great titles in literature.

Your corrections are taken in the spirit given. My best to you and yours for a successful 2000 and thanks for your on-going contributions here.
Journeyman
(01/09/2000; 13:35:18 MDT - Msg ID: 22589)
B of E sales @tedw
There's more to the price of gold and fiat failure than meets the eye. The most easily understood (well for me at least) is that gold has ALWAYS acted as a barometer for inflation. If gold goes up, that means the value of the dollar (or which ever other fiat currency you live your economic life in) is dropping in value. Such a currency token value depreciation is misleadingly called "inflation." So many people (investors, etc.) perceive an increased price of gold a sign that maybe they should unload (trade) their dollars (yen, etc.) for something else. This leads to further devaluation, as the available supply of currency tokens balloons, making it more likely others will unload their tokens, etc.

In this sense, the price of gold acts as a flag which in the past has signaled hyper-depreciation (hyper-inflation).

There are many other labarinthine connections between the gold markets and the fiat currency values, but others at this forum are more likely to be able to coherently explain these than I am.

Regards,
Journeyman
TheStranger
(01/09/2000; 13:40:31 MDT - Msg ID: 22590)
Miscellaneous Kudos
To Michael Kosares for the Golconda excerpts. I never tire of reading the story of 1929. It is so rich in the kind of dramatic irony that makes the story of the Titanic so fascinating. Thanks for taking the time, Michael.

To Cavan Man for his marvelous Oz/Bryan link which entertains as well as educates. Good show, CM!

To Lamprey who is already a major asset to this forum. I don't know how we found you Lamprey, but it was our good fortune, I assure you.
RossL
(01/09/2000; 13:42:00 MDT - Msg ID: 22591)
Summers using Clinton-speak?
Saturday January 8 3:00 PM ET
Summers: US Not Selling Any Gold Reserves
BOSTON (Reuters) - The United States has not
sold any of its gold reserves and has no
plans to do so, U.S. Treasury Secretary
Lawrence Summers said on Saturday.

``I categorically deny assertions that U.S.
gold reserves were being sold off or that
there is any plan to sell them off,'' Summers
told reporters on the sidelines of an
economics conference.



The statement by Summers refers only to the present tense and the future tense. His statement is carefully worded to avoid making a statement in the past tense. It is Reuters who is making the assumption that the past tense is covered in the statement by Summers!!! I will never underestimate the semantic games of these people!!!
Usul
(01/09/2000; 14:16:13 MDT - Msg ID: 22592)
Manias: Yesterday, today and tomorrow!
http://www.urbansurvival.com/week.htmAll the best back to you, sir, and all USAGOLD readers for 2000. Extraordinary Popular Delusions and the Madness of Crowds is surely one of the great (unappreciated by many) titles in literature. I recall my boss mentioning it many years ago... only after some time did I purchase a copy and read through the chapters on the Mississippi Scheme, the South Sea Bubble, and the Tulipomania, which still leaves about 2/3 yet to properly read. When one reads these chapters, one can not fail to compare events with today's stock markets (and Japan's 1990s markets) and feel deja vu.
I suspect a few more copies will be printed after the tech stock mania collapses (so easy to be wise after the event).

Speaking of manias... the charts at George Ure's site (see link) are getting very interesting!

Extraordinary Popular Delusions and the Madness of Crowds is on the Web here:
http://sailor.gutenberg.org/gutenberg/by-author/ma7.html
Mr Gresham
(01/09/2000; 15:40:58 MDT - Msg ID: 22593)
Derivatives Links
http://mt.sopris.net/mpc/finance.derivatives.htmlBig page of derivatives info -- caught link from Prudent Bear chat threads (which disappear after about a day, so it's a race to keep up, unlike the more relaxed pace around here -- thank you MK!)
Usul
(01/09/2000; 15:47:49 MDT - Msg ID: 22594)
The Oil Embargo and the Kreinin Letter (Pt. 2)
http://www.msu.edu/~kreinin/Mordechai E. Kreinin is accredited today as University Distinguished Professor, Department of Economics, Michigan State University, at the web URL above dated May 1999.
His Fields of Specialization are listed as International Economics, Money and Banking, Theory. His Ph.D. Thesis: "Exchange Stabilization Funds." Note that the point of
Exchange Stabilization Funds in general is to stabilize the value of paper currencies without the need for a gold standard.
The fact that Exchange Stabilization did not work to prevent
the fall of the Baht in 1997 should not have been lost on the Powers that Be. Curiously, Prof. Kreinin's "current work" is listed as including:
Problems of introducing the EURO;
The international currency crisis of 1997-9

Back in 1974, March 18th to be precise, Prof. Kreinin wrote to the New York Times. His letter opens like this:
---

To the Editor:

If We Gave Gold for Oil

Much has been said in recent months about the "immense burden" on the balance of payments of Western Countries created by the quadrupling of oil prices. Yet to the extent that the producing countries are willing to accumulate Western currencies (especially dollars), that burden can be alleviated or removed in a noninflationary manner by gradually disposing of official gold reserves on the private market.

It is the coincidental occurrence of two events that makes this possible. The adoption of flexible exchange rates by the industrial nations eliminates the necessity of maintaining official gold reserves. And second, the price of gold on the private market rose to four and one half times its official value precisely during the four fold increase in oil prices. Thus the U.S. gold stock, officially valued at $11 billion, is worth nearly $50 billion on the private market.

Assuming that this market is rather thin, it cannot absorb massive quantities of gold at a given moment of time, without the price tumbling. For that reason, it would be easier if France and some other countries preferred to hang on to the cherished yellow metal and leave this field of operation open to the United States.

In that event the U.S. gold stock should suffice to subsidize oil imports to this country over a ten-year period to the tune of $5 billion per year. By the end of that period, we should be on the way to self-sufficiency in energy production...
---

It seems to me that the potential for the U.S. gold stock to run out after 10 years according to the Professor's plan would be seen as somewhat alarming... today is over 25 years later and oil still flows to the U.S. in large quantities... In hindsight, the notion of self-sufficiency in energy production is clearly flawed. Later in his letter, the Professor refers to the "extent that the Persian Gulf Sheiks are interested in accumulating their wealth in gold". A concept that is well know to UAGOLD readers and is there in print, well understood in 1974. What to do about the limited lifetime of a gold-for-oil deal? At the time, the dollar was losing value from inflation associated with the funding of the Vietnam War. The price of gold is traditionally seen as an indicator of inflation. It would therefore be of advantage to have a system of exchange whereby the price of gold would not need to rise... perhaps by concealing the 'demand' side of the equation?
The recipients of the gold would not be worried by this, as they would receive more gold for the percieved price.
One party has gold available to a certain extent... the other party has oil available in great abundance, but still limited in the fullness of time. Would it not make sense, therefore, to modify Prof. Kreinin's original proposal such that a barrel of oil is paid for part in dollars, and part in gold, the gold fraction being allocated suitably so that the trade over time is well matched to the assets seen available on both sides? Furthermore, it would be an advantage that the price of the oil in dollars could be seen as stabilizing or even coming down from the dizzy heights triggered by the embargo, alleviating the inflationary scenario, while a payment component in gold need not necessarily be out in the open for all to see? Especially if those gold sales were considered "politically sensitive"...
Mr Gresham
(01/09/2000; 16:30:21 MDT - Msg ID: 22595)
Journeyman -- Crime of 1873
A quick answer (all I have time for now) would say that all economic activity is risky, especially the choice of a profession (especially agriculture), and that money plays a chaotic role in economics. Including gold. No guarantees -- except the absence of the "cheat factor" that exists with paper.

The gap in their reasoning is the appeal to the short-term horizon of what happened to certain "economic losers", vs. the long-term avoidance of a "cheatable" currency.

{note inserted after finishing:
SOAP BOX OUT -- "Scre-e-e-e-e-chhhh"}

I differ with absolute libertarianism in that I believe that economic society should exist circumscribed within the boundaries of civil society, and not engulf the civil society as its wholly-owned subsidiary. All life is NOT economics; today's message is a deadly one. The economy exists for people, and not vice versa. If the people, in such wisdom as they possess, want to temporarily subsidize a class of their neighbors, (I think of the small Japanese rice farmers) via private or public charity, then they may act outside the bounds of strict market dynamics with the money they choose to allocate.

Acquiring the wisdom to know how and when to do this, now, that's another matter; and I sometimes despair almost as deeply as the pure marketeers who've given up on human learning. I hear several among those assembled here who've not surrendered that hope, either.

Of course we know there are manipulations _within_ the market system, when big players are able to corner markets. And we know that the permanent institution of politicians and bureaucrats in control of gigantic public purses has created an 800-pound "cheat factor" working AGAINST public benefit. And when the "big players" can capture government as their errand boy, why then, the effects of The Cheat can be mega-magnified.

Honest Money. The theme here. When I think about the gulf in my lifetime between that philosophy and the idea of social compassion, and the fact that the liberal/radicals I've known for 30 years have ABSOLUTELY NO CONCEPT of gold as anything but a right-wing whacko paranoid plot,-- hell, no concept of monetary dynamics of ANY sort -- then I start wanting to meet some people from a younger generation who might someday GET IT.

{SOAP BOX AWAY} -- now out for some rare Northwest winter sun
Chris Powell
(01/09/2000; 19:16:43 MDT - Msg ID: 22596)
U.S. govt. starts responding to GATA questions
http://www.egroups.com/group/gata/334.html?Now we have to get rid of the wiggle room.
R Powell
(01/09/2000; 20:21:18 MDT - Msg ID: 22597)
Usul
Another book similar to Extraordinary Popular Delusions and the Madness of Crowds is Manias,Panics, and Crashes by Charles P. Kindleberger. John Wiley and Sons Inc. publisher.I had to work through parts of it and read with a pen and ruler for underlining so rereading can be done quickly. Well worth the read but I can't absorb it all at one sitting. One of my many shortcomings. Thanks for book reference as reading is a great pleasure for me.
schippi
(01/09/2000; 20:37:32 MDT - Msg ID: 22598)
Gold Sectors FSAGX & FDPMX
http://www.SelectSectors.com/agpm120.gifGold Sector trend still Up
Gandalf the White
(01/09/2000; 22:29:25 MDT - Msg ID: 22599)
Serial #5 of the story titled, "Mystery of the Lost Ozarks Silver".
RECAP -- In Part #4 of the Serial, we saw things from the perspective of the other principal character, Pu Deville. He mentions that both he and Pierre dug out the opening to the cave and found: "Great big cave; All Indian stuff; Arrows; Lots of bones and human skulls; Silver lumps; and Melted Silver Bars". Pu Deville's diary states that each explorer took three bars.
Part #5 of the story restarts with more from Pu Deville's diary.
(PS: Sundays were double features --- remember ?)

"Mystery of the Lost Ozarks Silver" � PART Five --
Written by Tom Bailey and illustrated by Al Martin Napoletano. Published in the FRONTIER TIMES, Austin, TX -- Summer, 1961. (Please read carefully as it is transcribed just as it was written, and my spellchecker is not conversant in 1960's Texas style Angrit.)
--
Pu Deville goes on: "Crawled out and closed everything. Back to camp. Pierre sees Indians on the river and in the valley. Go way up valley. Separate. Will meet again on river."
"I go straight south. Pierre northeast. Back on mouth. No sign of Pierre. Wait two days at mouth of river. Lay hiding."
The diary now conforms to that of Pierre.
"Found Pierre dead on top of mountain. Dead full of arrows. Bullet in head. Gun broke. Took map and his diary and put them with mine. Indians in valley all around. It shall go with me like Pierre and others before us."
"If anyone finds these maps and diaries bring them to Leduc in St. Louis. He owns and knows all. He knows Pierre's wife." (Signed) Pu Deville
Beneath his signature is the notation made be the man who found the papers in the gun barrel years later, and then disappeared into the West.
There is no record of who found the papers and delivered them to Leduc, who obviously stuffed them into the gun barrel for safekeeping.
After the old maps and diaries were found, men who tried to read and understand them came to the conclusion that the little lake which came out of the mountain with a great noise, as mentioned in Pu Deville's diary, could only mean Roaring River.
WAIT A MINUTE ! --- Pu Deville's diary said "Little creek came out of rocks with great noise.") OK, I must tell it as it is written. � Let's go on, <;-)
If the directions of the old map are to be relied upon, the "great river" which "came up from the south" could only be the White River, which would place the location of the fabulous cave somewhere in Barry county, near what is generally known as the Easley Ford. The land here was once owned by a man named Robinson. Later two men known as Murphy and Keitz bought the property. Murphy had come into possession of the old charts and felt certain the lost cave could be located on that land.
In 1940 these two men gave up hope of ever finding the cave and sold the place to Ola and Audry Farwell. The old papers went along with the deed. The Farwells did not buy the land because of the old papers that went with it, but after they acquired it they did engage in some exploration work, but without result.
(Included was a photo of well-dressed middle aged woman, Ola Farwell, sitting at a table looking at an old paper map approximately two feet square.)
Before the Table Rock Dam was built, treasure hunters by the score came onto the property and roamed up and down the river with all the latest gadgets known to man for the detection of metals underground, but no one found anything.
===
End of Serial #5 with the FINAL episode to come.
<;-)
AllanC
(01/09/2000; 22:38:31 MDT - Msg ID: 22600)
Extraordinary popular delusions by McKay
ftp://sailor.gutenberg.org/pub/gutenberg/etext96/ppdel10.txtThanks for the link Usul.

Here's the tulipomania part, for all to see. In this case, just substitute the word "internet company" for "tulip", "American" for "Dutch", "stock broker" for "tulip dealer", years "1998-99" for years "1634-35".
Happy reading!

From Project Gutenberg's Etext of Memoirs of Extraordinary Popular
Delusions, Volume One, by Charles MacKay


THE TULIPOMANIA.

Quis furor o cives! -- Lucan.

The tulip,--so named, it is said, from a Turkish word, signifying
a turban,-- was introduced into western Europe about the middle of the
sixteenth century. Conrad Gesner, who claims the merit of having
brought it into repute,--little dreaming of the extraordinary
commotion it was to make in the world,--says that he first saw it in
the year 1559, in a garden at Augsburg, belonging to the learned
Counsellor Herwart, a man very famous in his day for his collection of
rare exotics. The bulbs were sent to this gentleman by a friend at
Constantinople, where the flower had long been a favourite. In the
course of ten or eleven years after this period, tulips were much
sought after by the wealthy, especially in Holland and Germany. Rich
people at Amsterdam sent for the bulbs direct to Constantinople, and
paid the most extravagant prices for them. The first roots planted in
England were brought from Vienna in 1600. Until the year 1634 the
tulip annually increased in reputation, until it was deemed a proof of
bad taste in any man of fortune to be without a collection of them.
Many learned men, including Pompeius de Angelis and the celebrated
Lipsius of Leyden, the author of the treatise "De Constantia," were
passionately fond of tulips. The rage for possessing them soon caught
the middle classes of society, and merchants and shopkeepers, even of
moderate means, began to vie with each other in the rarity of these
flowers and the preposterous prices .they paid for them. A trader at
Harlaem was known to pay one-half of his fortune for a single
root--not with the design of selling it again at a profit, but to keep
in his own conservatory for the admiration of his acquaintance.

One would suppose that there must have been some great virtue in
this flower to have made it so valuable in the eyes of so prudent a
people as the Dutch; but it has neither the beauty nor the perfume of
the rose--hardly the beauty of the "sweet, sweet-pea;" neither is it
as enduring as either. Cowley, it is true, is loud in its praise. He
says--

"The tulip next appeared, all over gay,
But wanton, full of pride, and full of play;
The world can't show a dye but here has place;
Nay, by new mixtures, she can change her face;
Purple and gold are both beneath her care-
The richest needlework she loves to wear;
Her only study is to please the eye,
And to outshine the rest in finery."

This, though not very poetical, is the description of a poet.
Beckmann, in his History of Inventions, paints it with more fidelity,
and in prose more pleasing than Cowley's poetry. He says, "There are
few plants which acquire, through accident, weakness, or disease, so
many variegations as the tulip. When uncultivated, and in its natural
state, it is almost of one colour, has large leaves, and an
extraordinarily long stem. When it has been weakened by cultivation,
it becomes more agreeable in the eyes of the florist. The petals are
then paler, smaller, and more diversified in hue; and the leaves
acquire a softer green colour. Thus this masterpiece of culture, the
more beautiful it turns, grows so much the weaker, so that, with the
greatest skill and most careful attention, it can scarcely be
transplanted, or even kept alive."

Many persons grow insensibly attached to that which gives them a
great deal of trouble, as a mother often loves her sick and
ever-ailing child better than her more healthy offspring. Upon the
same principle we must account for the unmerited encomia lavished upon
these fragile blossoms. In 1634, the rage among the Dutch to possess
them was so great that the ordinary industry of the country was
neglected, and the population, even to its lowest dregs, embarked in
the tulip trade. As the mania increased, prices augmented, until, in
the year 1635, many persons were known to invest a fortune of 100,000
florins in the purchase of forty roots. It then became necessary to
sell them by their weight in perits, a small weight less than a grain.
A tulip of the species called Admiral Liefken, weighing 400 perits,
was worth 4400 florins; an Admiral Von der Eyk, weighing 446 perits,
was worth 1260 florins; a shilder of 106 perits was worth 1615
florins; a viceroy of 400 perits, 3000 florins, and, most precious of
all, a Semper Augustus, weighing 200 perits, was thought to be very
cheap at 5500 florins. The latter was much sought after, and even an
inferior bulb might command a price of 2000 florins. It is related
that, at one time, early in 1636, there were only two roots of this
description to be had in all Holland, and those not of the best. One
was in the possession of a dealer in Amsterdam, and the other in
Harlaem. So anxious were the speculators to obtain them that one
person offered the fee-simple of twelve acres of building ground for
the Harlaem tulip. That of Amsterdam was bought for 4600 florins, a
new carriage, two grey horses, and a complete suit of harness.
Munting, an industrious author of that day, who wrote a folio volume
of one thousand pages upon the tulipomania, has preserved the
following list of the various articles, and their value, which were
delivered for one single root of the rare species called the viceroy
:--
florins.
Two lasts of wheat.............. 448
Four lasts of rye............... 558
Four fat oxen................... 480
Eight fat swine................. 240
Twelve fat sheep................ 120
Two hogsheads of wine........... 70
Four tuns of beer............... 32
Two tons of butter.............. 192
One thousand lbs. of cheese..... 120
A complete bed.................. 100
A suit of clothes............... 8O
A silver drinking cup........... 6O
-----
2500
-----

People who had been absent from Holland, and whose chance it was
to return when this folly was at its maximum, were sometimes led into
awkward dilemmas by their ignorance. There is an amusing instance of
the kind related in Blainville's Travels. A wealthy merchant, who
prided himself not a little on his rare tulips, received upon one
occasion a very valuable consignment of merchandise from the Levant.
Intelligence of its arrival was brought him by a sailor, who presented
himself for that purpose at the counting-house, among bales of goods
of every description. The merchant, to reward him for his news,
munificently made him a present of a fine red herring for his
breakfast. The sailor had, it appears, a great partiality for onions,
and seeing a bulb very like an onion lying upon the counter of this
liberal trader, and thinking it, no doubt, very much out of its place
among silks and velvets, he slily seized an opportunity and slipped it
into his pocket, as a relish for his herring. He got clear off with
his prize, and proceeded to the quay to eat his breakfast. Hardly was
his back turned when the merchant missed his valuable Semper Augustus,
worth three thousand florins, or about 280 pounds sterling. The whole
establishment was instantly in an uproar; search was everywhere made
for the precious root, but it was not to be found. Great was the
merchant's distress of mind. The search was renewed, but again without
success. At last some one thought of the sailor.

The unhappy merchant sprang into the street at the bare suggestion.
His alarmed household followed him. The sailor, simple soul! had not
thought of concealment. He was found quietly sitting on a coil of
ropes, masticating the last morsel of his "onion." Little did he dream
that he had been eating a breakfast whose cost might have regaled a
whole ship's crew for a twelvemonth; or, as the plundered merchant
himself expressed it, "might have sumptuously feasted the Prince of
Orange and the whole court of the Stadtholder." Anthony caused pearls
to be dissolved in wine to drink the health of Cleopatra; Sir Richard
Whittington was as foolishly magnificent in an entertainment to King
Henry V; and Sir Thomas Gresham drank a diamond, dissolved in wine, to
the health of Queen Elizabeth, when she opened the Royal Exchange: but
the breakfast of this roguish Dutchman was as splendid as either. He
had an advantage, too, over his wasteful predecessors: their gems did
not improve the taste or the wholesomeness of their wine, while his
tulip was quite delicious with his red herring. The most unfortunate
part of the business for him was, that he remained in prison for some
months, on a charge of felony, preferred against him by the merchant.

Another story is told of an English traveller, which is scarcely
less ludicrous. This gentleman, an amateur botanist, happened to see a
tulip-root lying in the conservatory of a wealthy Dutchman. Being
ignorant of its quality, he took out his penknife, and peeled off its
coats, with the view of making experiments upon it. When it was by
this means reduced to half its original size, he cut it into two equal
sections, making all the time many learned remarks on the singular
appearances of the unknown bulb. Suddenly the owner pounced upon him,
and, with fury in his eyes, asked him if he knew what he had been
doing? "Peeling a most extraordinary onion," replied the philosopher.
"Hundert tausend duyvel," said the Dutchman; "it's an Admiral Van der
E. yck." "Thank you," replied the traveller, taking out his note-book
to make a memorandum of the same; "are these admirals common in your
country?" "Death and the devil," said the Dutchman, seizing the
astonished man of science by the collar; "come before the
syndic, and you shall see." In spite of his remonstrances, the
traveller was led through the streets, followed by a mob of persons.
When brought into the presence of the magistrate, he learned, to his
consternation, that the root upon which he had been experimentalizing
was worth four thousand florins; and, notwithstanding all he could
urge in extenuation, he was lodged in prison until he found securities
for the payment of this sum.

The demand for tulips of a rare species increased so much in the
year 1636, that regular marts for their sale were established on the
Stock Exchange of Amsterdam, in Rotterdam, Harlaem, Leyden, Alkmar,
Hoorn, and other towns. Symptoms of gambling now became, for the first
time, apparent. The stockjobbers, ever on the alert for a new
speculation, dealt largely in tulips, making use of all the means they
so well knew how to employ, to cause fluctuations in prices. At first,
as in all these gambling mania, confidence was at its height, and
everybody gained. The tulip-jobbers speculated in the rise and fall of
the tulip stocks, and made large profits by buying when prices fell,
and selling out when they rose. Many individuals grew suddenly rich. A
golden bait hung temptingly out before the people, and, one after the
other, they rushed to the tulip marts, like flies around a honeypot.
Every one imagined that the passion for tulips would last for ever,
and that the wealthy from every part of the world would send to
Holland, and pay whatever prices were asked for them. The riches of
Europe would be concentrated on the shores of the Zuyder Zee, and
poverty banished from the favoured clime of Holland. Nobles, citizens,
farmers, mechanics, seamen, footmen, maidservants, even chimney-sweeps
and old clotheswomen, dabbled in tulips. People of all grades
converted their property into cash, and invested it in flowers. Houses
and lands were offered for sale at ruinously low prices, or assigned
in payment of bargains made at the tulip-mart. Foreigners became
smitten with the same frenzy, and money poured into Holland from all
directions. The prices of the necessaries of life rose again by
degrees; houses and lands, horses and carriages, and luxuries of every
sort, rose in value with them, and for some months Holland seemed the
very antechamber of Plutus. The operations of the trade became so
extensive and so intricate, that it was found necessary to draw up a
code of laws for the guidance of the dealers. Notaries and clerks were
also appointed, who devoted themselves exclusively to the interests of
the trade. The designation of public notary was hardly known in some
towns, that of tulip notary usurping its place. In the smaller towns,
where there was no exchange, the principal tavern was usually selected
as the "showplace," where high and low traded in tulips, and confirmed
their bargains over sumptuous entertainments. These dinners were
sometimes attended by two or three hundred persons, and large vases of
tulips, in full bloom, were placed at regular intervals upon the
tables and sideboards, for their gratification during the repast.

At last, however, the more prudent began to see that this folly
could not last for ever. Rich people no longer bought the flowers to
keep them in their gardens, but to sell them again at cent. per cent.
profit. It was seen that somebody must lose fearfully in the end. As
this conviction spread, prices fell, and never rose again. Confidence
was destroyed, and a universal panic seized upon the dealers. A had
agreed to purchase ten Sempers Augustines from B, at four thousand
florins each, at six weeks after the signing of the contract. B was
ready with the flowers at the appointed time; but the price had fallen
to three or four hundred florins, and A refused either to pay the
difference or receive the tulips. Defaulters were announced day after
day in all the towns of Holland. Hundreds who, a few months
previously, had begun to doubt that there was such a thing as poverty
in the land, suddenly found themselves the possessors of a few bulbs,
which nobody would buy, even though they offered them at one quarter
of the sums they had paid for them. The cry of distress resounded
everywhere, and each man accused his neighbour. The few who had
contrived to enrich themselves hid their wealth from the knowledge of
their fellow-citizens, and invested it in the English or other funds.
Many who, for a brief season, had emerged from the humbler walks of
life, were cast back into their original obscurity. Substantial
merchants were reduced almost to beggary, and many a representative of
a noble line saw the fortunes of his house ruined beyond redemption.

When the first alarm subsided, the tulip-holders in the several
towns held public meetings to devise what measures were best to be
taken to restore public credit. It was generally agreed, that deputies
should be sent from all parts to Amsterdam, to consult with the
government upon some remedy for the evil. The Government at first
refused to interfere, but advised the tulip-holders to agree to some
plan among themselves. Several meetings were held for this purpose;
but no measure could be devised likely to give satisfaction to the
deluded people, or repair even a slight portion of the mischief that
had been done. The language of complaint and reproach was in
everybody's mouth, and all the meetings were of the most stormy
character. At last, however, after much bickering and ill-will, it was
agreed, at Amsterdam, by the assembled deputies, that all contracts
made in the height of the mania, or prior to the month of November
1636, should be declared null and void, and that, in those made after
that date, purchasers should be freed from their engagements, on
paying ten per cent. to the vendor. This decision gave no
satisfaction. The vendors who had their tulips on hand were, of
course, discontented, and those who had pledged themselves to
purchase, thought themselves hardly treated. Tulips which had, at one
time, been worth six thousand florins, were now to be procured for
five hundred; so that the composition of ten per cent. was one hundred
florins more than the actual value. Actions for breach of contract
were threatened in all the courts of the country; but the latter
refused to take cognizance of gambling transactions.

The matter was finally referred to the Provincial Council at the
Hague, and it was confidently expected that the wisdom of this body
would invent some measure by which credit should be restored.
Expectation was on the stretch for its decision, but it never came.
The members continued to deliberate week after week, and at last,
after thinking about it for three months, declared that they could
offer no final decision until they had more information. They advised,
however, that, in the mean time, every vendor should, in the presence
of witnesses, offer the tulips in natura to the purchaser for the sums
agreed upon. If the latter refused to take them, they might be put up
for sale by public auction, and the original contractor held
responsible for the difference between the actual and the stipulated
price. This was exactly the plan recommended by the deputies, and
which was already shown to be of no avail. There was no court in
Holland which would enforce payment. The question was raised in
Amsterdam, but the judges unanimously refused to interfere, on the
ground that debts contracted in gambling were no debts in law.

Thus the matter rested. To find a remedy was beyond the power of
the government. Those who were unlucky enough to have had stores of
tulips on hand at the time of the sudden reaction were left to bear
their ruin as philosophically as they could; those who had made
profits were allowed to keep them; but the commerce of the country
suffered a severe shock, from which it was many years ere it
recovered.

The example of the Dutch was imitated to some extent in England.
In the year 1636 tulips were publicly sold in the Exchange of London,
and the jobbers exerted themselves to the utmost to raise them to the
fictitious value they had acquired in Amsterdam. In Paris also the
jobbers strove to create a tulipomania. In both cities they only
partially succeeded. However, the force of example brought the flowers
into great favour, and amongst a certain class of people tulips have
ever since been prized more highly than any other flowers of the
field. The Dutch are still notorious for their partiality to them, and
continue to pay higher prices for them than any other people. As the
rich Englishman boasts of his fine race-horses or his old pictures, so
does the wealthy Dutchman vaunt him of his tulips.


In England, in our day, strange as it may appear, a tulip will
produce more money than an oak. If one could be found, rara in tetris,
and black as the black swan alluded to by Juvenal, its price would
equal that of a dozen acres of standing corn. In Scotland, towards the
close of the seventeenth century, the highest price for tulips,
according to the authority of a writer in the supplement to the third
edition of the "Encyclopedia Britannica," was ten guineas. Their value
appears to have diminished from that time till the year 1769, when the
two most valuable species in England were the Don Quevedo and the
Valentinier, the former of which was worth two guineas and the latter
two guineas and a half. These prices appear to have been the minimum.
In the year 1800, a common price was fifteen guineas for a single
bulb. In 1835, so foolish were the fanciers, that a bulb of the
species called the Miss Fanny Kemble was sold by public auction in
London for seventy-five pounds. Still more astonishing was the price
of a tulip in the possession of a gardener in the King's Road,
Chelsea. In his catalogues, it was labelled at two hundred guineas!
Thus a flower, which for beauty and perfume was surpassed by the
abundant roses of the garden,--a nosegay of which might be purchased
for a penny,--was priced at a sum which would have provided an
industrious labourer and his family with food, and clothes, and
lodging for six years! Should chickweed and groundsel ever come into
fashion, the wealthy would, no doubt, vie with each other in adorning
their gardens with them, and paying the most extravagant prices for
them. In so doing, they would hardly be more foolish than the admirers
of tulips. The common prices for these flowers at the present time
vary from five to fifteen guineas, according to the rarity of the
species.

END
transparent
(01/10/2000; 02:12:22 MDT - Msg ID: 22601)
Article on global inflation
http://www.khouse.org/articles/currentevents/19980701-168.htmlGot Gold?
Black Blade
(01/10/2000; 06:31:27 MDT - Msg ID: 22602)
Ecuador to dollarize!
Breaking news reported on CNBC that Ecuador is to dollarize it's economy (ala Panama). Rumblings the last few months was that Argentina was about to do tha same. Meanwhile bonds down slightly, s&p futures up +14.50 with fair value -5.53, ASu down -0.30 at $281.10 (with NY about to open). Should be an entertaining day on the street today. Get your java, sit back, and watch the bubbles expand/burst. M&A mania continues with Time-Warner and AOL merger news.
TownCrier
(01/10/2000; 08:06:31 MDT - Msg ID: 22603)
Fed adds $3/4 billion using overnight repurchase agreements
http://biz.yahoo.com/rf/000110/nr.htmlFed watcher Kim Rupert, economist at Standard & Poor's MMS, said of the Fed: "They're having a difficult time trying to manage reserve flows, to keep the funds rate on a fairly even keel." This helps explain the difficulty for analysts trying to forecast the Fed's reserve-maintennance operations. This morning the Fed added 3/4 billion dollars to the banking system through overnight system repos.
nickel62
(01/10/2000; 08:11:25 MDT - Msg ID: 22604)
Price of Oil and gold
ORO or anyone who feels they can answer this. If the US is intent on holding the current financial situation togeth and the OPEC countries are able to increase the price of oil by over 100% isn't it necessary for them to lower if they can the value of gold enough so that the dollar is overvalued enough to minimize the cost of the increase in the price of oil?And thereby keep the low inflation charade going a little longer.
TownCrier
(01/10/2000; 08:31:10 MDT - Msg ID: 22605)
Nickel62...
With your latest post, you've described the previous 20 years in gold. Perhaps oil is now rising because the game is nearing its end...the dollar-value-illusion has been worn paper thin.
Cavan Man
(01/10/2000; 08:45:23 MDT - Msg ID: 22606)
Townie
What is the significance of Ecuador dollarizing? Do they simply get another roll of the dice (and back on the game board)now that they have a new currency?

Is there strength in numbers???
TownCrier
(01/10/2000; 08:47:03 MDT - Msg ID: 22607)
As mentioned by Black Blade, read more here about Ecuador's desperate move to dollarization
http://biz.yahoo.com/rf/000109/c2.htmlAfter denying intentions for dollarization as recently as Wednesday, the Ecuadorean government announced that dollarization is being pursued as the means to stabilize the beleagured sucre currency. The dollarization plan would amount to the conversion salaries and other financial or trade contracts from sucres to dollars at a rate of 25,000 per dollar.

They're doomed.
TownCrier
(01/10/2000; 08:52:33 MDT - Msg ID: 22608)
Cavan Man...
You've hit the nail on the head with your suggestion that they get another roll of the dice on the game board. More than anything, the move is to prevent the kind of panic that would result concurrently with a currency falling to zero perceived value. By establishing a fixed convertibility of 25,000 to one, they buy a little time to sort things out. Consider this to be an intermediate step, not the final destination. If they think they have "arrived" with dollarization and stop here, they are doomed.
USAGOLD
(01/10/2000; 08:56:54 MDT - Msg ID: 22609)
Today's Gold Market Report: Summers Says U.S. Not a Seller; Ashanti Back in News
Market Report (1/10/00): Gold was sideways in typical slow early
Monday trading. European trading was quiet overnight in the $280-$282
range and the Japanese market was closed for a national holiday.
Treasury Secretary Lawrence Summers strongly denied allegations from the
Gold Anti-Trust Action Committee that the U.S. government had been
selling gold on the sly to keep the price down. GATA also published a
letter response from the Federal Reserve over the weekend that it was
not involved in the gold market. "I categorically deny assertions that
US gold reserves are being sold off or that there is any plan to sell
them off," said Summers. The general feeling in London was that the $10
self since the beginning of the year was unwarranted with physical
demand still running strong particularly out of India and the Middle
East, according to this morning's London Reuters report on the gold
market. "I still think the reaction was overdone. Yes, you didn't need
your insurance policy anymore but it certainly didn't warrant the
aggressive fund selling and stuff we have seen," one dealer said.
Ashanti's back in the news. In what could serve as a warning to other
mine company financial officers and directors, the firm's treasurer and
her entire staff resigned over her recent botching of the company's
hedge book. In addition, a group of disgruntled shareholders have taken
the first legal steps to remove the current board. A court date is set
for January 13 to hear the stockholders' complaints.

That's it for today. We'll see you here tomorrow.
Cavan Man
(01/10/2000; 08:59:53 MDT - Msg ID: 22610)
Townie: Ecuador
I asked USAGOLD about the significance of a possible total default relative to the other South American countries. It seems to me that Ecuador is much more insignificant in economic relationship to greater SA than for example Thailand was to Asia at the time of the Thai crisis.

I am waiting on GNP numbers from Ecuador to compare to Thailand. Hope I get them. What do you think?
ORO
(01/10/2000; 09:14:05 MDT - Msg ID: 22611)
Town Crier Nickel62
Quite frankly, I don't know why OPEC and the EU have not made a more dramatic break with the old system. They must know that the drawing out of the process will extend pain for everyone. Ultimately deeper and more lasting damage would result from the extension. OPEC has been very slow in tightening the oil supply. Prices are merely back to the pre-Asian Crissis level, and reflect nothing more than changes in supply demand balance.

I would like to point out again that there is a defacto central bank of the bullion market. The way Morgan Guarantee has lived up to the old Morgan name in picking up the pieces of the exiting Bankers Trust/Deutche is exactly what a central bank would do.

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

Interesting to note that the Fed drained liquidity only when there was a short burst of excess liquidity late last week. However, of greater note should be the reason for the excess liquidity being there in the first place. Dollar liquidity is created when stocks are sold off by foreign holders. Otherwise, the selling of US stocks by the public has no effect on the banking system so long as margins are met and little margin debt is destroyed. The 10% move in the NASDAQ was insufficient to destroy much margin. The drop in the dollar preceding and extending during the sell off indicates that there was a move of foreign holders of US equities out of the country. This would create the excess currency:
Seller - has US stock
Buyer - has US dollars (American buyer)
Seller Exchanges stocks for dollars
Seller exchanges dollars for Yen or Euro.
On a net bassis, we can assume that the dollars were originally created on a carry trade with their counterpart debts being denominated in Yen or Euro, The release of dollars into the market was not accompanied by the extinction of any dollar debt, therefore, it created excess liquidity.

Knallgold
(01/10/2000; 09:19:51 MDT - Msg ID: 22612)
Silver/China
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=644d58595453ca664a45de54028703aeChina Says it Isn't Selling Silver Overseas, Calls
Media Reports `Gossip'


TownCrier
(01/10/2000; 09:25:53 MDT - Msg ID: 22613)
Back to Cavan Man...
I see the thrust of your thinking here..."It seems to me that Ecuador is much more insignificant in economic relationship to greater SA than for example Thailand was to Asia at the time of the Thai crisis."

Along these lines, it is significant that a constant burr under the saddle of those that attempt to manage economies is the fact that this realm is not governed by precise and reliable laws of science such as we see in gravity. They (and we) can never be certain which little items will precipitate greater events. But certainly, it is more comforting that the crisis is within a small country (Ecuador) instead of a larger one (Agentina or Brazil). Domino theory? Likely, nobody can say one way or another with any certainty...the IMF included.

The previous response to you regarding Ecuador was not intended to address the international ramifications...it was focused on their efforts to maintain some degree of domestic stability. Perhaps that was already evident...
Cavan Man
(01/10/2000; 09:34:34 MDT - Msg ID: 22614)
Sir ORO
Perhaps Oil is waiting on the dysfunction of the paper gold markets to manifest themselves before Oil leaves dollar?

I think Oil would want the world to know that, "we had no choice," the dollar has failed us not, we the dollar.
nickel62
(01/10/2000; 09:57:36 MDT - Msg ID: 22615)
ORO,Town CRIER,CAVAN MAN
Thank you all for your help. I actually think I am beginning to be able to see the puppeteers strings.
ORO
(01/10/2000; 09:58:04 MDT - Msg ID: 22616)
Cavan Man - Ecuador GDP
Yr ,,,$US.....Real GDP (1973=100)
1998 19.7284 227.865
1999 16.6989 211.9144
2000 14.6898 215.0932

1999 and 2000 are estimates by the IMF. 1999 should be a good number, 2000 - well, who knows?

The Sucre devaluation was totally a result of the dollar debt of Ecuador. Resulting from its denomination of debt in dollars. Even with 42% of the budget going to repay loans, the Ecuadorian government managed to get national debt to "only" 110% of GDP. Before the disaster of the Sucre, the county had a currency market position that destroyed the value of its currency. IMF purchasing power parity (PPP)figures show that the exchange rate of the Sucre to the dollar understated the value of Ecuador's economy by 1/3. Now, with nothing but a slight wisp of smoke, the currency has lost nearly all its value. The country is selling for 10 cents on the dollar because it fell into a debt trap. To visualize this, see in your mind a Venus fly trap plant. It attracts its food with the fine odor of nectar (international capital goods that will produce everything from buttons to fabric), once the fly is well withing the trap, looking for the nectar (physical plant in place and debts signed for), the trap makes the first move to close, the edges of the cage meet to enclose the insect (the financing of working capital to purchase foreign raw materials), the insect is made aware of the trap and tries to climb up the slippery walls of the plant's trap, (the country's producers export at the cost of material inputs to production or even below, to generate the cash flow needed to support the debt, this breaks the markets for the debt ridden country's products and puts all competitors into the same situation - more supply of product standing against more demand for dollars), the plant trap now slowly closes and the digestive juices flow into the chamber, the exhausted insect falls in and is digested (the indebted country and its industries are pushed to exchange debt for equity in the businesses and real property, which the bankers and their investors will now own).
If you wonder why the US is so WTO happy. This is the reason - to support the value of the dollar through the maintenance of foreign indebtedness, so that more and more assets can be subjugated to the dollar creditors, in the meantime supplying the US, Europe and Japan with ultra cheap goods.
Implied by the IMF calculations of PPP, the US has a 30% discount on its imports, Europe has up to 49% discount (for the Swiss), with 40% for the Germans, 30% for the French. Japan has a 45% discount.
TownCrier
(01/10/2000; 10:02:35 MDT - Msg ID: 22617)
ORO: oil and the EU
Building on your comment: "Quite frankly, I don't know why OPEC and the EU have not made a more dramatic break with the old system. They must know that the drawing out of the process will extend pain for everyone."

The perception among the few of us currently here in The Tower today is that more "pain" (as you've called it) would result from a process that carried with it any taint of brute force...smacking a square peg into a round hole--even if it seemed like a good idea to do so. Specifically speaking, pricing oil in euros. To those of us (yourself included) on the front lines watching this develop with the keen interest that only a gold advocate could understand, there is no wonder that you would describe this as a "drawn out" process. To those that are blissfully unaware (the masses that are currently bidding on AOL and Time-Warner stock,) I'm sure the subtle progression of events will seem near enough like the "dramatic break" you mentioned when the natural shift has reached the point that captures their attention. Politically and socially, something this big can only work if it occurs as a natural, evolutionary development--even if it is true that the policy groundwork that established the intended trend occured in a relative flash of an instant...a mere concept yesterday, but signed and sealed policy today.

No one would want to risk prosecution for blowing up a building (to collect the insurance) if it is already on fire from natural causes.

Just a thought from The Tower.
ORO
(01/10/2000; 10:14:34 MDT - Msg ID: 22618)
TownCrier - EU - oil delays
TownCrier (01/10/00; 10:02:35MDT - Msg ID:22617)

I do understand the blame game and have offered the same explanation myself on many occasions - including some regarding internal EU growth issues, somewhat dependent on exports outside the EU. They do have options to precipitate a more realistic rate of change, though these would be slightly destabilizing and definitely painful today, they would be easier in the future.
Cavan Man
(01/10/2000; 10:19:01 MDT - Msg ID: 22619)
Dollar Weakness
Dollar weakness must manifest before Oil can transition.

The true current and projected value of the dollar is a matter of perception = reality. Perception must change. Change of this magntude requires clever engineering. Perhaps that is what FOA alluded to.

Pity the Japanese small fry. Fundamentally, they are very similar to the rest of the global fry (like me).
Twice Discipled
(01/10/2000; 10:29:13 MDT - Msg ID: 22620)
ORO Msg# 22616
Wonderful analogy to open the eyes and understanding of a simple mind.
I think this is worthy of the HOF.

Now I know why no other presidential candidate other than Mr Keyes even suggests that we should be questioning why the US is in the WTO. Getting China in the WTO gives the US another place to export dollars and hence domestic inflation.

What a nasty web we weave.
ORO
(01/10/2000; 10:32:32 MDT - Msg ID: 22621)
A note on Rees Mogg and Dale Davidson
The two authors of "Blood on the Streets", "the Great Reconning", and "The Sovereign Individual", made the tremendous observation of the US being an empire in decline. The best economic forecast they had was actually one which they doubted - they discounted the strength of their own analysis, a powerful one.
Their prediction was that the US will enjoy a boom similar to the one that Britain enjoyed as it retained its last hold on power in the 30s. The means to that boom was a debt trap then, as it is a debt trap now that makes the US economy so prosperous. The UK's Lord Norman led BOE had managed to make the world as a whole indebted in Sterling. Life in the UK improved tremendously during the 30s while the world at large, particularly UK's creditor, the US, was contracting in a deflationary crissis. Japan and Europe have now been joined by China and Korea in this deflationary crissis, as likely successors to the US in economic power now, and later in the future - military power.

Their thinking may smack of Machiavelli, but reality is presented there with a rich historical backdrop and a depth of understanding that will compensate the reader for the asault on his conscience. Fortunately, they did not dwell Solzhenitsin like on the details of torture, but they did not try to make it look like the prick of rose thorn.
TownCrier
(01/10/2000; 10:49:34 MDT - Msg ID: 22622)
ORO...and financial evolution
It is reassuring that you see it this way also.

The visitors to USAGOLD are surely very much like the people in the park that arrive precisely as the maintenance-man finishes his last brushstroke and places the "WET PAINT" sign on the pretty horses of the carrousel. We've bought our tickets, yet when the wind has whipped up and blown the sign away, we know enough to stand by, patiently waiting for the paint to dry (a wait that seems interminable for those most anxious for this unique ride.) Further, in the absence of that clear sign, there is currently no convincing a casual passer-by that our "idle standing around" has any purpose at all. Anyone passing by this place "tomorrow" will find it quite natural to immediately pay up to get on...regardless the longer lines and higher prices.

Not a perfect analogy by any means, but the gist of it is there...watching paint dry.
Canuck Gold
(01/10/2000; 10:57:10 MDT - Msg ID: 22623)
ORO (01/10/00; 10:32:32MDT - Msg ID:22621)
A note on Rees Mogg and Dale Davidson.
ORO, you've made reference to them a number of times and I thought, for reference purposes, the forum should know that it's James Davidson, not Dale. I subscribe to their Strategic Investment newsletter.

CG
ORO
(01/10/2000; 11:10:27 MDT - Msg ID: 22624)
James Dale Davidson
http://www.strategicinvestment.com/Lord William Rees Mogg

Canuck, is that better
Gandalf the White
(01/10/2000; 11:20:01 MDT - Msg ID: 22625)
WOWSERS ORO the GREAT
Did you see that the PPT started out the $PREM at +35 today?
Tulips anyone?
<;-)
TownCrier
(01/10/2000; 11:25:30 MDT - Msg ID: 22626)
Canuck Gold and ORO
You are both right. Full name is James Dale Davidson.
ORO
(01/10/2000; 11:56:46 MDT - Msg ID: 22627)
Wiz - PPT
The PPT only does that when the market is threatening to go down, since there was no such threat and early indications that we would have more buying coming in this morn were quite on the side of overwhelming, I would say it was "natural", including lots of short covering.

They did seem to step in later - early second hour, when the "pop" buyers were done and bankers started going short again - which they have been doing now since the last days of 1999.

For comparison purposes, the most flagrant entrances into the market were on the 31st of Aug 98, and Sep 1st 98. Close seconds were in mid Aug 98, end of Jan 99, early Feb 99. Market chart patterns looked then like the Japanese interventions do on the forex markets. Pattern details - Spikes being reversed too early, ruler flat tops and bottoms ("we can't afford to go beyond this level, it is to here and no further") with failed spikes in the opposite direction.
HUM
(01/10/2000; 11:58:12 MDT - Msg ID: 22628)
USAGOLD
Thx for updating me. Wasn`t aware that the demand had increased so much. So much the better. The prospects for us gold bugs indeed seem bright.
TownCrier
(01/10/2000; 12:08:02 MDT - Msg ID: 22629)
G-7 Officials Discuss Currencies as Japan Seeks Backing to Push Yen Lower
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=7d68dfcc9d9531deb4df12be898e290eThe official word in this article is "No comment."
How would this Bloomberg headline make you feel if your life savings were sitting in a Tokyo bank, denominated in yen?
Canuck Gold
(01/10/2000; 12:21:53 MDT - Msg ID: 22630)
ORO (01/10/00; 11:10:27MDT - Msg ID:22624)
There was no intent to nitpick. He always signs his articles 'James Davidson'. Anyone looking up any references to Dale Davidson would be hard pressed to find one.

CG
ORO
(01/10/2000; 12:29:53 MDT - Msg ID: 22631)
Canuck - no problem
I don't know why the Dale part sticks in my mind. Perhaps because it is a less common name.
Gandalf the White
(01/10/2000; 13:28:53 MDT - Msg ID: 22632)
Thanks ORO the GREAT
I guess the PPT has it much easier with the irrational exuberance flowing in the veins of the DayTraders.
<;-)
goldfan
(01/10/2000; 13:40:02 MDT - Msg ID: 22633)
Gambling and risk taking and markets
http://www.usagoldfan.comOn Gambling and Risk-taking

AS I understand it, gambling is part of human nature. In tribal times, people (maybe mostly men) regularly gambled in their spare time, of which they had plenty, unlike us. Maybe the gambling instinct is part of the hunting instinct, and made them, overall, better hunters.

Today, governments support gamblers as "tax-farmers" the way ants support aphids, establishing lotteries and casinos, skimming off a lot of the profits for various kinds of good and not so good uses and pork-barreling.

Generally, it's accepted there are two kinds of gamblers, the for fun and profit kind, who usually gamble openly in the company of others. For example, Bingo, or taking a family week in Las Vegas, or week-end at the races. Usually they set an upper limit on what they will lose, which they stick to. They don't use a "system", or it they do, they're not slaves to it.

And then there are the "problem gamblers", who are addicts. They gamble secretly, often go on past any safe limit, ignore their own safety and well-being as well as that of those who depend on them. Often they believe they have a "system" which will make them rich when they get it right.

I see a third kind, "experts" who make a living gambling. Good poker players for example, or maybe, options and futures traders, or stock exchange market makers. For these, it's not really gambling. It's a refinement of a time-tested entrepreneurial activity called "risk-taking". I would argue that the human race has survived and progressed in a hostile and changing world, with relatively poor physical equipment, because we have substituted "risk-taking" and "learning", for"instinct" and "genetic modification".

When it comes to the stock market, and the elaborate systems of derivatives and hedging and computer generated trading strategies set up to trade trillions of dollars a day more than needed for commerce, then I say this is "problem-gambling" by people who exhibit all the signs of problem gamblers, including, secrecy, and fanatic faith in their system.

I strenuously object to the fact that the financial system on which I depend for stable commerce, and stable investment for my and my children's future pensions, has been given by our governments to these people, these "addicts", as the capital they need for "rolling the dice". I say that our banks should be prohibited from engaging in this stuff, in the same way they are prohibited from engaging in drug-trafficking, even though drug selling is a very lucrative enterprise, and could earn banks and governments a lot of money it they got into it

Goldfan

Journeyman
(01/10/2000; 13:47:05 MDT - Msg ID: 22634)
Bubble longevity, ORO, TownCrier
The thing about this bubble compared to 1929 is that in 1929, because of the gold standard, it wasn't easy to increase the money supply. Today, it is very easy. In addition, there is today an immense "overseas" stock of "dollars" available to keep the bubble growing. Can't these factors keep the bubble expanding much much longer?

Regards,
Journeyman
ORO
(01/10/2000; 13:48:24 MDT - Msg ID: 22635)
Wiz - Help from AOL - TW
AOL - Time Warner deal made it a cinch.

All Media and Internet + Communications infrastructure plays are booming around this - ND100 up 6%. That is nearly 300 billion dolares added to market cap.

We have yet to see the second wave - and much longer one, I expect - of ESOP cash outs. It arrived earlier than I thought, but in lesser size.

If the people realize that the AOL and TW move was an act of desparation on both sides, they may not be that excited. AOL is shut out of the ATT TCI atHome structure and needed a cable platform. Their Foreign Ops were not working out nearly as well as was expected. Their excitement numerator was in danger of falling just as the float was increasing with ESOP redemptions and plain Jane insider selling (remember: price = Excitement/float for internet companies).

Barron's ran an article about the great IPO sell-off beginning later in Jan, as last year's IPO insiders are due to see lock-up agreements expire.
Canuck Gold
(01/10/2000; 14:25:55 MDT - Msg ID: 22636)
Day traders exuberance
I was speaking with one of my neighbours yesterday about the market, day traders and the bubble. He said he's noticed a pattern displayed by the stocks profiled by CNBC. Within minutes of being aired, the price starts to rise, so he says. (He's got lots of time on his hands while the rest of us toil in the salt mines.) Anyway, his attitude is to buy and hold for an hour or so then sell, making a few hundred to a few thousand dollars in the process. He's not interested in fundamentals or earnings, just momentum. He'll spent between $40 and $250 a share based solely on something that has up momentum and buys regardless because he'll be out again in an hour or by the end of the day at the latest. He's convinced there's a new paradigm at work out there which will keep the game going in perpetuity. He's convinced he can get out of a loser without losing more than a few points. He isn't interested in discussing the possibility of a bubble market because he's making so much money, he's euphorically oblivious to such a concept. He's an intelligent man, who owns a successful company, who doesn't classify himself as a day trader. Gold means nothing to him at all. He chuckles when I tell him I've got gold and gold shares, as if I'm deluded.

I was thinking of him when I read the tulipmania post. I tried to rationalize with him that the market can only keep going up while there are people willing to pay more than the seller paid. Sooner rather than later, there will be no more buyers because the price will be so high that a rational person will balk at giving up a fortune for something that obviously isn't worth it. The majority in the forum came to that realization some time ago but there are still a lot of people out there who haven't seen the light. The smart day traders never hold a position overnight and are convinced that someone else will be left holding the bottle when the music stops, he says. He thinks the spotlight will then shine somewhere else to keep the game going. I just shook my head and changed the subject.
pdeep
(01/10/2000; 14:41:01 MDT - Msg ID: 22637)
Bubbles Within Bubbles
I was amazed at the recent report in Barron's regarding using stocks as collateral in place of a downpayment on real estate. Offered by the likes of Merrill Lynch, Morgan Stanley, Fidelity (via GMAC), and Salomon Smith Barney. If the value of the securities falls below around 30% of the mortgage value, a margin call results.

The borrowers are those who want to avoid tax-related hits on appreciated stock, and need that extra kick for the million-dollar condo.

What a brilliant idea to marry equities to the real estate market. It takes the reality out of the real....

TownCrier
(01/10/2000; 14:41:28 MDT - Msg ID: 22638)
Ecuador says IMF loan not needed if it dollarizes
http://biz.yahoo.com/rf/000110/4a.htmlEcuadorean Finance Minister Alfredo Arizaga said their long need for an IMF loan would be history under the new dollarization scheme. "This economic model (dollarization) no longer depends like the previous one did on this relation (with the IMF). Under the new scheme, we don't need it."

Does this mean that their current account sheet is viable with a stable currency, and they would be able to service their debts where they could not before..._OR_...does it mean that their government would gain the ability to create the necessary U.S. Dollars (as we do in the U.S.) in order to pay their budget shortfalls?
ORO
(01/10/2000; 14:42:18 MDT - Msg ID: 22639)
Journeyman - you are so right
The newer "totally flexible" currency regime allows a much greater leverage - but then allows only for a total immolation of the currency. Whereas the dollar needed devaluation of "only" a 42% devaluation to set things straight, this time it will be completely eliminated, Russian style, with no noteworthy residual value.

In the 70s stocks rebounded from the 66 and 68 drop offs but on a CPI adjusted bassis, the real purchasing power of the equity investor was down through 1990.

The trouble is that now, as then, the new money lent by the banks through the fantastic 1950s market expansion had to be monetized by the Fed throughout the next two decades. It was only halfway done in 1971.

Today, the markets have active support by the Fed to provide liquidity and hold the market up when it lilts. The Fed's policy, resulting from this, is super inflationary, as another Barron's article - an interview with William Duddley (sp?) - points out. He seems to indicate that that is the case without saying so outright. The Fed wants to help the markets when they are down, but does not want the markets to think that the Fed would be guarantor of the market; as in "if all fails, we'll monetize stocks" too, not only margin debt. When the Fed extends liquidity to delta hedger's borrowing, it is essentially doing just that, though indirectly, since it only buys the debt the hedger's creditors sell to make room for the new borrowing.

During the outgoing current crissis, the Hong Kong monetary Authority printed up tons of cash and used it to buy a 20% stake in the equity markets. The cash infusion solved much of the deflationary problem, but made it difficult to undo the trade, and has been a factor in weakening the HK dollar. The Israel had a great bank stock fiasco that was only resolved when the government took over the banks and exchanged the, by then, worthless stock with the equivalent of government dollar indexed bonds. This proceeded to inflate the local money supply and add another 0 out of the three added to the average government banknote, all within one decade. There are lots of other cases. They all end up with monetary disaster or a banking disaster at some point.
Cavan Man
(01/10/2000; 15:00:18 MDT - Msg ID: 22640)
Canuck Gold
You're not a lone ranger. I feel like a dumb#$% myself. I have a brother-in-law that sits around and does the same thing all day; I'll bet Mike is getting filthy rich in an FRN context. I just can't do it--no way. I hope for my kid's sake I am doing the right thing. I've done my research and then some but hey, I've been wrong before.

Best reasons to buy AU: Stranger's inflation and FOA/Another!
TownCrier
(01/10/2000; 16:06:59 MDT - Msg ID: 22641)
The frothy head of exuberance...like a warm beer poured too fast.
http://biz.yahoo.com/rf/000110/bft.htmlFive of the Nasdaq composite's 10-largest daily point gains have been in the last month timespan. They've logged some record percentage gains in the recent months, too.

Are you beating yourself up by playing "Monday morning quarterback" with the benefit of 20/20 hindsight as some have suggested, or are you still rational, and watching this with interest from the golden safety of the sidelines?
canamami
(01/10/2000; 16:07:14 MDT - Msg ID: 22642)
Various
Canuck Gold and Cavan Man,

I hate to say it, but the day-trader approach, if one is successful at it (not me), is not stupid. If one consistently "wins", and are out of one's postion at the end of the day, one has more dollars plus no risk of an overnight crash, provided all one's "winnings" are not "re-invested". However, if one gambles all the winnings, then one can lose everything, like the proverbial tyro commodities traders who get lucky at first, but then lose anything. Even by the lights of the Forum, if a portion of the "winnings" is converted to physical gold as a hedge against currency collapse, one could end up with more "wealth insurance" than one who played gold all along.
That being said, at some point this lunacy must stop but, goshdarnit, WHEN?

Oro,

You are a true polymath. Europe is apparently, internationally, a net creditor "area". Most transnational debt is denominated in dollars. Thus, a crash in the dollar can result in a diminuation of the worth or value of Europe's net creditor position. Perhaps this is why no effort is made to quickly kill the dollar.

Everyone,

If most transnational debt is denominated in dollars, how could the US default? All it has to do to meet its external obligations is print a lot of dollars. (I'm speaking of official debt. Private US debtors may not be able to access sufficient dollars to meet external obligations).

Re Ecuador. Why don't such countries adopt a quasi currency board/central bank arrangement (CB/CB) based on a number of reserve currencies. For example, the CB/CB could, for example, be permitted to issue 1 ecu-peso for each US dollar, Cdn. dollar, Aus. dollar, Euro or 100 yen in its holdings, or 1000 ecu-pesos per ounce of gold. In such an arrangement, gold could be used as an instrument of inflation, by granting a right to private parties to demand issuance of 1000 ecu-pesos per ounce of gold deposited (only gold depositors would have this right). (These developing countries usually require some degree of inflation.) By valuing gold alone as an instrument of inflation (at a level relative to the other "reserves"), such a country could insure it could inflate its currency in a limited manner, while building up its gold reserves. Such an arrangement would ensure at least some degree of hard money, in that ecu-pesos would be exchangeable for a fixed amount of at least one of the reserve assets (at the CB/CB's election), but the indignity of subservience to another country's dollar would be avoided. The CB/CB could manipulate its reserves to permit some degree of inflation or deflation. The right of private citizens to demand ecu-pesos for gold alone would be a check against an overly deflationary policy. Finally, dollarization is an unwise policy because such supply region/commodities countries should not tie their currency to the metropolitan country's currency. A country's currency/monetary policy should respond to the rhymes and rythmns of its own economy. (Don't hold me to the details of this; just a rough theory).


Journeyman
(01/10/2000; 16:41:06 MDT - Msg ID: 22643)
Feeling like a dumb$#%, gambling, & a call to contest
Canuck, Cavan Man, Goldfan, Oro, TownCrier

I made my living as a "card counter" (professional blackjack
player) for years -- and still make some money at it now and
then. Many times I play a "perfect" game and lose while
complete tunas at my table play VERY badly and win like
pigs.

It used to irritate me. But I ran into enough of these tunas
later when they busted out that I just feel sorry for them
now. Sometimes they would catch what looked like a "streak"
(there's no such thing as a "streak" except after the fact)
when the deck was poor and favored the house. They'd watch
me win hand after hand while betting only table minimum and
chide me for being a chicken while they raked in the cash.
Do I change my play? Only if I know the streak isn't over. I
NEVER know. I can't know and neither can anyone else. In the
LONG RUN, I win, they lose.

The economic world today is indeed a casino, but with a
difference. What people believe will happen, within limits,
IS what happens. A "streak," called a "mania" these days, IS
possible in this context -- I have just a suspicion we're
having one now. The problem is, however, just as with
blackjack, to recognize it BEFORE it's over, bet it and get
out before you get trashed. The problem is, no one can tell
when it's going to be over.

Should we bet the streak? Well, maybe -- if we've got spare
cash to risk. One of my partners discovered options in 1985.
He told me he was going to retire once his BR (bankroll)
reached $1 million. By the fall of 1987, he was worth about
$950,000. After the October 1987 "correction," he OWED
$100,000.

However IF he'd known when it was going to be over, known
when to quit, well . . . . .

The problem is, no one can tell when it's going to be over.
Don't believe me, take it from Alan Greenspan:

... to date, economists have been unable to anticipate
sharp reversals in confidence. Collapsing confidence
is generally described as a bursting bubble, an event
incontrovertibly evident only in retrospect. -Federal
Reserve Chairman Alan Greenspan, "_New challenges for
monetary policy_," Jackson Hole, Wyoming August 27,
1999,
0827.html>

I think that history tells us that there will be a
[stock market] corrrection of some significant
dimension. What it doesn't help you on very much is
when." -Alan Greenspan, Semi-annual Humphrey-Hawkins
Testimony to US House, July 22, 1998, 11:33 AM EDT

Greenspan knows this "streak" is going to be over, he just
doesn't know when, and he knows he doesn't know. Are we
smarter and/or better informed than Greenspan? (Well, with
Oro, Townie, FOA, Aristotle, etc., maybe we are.)

OK folks, now you're on the hook. I propose an unofficial
contest to predict the minimum and maximum remaining life-
span of this bubble. Can we do better than Greenspan?

Regards,
Journeyman
Cavan Man
(01/10/2000; 16:47:11 MDT - Msg ID: 22644)
Various
ALL:
polymath-a person having a wide range of knowledge; a poly-histor.(Had to go to the Cavan Man "Unabridged" to find that one)

I'd say he's many miles wide and many inches deep.

canamami: Guess I'm envious right (one of the seven deadlies)? There's is just something not right about day trading for me anyway. It's a zero sum for everybody except the DT.

Townie: I take no umbrage but feel like your last psot was directed my way. Although new at the gold thing, I can assure you I am of stout (gold) heart. However, Don Quixote I am not. Let's face it pal, sound money is sucking hind #@$.

Having said that, I have devised a plan to buy very small incremental purchases at each month's end (ala Aristotle) from a local coin shop. Kind regards.....Cavan man

TownCrier
(01/10/2000; 17:17:35 MDT - Msg ID: 22645)
Sir Cavan Man...
"Townie: I take no umbrage but feel like your last post was directed my way."

Ha ha ha, heh, heh...well, old friend, if the shoe fits, you may indeed put it on! As for directional posts, on many days the various activities of site admin and data/news processing make it difficult to go duck hunting as you have indicated. No...when post-worthy news comes along, we toss in some comments that we think a number of people will be able to relate to. The more people who feel we have directed a post at them (except for the times when we do in fact mention a name,) the nearer we have apparently come to striking a chord of truth, apparently.

You also said, "Having said that, I have devised a plan to buy very small incremental purchases at each month's end (ala Aristotle) from a local coin shop."
The true beauty of such a plan is that you thereby almost assuredly gain the bragging rights to say you bought gold at its very bottom. Just as Journeyman points out Chairman Greenspan's warning that there is simply no way to know when the market top has arrived except in hindsight, the same is true for a market base such as we have been enjoying in gold. Surely the "Extraordinary Popular Delusions and the Madness of Crowds" finds some degree of positive, opposite euphoria in the few that recognize things for what they are and bide their time in the quiet corners of common sense, picking up the true treasures that others have toss aside and trampled in their lemmingesque rush to the sea.

Again, glad to have you choose to be among us of your own free will.
TownCrier
(01/10/2000; 17:39:38 MDT - Msg ID: 22646)
Mr Gresham (1/9/00; 16:30)
An altogether fine post. It was a pleasure to read. (A slow moment afforded the pleasure of catching up on the weekend.) Thanks for dragging out the SOAP BOX.
TheStranger
(01/10/2000; 17:50:50 MDT - Msg ID: 22647)
What Did You Do In The War, Daddy? A Desultory Phillipic
Someday, my grandson may ask what I was doing while the great explosion in tech stocks took place back at the turn of the millennium. Only time will tell whether I am going to feel like talking about it, but days like today aren't encouraging.

As I recall, the term "sour grapes" comes from a story about some animal which was only tall enough to reach the grapes near the ground. When asked how he felt about missing out on the grapes up in the sunshine, he rationalized his problem by saying, "I wouldn't want those anyway because they are probably sour."

Sometimes, I think we sound like that animal here at the forum. We wouldn't want to own those stupid tech stocks anyway because it's all just a stupid bubble.

Still, I look at what goes on in the market in total amazement:

Gateway says they will not make their numbers...the stock rallies.

Lucent says even their revenues have quit growing...the stock snaps back nearly half its loss in under two days.

Bellweather AOL tacitly admits they cannot "meet their numbers", which is what today's merger announcement was really about, IMO, and the Nasdaq has its biggest day ever.

Steve Balmer says his own Microsoft is "grossly overvalued"...the stock rallies.

A world which was girded for deflation gets reinflation instead, and gold slumbers.

Twenty-two of the world's largest central banks (including America's now, BTW) publicly forswear further sales or leasing...gold rallies for two or three days and then plummets.

Then, I read over the weekend that:

Only 1% of America's Christmas shopping was conducted over the internet.

Amazon.com's sales for the entire year barely equaled what Walmart does in a good weekend. Nonetheless they have got to build warehouses all over the place and fill them with inventory just like everybody else. They confess there is no profitability in sight. Time makes Bezos "Man of the Year".

The two biggest shopping weeks of the 1999 were the fourteen days prior to January 25, yet online shopping died at that time because of failure to guarantee delivery.

Some hacker stole the credit card numbers of 300,000 Christmas shoppers from an online merchant last month.

Fed Ex can't figure out how to profit from the internet because it has forced them to spend so much on new trucks that have to be driven all over the suburbs looking for the houses of people (who aren't even home) just to deliver a book or a CD.

In a recent post, I made the statement that, with gold, it always seems like it is jam yesterday and jam tomorrow, but never jam today.

This morning, Barton Biggs said last week's break in the techs was a warning. And then, quoted Biggs from a familiar source, "God sent Noah the rainbow sign, no more water, the fire next time."

If I had been on the Titanic, I would have spent those last two hours lashing deck chairs together.
canamami
(01/10/2000; 18:14:26 MDT - Msg ID: 22648)
Reply to the Stranger - The Tale of the "Autopilots"
Stranger,

I ask myself: What will knock sense into those who sink money in the Nasdaq index stocks ("the Autopilots")?

At some point, something will, but it could be a long time coming. So many investors don't even really watch the market: They were convinced by a guru -e.g., in Canada, Garth Turner - to set up a monthly deposit into mutual funds, and to hold at all costs, and to keep buying even when it goes down, to buy cheap (Wealthy Barber says this also). The Motley Fool says "Buy index funds", and they do. The extent of their active investment thought extends to knowing that the Nasdaq has better returns than the Dow or S&P, so they switch to the Nasdaq index funds. Other than that, they are on auto pilot and don't give a shoot about earnings, dividends, etc. It's the share price, stupid! (Aside: They ask - Why listen to the experts; The Motley Fool says they can't even meet the index. Second aside (mine): Amazon may never go broke if it can keep issuing new shares to eager buyers - yikes, what a thought!).

The wealth management professionals can't act on their knowledge that the Emperor has no clothes, because they can lose their jobs if they don't match the index. Even the indexes must match one another, so the Dow becomes more like the Nasdaq. Gold is for bozos - the proof lies in the losses suffered by the precious metals funds. Again, it's the share price stupid!

The question: For how long can the autopilots defy the laws of gravity? Second question: Will they kill the rest of us in the crash?
TownCrier
(01/10/2000; 18:23:15 MDT - Msg ID: 22649)
Euro management team's philosophy
http://biz.yahoo.com/rf/000110/85.htmlAdding a bit more to this mornings conversation regarding the natural development of events rather than a forced placement, we now have the benefit of these words by Christian Noyer, the European Central Bank's Vice President, spoken today at a conference in Dallas on International Monetary Policy: "We at the ECB and more generally the European authorities do not want to play any game of competition with the U.S. dollar. ...we do not try to promote the euro, to foster artificially the use of the euro ... We think that this must develop naturally, driven by market forces."

He said the exchange rate did not reflect the euro's potential, and of the euro's good start to 2000, Noyer said, "We are very confident that it will continue over the course of this year."
CoBra(too)
(01/10/2000; 18:26:45 MDT - Msg ID: 22650)
TW -AOL - Merger - for 178 bn -peanuts or just nuts?
Remembering the old and heady days when KKR (Kohlberg, Kravis and Roberts), a legal entity specialsing in alerting "white knights" to rescue old settlements from raiders of the new frontiers and, of course, matching the largest "mismatches" ever- knew their limits!
If I remember correctly, the battle for Texaco was finally buried for mere $ 9 bn. (Getty vs Pennzoil- late 80's)- what a waste of effort (George Bush, jr., spends these amounts on campaigning for presidency, while his dad has built up a bn. $ co.- and became President)...

...and there is no inflation - except, or better accept -
the fact that (y)our 4 yr. elected presidents only care about short term price hikes (P.Example: WTI - up 150% - "SUV's U right!)- so an $ 178 bn (paper) deal, between old fashioned Time - Warner (sounds like the alarm clock ...it is) and newly styled America On (hook) Line (and sinker)not only seems a backlash to Euro merger mania a la' Vodafone/Mannesmann, but to "out-permania-form" megamegers for the sake of same!

I, virtually - SUVer - regrets - CB2

(T)he (W)izard - and the - (A)lian (O)ff (L)ine...NUTS!


Clint H
(01/10/2000; 18:41:58 MDT - Msg ID: 22651)
Question for ORO
ORO (01/10/00; 09:58:04MDT - Msg ID:22616)
ORO, you said <<<(the indebted country and its industries
are pushed to exchange debt for equity in the businesses and real property, which the bankers and their investors will now own).>>>

How does this same idea play in the US of A since the FED is taking a lien on so many assets thru the repurchases? If the FED forecloses on a large portion of the US assets sometime in the future who owns the assets? Is it the Federal Reserve Bank (a private Corp.) or the US Government?
CoBra(too)
(01/10/2000; 18:49:13 MDT - Msg ID: 22652)
It's getting stranger by the hour- Stranger...
Despite all warnings by your friends Barton Biggs and/or Byron Wien at MS - while all should take heed - it seems the mainstream press(-ervative) intends to strip their (speak) bubbles of integrity.
'Allen' (Erfolg) ohne Gruenspan in 2000 - Servus CB2
Cavan Man
(01/10/2000; 19:06:44 MDT - Msg ID: 22653)
Sir Town Crier 22645
Good Sir Knight; your acerbic wit in this post and others has been noted. Also, your excellent commentary is appreciated. I thank you sincerely even as as play your foil aka fool.
Cavan Man
(01/10/2000; 19:20:05 MDT - Msg ID: 22654)
(No Subject)
http://www.micheloud.com/FXM/MH/canada.htmRead about monopoly money in Canada in the 1700's.
lamprey_65
(01/10/2000; 19:29:59 MDT - Msg ID: 22655)
The Danger of Setting A Precendent
http://www.gold-eagle.com/gold_digest_00/taylor011100.html36,000 on the DOW?...I hope not! Quick summary of the '87 crash and what it means for us today.

Lamprey
ORO
(01/10/2000; 19:43:38 MDT - Msg ID: 22656)
Clint H - see old RTC and depression for precedents
The government and the Fed did not end up owning the security, it was sold by the trustees of the bankruptcy courts on behalf of banks and bank creditors.

The RTC of the 90s was doing the same, repackaging bank portfolios till they found a buyer, same with the real estate and other security. Stuff was sold very cheap. The fact that the BOJ did the same in Japan didn't help any.

Chances are, the Fed would never touch the security, a court appointed trustee or a specialized government sponsored organization would do it.
Netking
(01/10/2000; 19:46:43 MDT - Msg ID: 22657)
USA Gold about to be dumped on the market?
http://www.gold-eagle.com/gold_digest_00/hein011200.htmlIn this link Dr Paul Hein writes (excerpt);
"...The United States will soon be dumping its gold reserves on the market, signaling, in all likelihood, a massive desertion of
gold by any governments which still have significant amounts of the stuff. We learned this from U.S. Treasury Secretary
Lawrence Summers, who said on Saturday, January 8, "I categorically deny assertions that U.S. gold reserves were being
sold off or that there is any plan to sell them off." A word to the wise!..."
gidsek
(01/10/2000; 20:07:34 MDT - Msg ID: 22658)
MK.. thank you for the Newsletter
TheStranger
(01/10/2000; 20:22:05 MDT - Msg ID: 22659)
canamami, CoBra(too), Cavan Man
canamami - Yes, I know what you say is true, though I am as disconcerted by the irony of it all as you are. There is, however, one other irony in these investor dynamics that may deserve attention here. To wit: For months now, Wall Street's full commission houses have been experiencing a shift in customer demand away from mutual funds and toward individual stocks. This is a form of disintermediation which is believed by some to indicate an alarming loss of concern about risk among customers.

Also, for months, "investment" accounts have been net sellers in the markets while "speculative" accounts,as a group, have been responsible for all of the net buying. (Clients can be profiled for this by their use of margin, options, etc. and by their trading frequency).

CoBra(too) - Ich hoffe, da� alle golden in die Stadt meiner Traume ist. Sie sollen �fter posten.

Cavan Man - Message received and right back at you, my friend!
SteveH
(01/10/2000; 20:30:21 MDT - Msg ID: 22660)
Dr. Hein's latest
www.gold-eagle.comI wrote this to him. It is meant with great respect:

Mr. Hein,

Nice article but you are firing for effect.

Summers is saying those things in response to allegations from GATA who blame the Fed and the Treasury for dissing the gold markets.

Gold is at the center of the Dollar v Euro conflict that will show one as the winner in the circle for reserve currency status.

Gold will ultimately rise to meteoric heights in face of all this paper wealth. There is no other outcome possible. Gold, oil, and the Euro are destined to be the outcome of a massive dollar devaluation when all these baby-boomers want a piece of the commodity action when all these dollars out there try to buy commodities.

The IMF dealy is a result of Congress halting their effort to sell on the open market. This was their way to clear debt and revalue gold showing it CAN and IS being used as money again.

Your thoughts are provocative but slightly afar of the bullseye.

Respectfully,


SteveH
TownCrier
(01/10/2000; 20:32:25 MDT - Msg ID: 22661)
The GOLDEN VIEW from The Tower
Investment manager (and closet goldbug) Martin Armstrong was held in contempt of court by a judge in the U.S. District Court in Manhattan on Friday, and was ordered to produce $16 million worth of gold bars and rare artifacts by a Tuesday deadline. Somehow the ordered forfeiture of this $16 million in hard assets is necessary in the court's attempt to recover the $1 billion in funds that Armstrong allegedly bilked out of his investors. We can't help but wonder if the court would be equally satisfied with a cashier's check for the $16 million instead of the gold...

Having gold "in hand" is not *automatic*, and should never be taken as blas� as crisp Twenties being endlessly spat out from an ATM. Here's today's glimpse at the Reality Compass...

Reuters reported from Johannesburg today that 15 gold miners were trapped more than 6,900 feet underground when a 2.9 (Richter scale) tremor rocked an African Rainbow Minerals Ltd. mine near the town of Orkney. The seismic event occurred an hour before noon in the mine's No. 2 shaft in an area that the men were preparing for mining operations. As it is, 2,700 miners work in the number two shaft to extract gold at a precious rate of 6.5 tonnes each year...that's solid cube measuring less than 30 inches on each side. A mine spokesman said rescue workers had alread begun the process of clearing away obstructions to reach the missing miners, but had no information on the miners' condition. Statistics for this area since 1911 reveal that approximately 69,000 miners have died in accidents, more than one million suffering injuries. Consider that the next time you hold a gold coin and try to assess whether $280 represents a fair price. In the history of mankind, only enough gold has been won from the earth to provide for three-quarters of an ounce for every living person on the planet.

Traders showed no deference, and spot prices closed marginally down at $281.10 per ounce after being traded tightly within a band of one dollar throughout the day. February COMEX gold futures ended down 20� at $282.70. There was no visible change in COMEX gold inventory.

Oil enjoyed a rebound today. February NYMEX crude gained 45� to close at $24.67 per barrel.

And that's the view from here...after the close.
ORO
(01/10/2000; 20:33:54 MDT - Msg ID: 22662)
The Stranger - ugly truths stay in closets
http://www.trimtabs.com/Interesting that the market retains its buoyancy. See the trimtabs for some info.

Quite frankly, I believe the market pros are chasing their tails. Late last year they were simply not letting go of the trash they collected because they wanted to show that they held the hottest stocks and because the tax hit would be so close to applying for the whole of the portfolios. Now there is a new game, name your merger. The internets have hit the brick wall, they are finding out that the e-tailer needs warehouses, the e-media need richer content and bandwidths to deliver it with. The end - high flyers excite athome found solace with ATT, AOL with TW, Go2net with ABC/Disney, etc.. The only reason the biggies buy is for time to market and because they can pay/merge with shares. What happens when the mergers are done? We had a stage like that and some of the trash came back to market. More is going to find its way there.

My take overall is that the market is liquidity driven now more so than ever before, the liquidity even drops straight to bottom lines of the tech companies (and some others, financials in particular). LU faltered because it did not have that much of a bang this year, so between the Spring issuance and the October vesting (if I remember right) there was not enough oomph in the stock to cause sufficient volume of fresh stock options excercizes to impact earnings as they did last year. This time, LU could not lower prices as much below cost as they did before.
Trimtabs gives a good story, essentially saying that corporate borrowing to buy stock is the major source of liquidity - the one that makes the difference. Furthermore, the micro-float of the typical IPO gets blown into the sky with the buzz and PR around the IPO. People then vote rather than invest. Another thing they do is play the numbers, the IPOs are purchased in "baskets" by people saying that the internet is obviously going to be big, but not knowing (or even wanting to know) which will make it.
French Chefs in the finance departments make for well refined books, braised then covered in hollandaise so that you can't tell what it is you are "eating".
But, again, the game is liquidity to float ratio, liquidity allows the excitement (how many people heard about it, and how often), to build in the excitement to float ratio. It seems much more important than earnings (whether cooked and smothered in hollandaise, or not there at all).
Yahoos and Qualcoms are bid up to the point that they can merge with all the well capitalized utillities of the world and still not have an attractive P/E. Their growth is well supported, fundumentally, but not their costs relative to revenue. The business proposition just ain't there, even for the best of them.
Check this one out - the math makes the membership of a stock in a well traded index more important than its earnings, and its low float more important than its assets. The indexers have to buy the stock according to weighting, while the float starts out being 10% to 20% of the company and after a year or two grows to 30%. Restrictive covenants prevent early selling, and the stock, once it gets into an index, has money just thrown at it automatically. That is how the ND100 got to trade at 200 times trailing earnings, and 140 times forward earnings. The companies still trade at a hefty 95 times two year forward earnings, and some (See Amazon) don't have a plan to make money at all. You need a true disaster to prevent a company from working out as long as the autopilot money flows.
So long as this holds, all that is needed to get your low float special going is excitement, for initial excitement you need only a "hot" sounding idea, even if it makes no business sense at all. The next thing is to sell your wares at a discount to cost. Nothing does one as much good as selling at a loss, with some support from analysts willing to see your Janitor as part of the R&D staff, you can appear to be king of growth as revenue skyrockets. Then you can get your funding by paying 80-90% of your costs with stock. Intel, Sun and brethren all take stock as payment for their products, as do the employees. A good PR firm and a solid investment bank will take care of getting you the financing you need to keep on burning the money on TV commercials and equipment that will be out of date by the time it is installed.

When liquidity stalls, as seems to be the case for the near future, the automatic money will not matter.
FOA
(01/10/2000; 20:39:02 MDT - Msg ID: 22663)
An Overview
ORO (01/06/00; 15:05:40MDT - Msg ID:22411)
Your words:
-----------------
For years, I could not understand how the dollar could stabilize in 1980. It was a complete mystery to me. Austrian monetary theory, which I studied with the intense interest of youth, alongside Monetarist theory, was giving no clue as to how the dollar could be stable at all once the arbitrage
to gold through redeemability was closed to everyone - CBs included. ---------------------

ORO,
It was amazing wasn't it? During that time, anyone that had any grasp of money theory just knew that eventual world wide dollar inflation was coming. Yet, right after the Mexico default crisis, the whole system came back to life. Never before in history had a country dropped it's gold backing, watched it's currency be devalued against gold ($800+) and then returned it to normal use as if nothing had happened.
But something did happen and it sent the world onto a different trail. Thinkers, world leaders, common workers, and investors had just spent the previous ten years learning the true worth of oil! And they learned how it had two values.

Consider:

Duality of value is a funny thing.
If you have a gun in hand pointed at me and I have an identical gun pointed at you, their (the guns) worth is the same. Yet, if I am wearing a bullet-proof vest, my identical gun has more worth. Not much, just a little more. Strategic location?
You pointed out how in 1933 dollars outside the US were worth their weight in gold. Yet, inside the US they were not. The same dollar had a dual value dependent on location.
Oil, gold, minerals and ones bank account can all have dual values based on the strategic location of these items.
Another form of duality exists for most things. Gold has a jewellery value and a monetary value. It's price is reflected in the degree of total demand generated from each value. In fact everything we own has our personal wealth value and a "monetary" worth.
After 1980, oil also reflected this different duality.

Back to the main trail:

In the late 60s and early 70s some US strategic leaders were beginning to understand the "monetary value" of oil. It was becoming clear that local oil reserves, not gold was the real backing behind the robust US economic engine. Like gold today, oil back then was worth a whole lot more than the amount we were paying for it.
The simple fact was that as long as your economic system got more from (out of) the local oil it brought than printing ones currency took away, local oil was worth more as a "monetary backing" than gold. This was the changing currency climate some could see long ago. Modern society, as it functioned using digital settlement was restructuring monetary theory. The only problem was that it wasn't changing the importance of "human nature" or "strategic location".

By the early 70s the old gold exchange standard was breaking down, even as the worlds goods production system was just embarking on a new era of efficiency. Using the benefits of hindsight, we can today see that each year into the 70s, 80s and 90s all brought technological gains that were overshadowed by our currency system's flaws. The world was using technology to get more out of the life's blood in a modern economy, oil.
It was recognized that even though the old (gold) money system of the 60s had priced oil favourably for the US, it's (US) oil reserves were running out at that price. We needed a higher price for oil in order to build local reserves. At the very least, we needed higher prices to discover higher cost reserves located in the "Strategic Americas" (both north and south).
The potential (indeed, it was reality at that time) for the Middle East to continue producing reasonably priced oil for gold (dollars) stood in the way these needed higher prices. In order to resolve this, we moved off the gold standard (1971) and onto the oil standard. Again, in hindsight it was a masterful play. You see, in duality, oil in the Middle east was worth more than other oil if it
could back the dollar in world settlement.

Make no mistake, gold was and still is the center of the money universe. Only the way we utilized it was changed (indeed, it's about to be changed again). ORO, the US had already placed it's currency on an oil standard years before (in practical theory anyway). They were expanding the
money supply directly in relation with the increased production of goods that modern oil use was providing. Of course they ran away with the process as is always the case. Gunning the debt money supply and justifying it by extrapolating growth at ever increasing rates. Dollar creation overran the ability of the gold exchange standard to balance it. Still, in all fairness, the old system was built on a much slower creation of production efficiencies and couldn't accommodate this modern surge of wealth (and debt). Let's face it, the world has no precedent for the last 30 years of growth. By adhering to the fixed money supply, currencies would have risen in value creating a deflationary effect on the debt created from this growth. Our first experiment with this came as the US decided
to keep gold in the money universe but back the currency with oil. Better said: "continue to settle oil in dollars as long as the rate (oil price) creates more value from production than the inflation of the currency takes away".
This is the reason the BIS did not lobby the US to officially devalue the dollar in gold (raise the dollar gold rate from $42 to say $200) and continue the system. Even though many people were hurt from this, the system was failing and had to change. The tactic was not to stop using dollars if the gold was not delivered, but rather for the US to just stop shipping the gold. In reality the dollar is still a receipt for $42 in gold, but the it will never be connected to gold again. Ever!
In the background, the value of the gold backing lost was found in oil. In reality, the value of oil to the world economy was increasing much faster than value of gold lost from dollar default. Even at the higher prices per barrel the need and demand for oil proved to be a far superior "monetary backing" for the dollar than gold. As long as the majority of oil producers agreed to receive dollars
for oil, the stage was set for a renewed surge in growth the world over.
Yet, gold was still in the monetary game. Only this time the game was proving to be short lived and unstable. This new "free market" for gold was soon being leveraged in a way the old dollar was. Once again, the supply of gold contracts was exploding as they were responding to the new demands of an expanding world economic system. Only this time it wasn't the dollar that was about to default, it was the "new gold market".
Today, we find ourselves on the edge of yet another change in the world financial structure.

More later FOA


koan
(01/10/2000; 20:44:28 MDT - Msg ID: 22664)
another perspective
Overvaluation: Not all overvaluations are equal! For the last 4 months all if have invested in and traded are Canadian wireless and associated companies. As such I have become familiar with the amazing explosion in technology. Many of these wireless comapnies are not overvalued, but very undervaued in relaation to what the future holds. Take a good company that is going to begin wireless services in China - overvalued? Not hardly. There is so much new and amazing technology coming out, that that is what will continue to spur growth around the world. Many of the third world comunties probably won't even bother to get wired up they will just start wireless which means encryption, software and on and on. I think many are undervaluing the amazing technological explosion we are undergoing right now. Nice to see you posting again stranger. Glad we at least don't have to fight the y2K battle anymore. Regards koan.
tedw
(01/10/2000; 20:49:28 MDT - Msg ID: 22665)
Gold and Common Sense
http://www.usagold.comI do not claim the knowledge that many have on this forum but I would like to make a point and pose a question.


In August I bought a substantial amount of physical gold when it was at very low prices. I asked the dealer at that time why Gold was so low, and his response was that the Central Banks were dumping Gold on the market.

If one had asked the question "What has to happen for the POG to increase", the answer would have been that the Central Banks would have to stop dumping Gold. And that is exactly what happened.

Now today Gold is low again.I asked another dealer recently and his response was that people that were short the market were manipulating the POG. Credible sources, David Tice, Bill Murphy, etc. are stating that the market is being
manipulated either by Bullion Banks, Hedge Funds, or possibly National Governments or the Fed.

Now the common sense answer to the question "What will it take for the POG to rise?" would be the manipulation has to stop. It may not be illegal to "price fix"gold in all countries but if their is a conspiracy to "price fix" it in the United States then I believe that to be illegal.

If POG is truly being "fixed" or manipulated, it is being done on a grand scale and their have to be many people involved in various parts of the world.

So I suggest that what has to happen is an expose' of the scandal involved by an insider or insiders involved.Clearly the regulatory agencies (CFTC et al) have a responsibility to investigate these allegations. And perhaps some of our efforts should be directed at our Congressmen to achieve this.

And if they are not willing, perhaps the investigation will have to be done on our own initiative.
Peter Asher
(01/10/2000; 21:12:53 MDT - Msg ID: 22666)
pdeep (01/10/00; 14:41:01MDT - Msg ID:22637)
You said: >>>What a brilliant idea to marry equities to the real estate market.<<<

What a brilliant way to put a rocket booster on the market power-dive that's coming. These people are out of their %@&*^%$#* minds. The event that causes the 30% drop in equity value will trigger the sale of other securities to meet the margin call on the home loan Down Payment paper. But, any other equities will ALSO be under margin call. I think this is margin squared, or maybe margin to the third or fourth power! "There is no spoon" ??. No! THERE IS NO MONEY!!
Chris Powell
(01/10/2000; 21:21:28 MDT - Msg ID: 22667)
Treasury secretary was answering GATA
http://www.egroups.com/group/gata/335.html?And he's got a lot more to explain.
Chris Powell
(01/10/2000; 21:22:24 MDT - Msg ID: 22668)
Scheme would deliver Ashanti to Barrick
http://www.egroups.com/group/gata/336.html?Report from the Ghanian Chronicle.
lamprey_65
(01/10/2000; 21:24:13 MDT - Msg ID: 22669)
The Sad Part...
Those of us trying to get people to see the danger in the markets are most probably just wasting our time...very few want to hear the message.

The sad part is when the inevitable happens (markets go down!) those laughing and enjoying the good times now without a shred of fear will be the first to cry out to the Feds - "HELP ME! This market isn't fair, I'm losing money!"
The really sad part is that the Feds may actually help, just like they did in '87 by backing the banks to provide liquidity.

Land of the free, home of the brave...

Ugh.

Lamprey
Solomon Weaver
(01/10/2000; 21:37:32 MDT - Msg ID: 22670)
WOW Who would have predicted this?
By Gustavo Oviedo
WASHINGTON D.C., Nov 12, 2000 (Reuters) - President Clinton, besieged by protests to force his resignation, announced on Sunday the Eurodollarization of the economy and that his entire cabinet had submitted their resignations to allow him greater freedom of maneuver.
``After a two-month analysis I have reached the conclusion that the new system...is the way out for us and whereby we must proceed,'' he told the nation in a speech broadcast on television.
In the same broadcast, he said the cabinet ``has submitted its collective resignation''.
Clinton said the government will apply an exchange rate of 8.60 USD per Euro.
He said he had preliminary congressional backing for the plan, but did not say when the measure would take effect.
Clinton did not elaborate on the Eurodollarization, but the measure basically entails the conversion of US dollar-denominated salaries, financial and trade deals into Eurodollars.
The Federal Reserve had ruled out on Wednesday the possibility of Eurodollarizing the US economy with unemployment running at 17 percent.
However, Clinton said: ``America does not need shy measures, but to go to the core of the problems and propose transforming solutions'' and instructed the Federal Reserve Bank to implement his plan.

The embattled American currency ended Friday at 8.65 per Eurodollar, 17 percent lower than a week ago. It had nose-dived through a disastrous 19100.

Clinton and key Democratic Senators held intense contacts with Republican forces through the day seeking backing for the Eurodollarization.
The economy is believed to have shrunk 7.3 percent last year, while 2000 inflation was 160.7 percent, the highest in the World for the second quarter in a row. The Federal Reserve Bank on Saturday revised its annualized Q4 2000 inflation target to 165 percent from the 120 percent estimated previously.
Clinton has been struggling to keep the economy afloat and stop the currency from sinking but over recent days has been facing strong pressure from unions and lobbies to quit.
Workers from all three major auto manufacturers have announced an indefinite strike from Nov. 17.

Economic woes were compounded by destructive late summer hurricane storms in and weak prices for corn and soybeans, which along with fiat dollars and internet stock IPOs are among the country's most important exports.

pdeep
(01/10/2000; 21:57:04 MDT - Msg ID: 22671)
Time Series Analysis and Gold Price
As part of my statistical work in time series analysis, I developed a method of analyzing time series that determines the autocorrelation of the time series by deriving what is called the Hurst exponent. Basically, it tells you something about the behavior of a particular time series. A Hurst (H) exponent of 0.5 implies that the time series is completely uncorrelated (a random walk). H varies between 0 and 1. When H is less than 0.5, there is a non-random component to the time series, in that rising and falling trends are rapidly reversed. When H is greater than 0.5, trends tend to be re-enforced. i.e., in both cases there is a driving force in whatever generates the series that looks at previous values to generate new values, call it a "memory". For kicks, I applied the method to a bunch of economic-related time series. For the Dow Jones average, H has been around 0.54 for a very long time, for windows of more than a year. In fact, for all equity averages I have looked at, the result is about the same. With windows of less than one year, one starts to see deviations, but usually they are of the persistent kind (H more than 0.5). When the recent Dow Jones is looked at for periods of 3 months or so (about the highest resolution the method can handle) the H value can go up to 0.6 or even 0.7 area.

But not for gold. Prior to the recent rise, gold was behaving very abnormally, with H values in the 0.3 area. Meaning that rising trends were more rapidly reversed in a highly non-random fashion. Even when time blocks of 3 months was analyzed. However, just before the rise, (and I posted this before the rise on another forum) the H value went back to close to 0.5 about three weeks before the price rise. In retrospect, this may have signaled a change in the behavior of the time series, which also means that the behavior of investors had changed. (hindsight is 20/20!) However, since the rise, we're back to the same anomalous state, where H is again hovering in the 0.3 to 0.4 area, meaning that rising and falling trends are reversed, and the series is again "very" non-random.

For whatever it's worth, for me this is statistical proof that the gold price time series has a very strong memory of price changes, and is being managed via investor actions at a much higher level than other price-related time series. I'll report back if there is any change in the behavior of the series to see if it antedates a sustained price rise, .....or fall.
beesting
(01/10/2000; 21:58:02 MDT - Msg ID: 22672)
PRICE OF GOLD?
SOLOMAN,
Gustavo Oviedo left out the price of Gold for Nov.12,2000.
Goldhearts want to know......beesting.
Solomon Weaver
(01/10/2000; 22:05:48 MDT - Msg ID: 22673)
POG in Eurodollarization
Yes

unfortunately, then, as now, the world-at-large cares not for the POG.

But perhaps you asked the wrong question..."what is the PONOG in Nov.,2000" (Price Of Not Owning Gold)

Poor old Solomon
Solomon Weaver
(01/10/2000; 22:19:57 MDT - Msg ID: 22674)
pdeep's bubbles
pdeep (01/10/00; 14:41:01MDT - Msg ID:22637)
Bubbles Within Bubbles
I was amazed at the recent report in Barron's regarding using stocks as collateral in place of a downpayment on real estate. Offered by the likes of Merrill Lynch, Morgan Stanley, Fidelity (via GMAC), and Salomon Smith Barney. If the value of the securities falls below around 30% of the mortgage value, a margin call results.

The borrowers are those who want to avoid tax-related hits on appreciated stock, and need that extra kick for the million-dollar condo.

What a brilliant idea to marry equities to the real estate market. It takes the reality out of the real....

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

Perhaps the Lending bank is allowed to "sell short on the down payment"....example, I have $250,000 of Microsoft stock but would have $240,000 of gains if I sold it. (this is not me, it's hypothetical.) I transfer title of the shares to the lending bank and they sell them short using their own broker and charge me interest rates similar to my mortgage rates (gets around the rule used to prevent selling short against the box).

Poor old Solomon
TheStranger
(01/10/2000; 22:35:57 MDT - Msg ID: 22675)
ORO, koan
ORO - Everytime you wield your keyboard I wind up feeling like an intellectual eunuch. I keep thinking, 'If I had his brains, I wouldn't be mired in this stupid yellow metal.' Yet, you obviously are, too. (Please, God, tell me that he is. Even a loudmouth know-it-all like me needs a little reassurance once in awhile).

koan - I am your servant, sir. Your knowledge of wireless may be sufficient to profit you, but I fear mine will never be sufficient to profit me. Meanwhile, are we to hear no more of bears and dogs. I certainly hope not!
koan
(01/10/2000; 23:01:55 MDT - Msg ID: 22676)
Hi Stranger
When the last rally fizzled - I sold all my metals, but my insurance. I caught the tech/wireless upswing on the CNDX almost at the beginning, by luck - no brains, that's for sure. A person I respect told me exactly, "Chuck I am going to tell you one word "wireless". I have done very well indeed and actually am rather amazed. I am riding this wave wherever it goes. I am ready at any moment to change back. I have followed this forum all along and you are right about inflation, but I am going to wait until I can see the whites of their eyes i.e. $6.00 silver and $340 gold. Stranger, I have read everyone on this forum for a long time, and non of us is in your league - I am just smart enough to know that. Cheers. Peter Asher and Cavan man hello. Tom Cat, if you still read this forum, I say hello to you as well, you are a good soul; and a happy new year to everyone.
ORO
(01/10/2000; 23:11:40 MDT - Msg ID: 22677)
Stranger - yes
I am "mired" in gold.

My gold stock portfolio is up, my Malaysia investment (EWM) is up 3 fold from my last purchase last year, and double on my dollar cost averageing. I did well on Korea into the beginning of this year but dumped it in favor of gold stocks in march.

I also hold the precious in physical form, and buy more on a continuous bassis.

I can't bring myself to go long the internet trash and the technology stocks because I don't trust the chef to avoid serving the earnings flambe in times of trouble.

I did not get to the understanding I have today overnight. I lost tons of money by not focusing on the main elements of the reality of the game - that valuation was something you get used to and the rest is liquidity, and who has what position levereged by how much. When some one or a group loses control through leverage, the markets smell it and pull the guy/guys down. The all encumpasing power of government + Fed is the only thing preventing a raid on the stock market.

Remember that the bankers make their money by selling a premium built of volatility and time. When the sales wane, they create the volatility and the expected new sales. It is not quite the same as a cabal because it is made of many individual decisions responding to the results of the same stimulus, the same environment and market sentiment.

The gold banking scheme was leveraged to the gills and believed its own fiction. Only through restraint by the central banks, and by careful coordination among the doomed bankers, could this system work. One day a large player will walk away from the agreement and say that the smell of the roast banker was just too much for him and he will proceed to take a leg off the roast beast. This will lead to a stampede to get what is left.
ORO
(01/10/2000; 23:16:00 MDT - Msg ID: 22678)
Stranger - Koan
I second Koan's word, you need not hold a candle to anyone on this forum. You stand solidly on your own two feet.
SHIFTY
(01/10/2000; 23:21:20 MDT - Msg ID: 22679)
Ashanti Gold/ Barrick Gold
I have read the post's at lemetropole Cafe and the GATA site about Ashanti Gold and Barrick Gold, I understand what they are reporting ( for the most part ). I just dont know if this is a good thing, or a bad thing for the price of gold. Comments please.
Holly
(01/10/2000; 23:44:22 MDT - Msg ID: 22680)
How to b retail bullion coins
My local area is profoundly underserved for gold and silver bullion. I would like to retail gold and silver bullion coins, but I am unsure where I should start. Where do I go about securing a supplier for American Gold Eagles for instance.

Any advise and pointers will be greatly appreciated.
SHIFTY
(01/10/2000; 23:52:41 MDT - Msg ID: 22681)
Holly
I fear the great minds have gone to bed. I think you may want to check with our kind host.
schippi
(01/11/2000; 00:15:55 MDT - Msg ID: 22682)
Gold Sector & XAU Chart
http://www.SelectSectors.com/xautoday.gifThe divergence between FSAGX and the XAU
will be resoved to the Upside!
Gandalf the White
(01/11/2000; 00:18:15 MDT - Msg ID: 22683)
Serial #6 (FINAL) "Mystery of the Lost Ozarks Silver"
RECAP -- In Part #5 of the Serial, Pu Deville told us about finding Pierre dead on top of the mountain. He picked up Pierre's map and diary and placed them with his, and wrote instructions in his diary to whom ever finds these documents to get them to Leduc in St. Louis, as he "owns" them.
From here on, the author makes a "big jump" in thinking and says that the maps and diaries were placed in the barrel of a gun BY Leduc and later found by an unknown man.
<;-)Question: Why, if Leduc received the data that showed that the cave of silver bars was really where shown on the map, did he not mount an expedition to recover some of the silver bars also? The Wiz's read on this is that: Pu Deville was also killed by the Indians before he made it back to "civilization", but his hiding place was in the barrel of a gun, and the gun was traded by the Indians (as they had no ammunition for the weapon) and ultimately was cleaned by the new owner and that is when the data was found. Oh well, the Wiz has MANY questions about this story, BUT, the end must now come.
Part #6 of the story concludes with later years information.
===
"Mystery of the Lost Ozarks Silver" � PART Six and FINAL --
Written by Tom Bailey and illustrated by Al Martin Napoletano. Published in the FRONTIER TIMES, Austin, TX -- Summer, 1961. (Please read carefully as it is transcribed just as it was written, and my spellchecker is not conversant in 1960's Texas style Angrit.)
--
Then came the dam and the water inundated the land on which the cave was supposed to have been located. There is no certainty that it is buried for it may not have been on what later became the Farwell property, but the majority of those who have an opinion about it, are convinced it is buried forever.
Cliff Trussell of Joplin, Missouri, has dedicated himself to searching for the cave. During 1937 he prospected with an old man who grew up in the White River country. The man told him that while hunting one day many years ago, he came upon an old cave with a pile of gray-colored bars stacked against the walls. He had not at that time heard the story of the cave and believed the bars were some kind of building material made from the cave's peculiar soil. He thought no more about it until years later when he first heard the story of the lost silver mine.
Back he went, to retrace his steps on that hunting trip of years before. But that had been a long time ago and he had forgotten. The son of this man, Clarence Lee, is still living near Neosho, Missouri, and remembers his father's efforts to find the cave.
Trussell has checked the diaries carefully and believes it possible that the lost cave may have been farther north. The distance from St. Charles to Roaring River is about 300 miles and from the time indicated by their diaries, Trussell believes Pu Deville and Pierre did not have enough time to travel that far. He thinks they made no more than 200 miles and therefore the cave would be farther north. He found a place on the Sac River almost identical to the one described by the map.
"That lake may have covered it all right," says Trussell, "but I'm from Missouri. I don't believe nothin� till somebody proves it and so far nobody's proved anything. I've still got a few good years left and if I don't come up with a jackass load of silver, it won't be because I quit looking."
The legend may become history yet.
===
End of Serial #6, the FINAL episode as printed.
<;-)


schippi
(01/11/2000; 00:31:25 MDT - Msg ID: 22684)
@pdeep Time Series Analysis
pdeep.... If you would send me a reference on the
computation of Hurst Exponents, I would appreciate it.
Thank You
Schippi@SelectSectors.com
SHIFTY
(01/11/2000; 01:07:53 MDT - Msg ID: 22685)
kitco
London open gold moving up! Lets hope it continues.
Farfel
(01/11/2000; 01:23:24 MDT - Msg ID: 22686)
Swimming in the New Paradigm
I am placing a new computer in my office and was forced to spend a lot of time on hold today waiting to talk with a tech rep at my ISP.

A half hour wait to get hold of tech support and I asked what took so long.

The fellow responded that there were only some ten people supporting calls from five different states.

I suggested they add a helluva lot more employees to the phones. However he informed me that the company did not want to incur the costs of additional employees.

I told him I could not understand why. After all any internet provider that loses money ends up with a vertical rising stock price. The more money lost, the faster the stock goes vertical.

"Dammit!" I yelled, "Go tell your president to hire some more employees, I don't care what it costs. What type of internet exec is he to give a hoot about costs? THe main thing is this: I do not want to wait more than a minute on hold for any lousy ISP provider service! He should be more concerned about keeping customers like me happy than mundane old fashioned concerns such as profits."

Don't you just hate sane, rational, logical New Paradigmists? I know I sure do.

Thanks

F*

Strad Master
(01/11/2000; 01:29:56 MDT - Msg ID: 22687)
HOLLY - Where to get gold.
I recently had the distinct pleasure of dealing with our esteemed host here at the USA Gold Forum - Michael Kosares. Having been burned VERY badly by another company (who's name should be widely trumpeted but, for now, shall remain nameless) I can't recommend Centennial Precious Metals highly enough. Mr. Kosares is a gentleman and a scholar and I'm certain he'd be able to meet all your needs in an honest and helpful way. You are welcome to e-mail me privately if you want any further details. Strad@zyan.com
SHIFTY
(01/11/2000; 01:30:45 MDT - Msg ID: 22688)
London $ up
NOT! What was I thinking? Good night all.
Bonedaddy
(01/11/2000; 06:13:05 MDT - Msg ID: 22689)
Due diligence
All, tremendous posts these last few days! I've only had time to skim, will digest them later at the next chance for recreation.
We were having discussion the other day at work about corporate mergers. (I've just been through my 5th or 6th in the energy industry.) Someone asked the meaning of the term "due diligence." Trying to explain the meaning brought forth several examples. "You review all of your partners gas contracts." "You drill monitoring wells to check for ground water contamination under the plant properties." "Find out how they hedge production." There are certainly many more examples, depending on the industry involved. But the gist is that you check them out as closely as a marriage partner before you commit the entire corporate bottom line.
Due diligence. What a concept. When two dot coms merge, do they perform due diligence? "Make any money?" (nope) "Gonna make any money?" (someday) " What are your assests?"
(We have a killer ad campaign.)
PHYSICAL GOLD. "Liquid Assets?" (totally) "Liabilities?"(none) "Convertability into world currencies."
(depends on the strength of the currency) "Let's see, 6000 years in business, ever been through a market correction?"
(seen a few, would the great flood be a correction?)
FOA
(01/11/2000; 06:23:10 MDT - Msg ID: 22690)
More Overview
Working from my FOA (01/10/00; 20:39:02MDT - Msg ID:22663)
An Overview:

" " Our first experiment with this came as the US decided to keep gold in the money universe but back the currency with oil. Better said: "continue to settle oil in dollars as long as the rate (oil price) creates more value from production than the inflation of the currency takes away".--------

Initially this created instability in the financial system. Through out the 70s players ran into gold, trying to regain the monetary security the dollar had lost without it. Soon, everyone realized that no amount of conversion would ever replace all the foreign dollars outstanding. The dollars stayed in circulation even as they were traded for gold. Further, the dollars were still being received by ME
oil producers in return for oil. Dollar price inflation was bad, but in no means did we see the "runaway price inflation" that should have come from a reserve currency without gold backing.

In practical theory, oil now backed the dollar as world oil payments were settled in dollars. In return, gold now backed oil from a US guarantee of an open market for the metal. Over time, a portion of oil dollars could be replaced with real gold through actual physical purchases or in
participation with evolving world gold banking (paper gold). Even though the dollar gold price had surged, the higher oil prices were allowing a percentage of those dollars to be converted back into gold at the old gold/oil rate. Slowly, the old dollar holdings (prior to 71) were effectively being used to reclaim gold. The expansion of the world dollar money supply was seen as reflecting the more modern importance (value) of oil in the economy. As long as growth in the production of economic goods outstripped dollar price inflation, the dollar could be expanded to match the unrealized value held in oil.

Again, "strategic location" of the worlds major oil reserves was the backbone behind this "duality" in oils value. Gold in fort knox could not back the dollar anymore, because the US had shown that they could just withdraw it from backing. In fact, the entire validity of backing any
currency with a fixed gold amount was in question with this new age of "super nation blocks". For it to work again, gold and the reserve currency backed by it would have to reside in different "power blocks" to guarantee delivery. That wasn't going to happen. Indeed, with supply of the worlds
major oil reserves being controlled outside the US, the dollar was now backed more effectively by a commodity that could be used to devalue it (through the oil price) should the money supply run wild.

This system balanced, as the value received from oil by the goods producing world outran the loss from price inflation initially created from rising oil prices. ORO, this does not explain everything , by any means. But, it does at least give us a handle on the dollar transition through out the 70s and 80s. Looking back one can see that "money theory" wasn't thrown out the window, only reworked
a great deal. It offers a reasonable understanding as to why the dollar continued, even as the US treasury took control of the world financial system.

Today, the situation is changing in a much more dramatic way. I'll later offer a view as to where we are and where we are going.

Thanks FOA

Black Blade
(01/11/2000; 06:30:09 MDT - Msg ID: 22691)
Rhodium
http://www.kitco.com/gold.live.htmlS&P futures -6.90, Bonds down slightly, Au -0.60 at $280.50. But for fun check out the steady rise of rhodium (the other white metal). NASDAQ looks to be a little down at the open, or as the talking heads say "just some profit taking".
Black Blade
(01/11/2000; 06:41:51 MDT - Msg ID: 22692)
Koan and Stranger
Koan: I too have done well with wireless. Nokia (NOK.A) and Qwest (Q formerly QWST)to be exact. I sold a portion of that position at year end. Now that I covered the cash basis and some tax liability I am riding the rest as "free shares" to where ever they go. I am still hanging on to my PM position though (both insurance and value play). Haven't heard from you for a long time. I was afraid that you came across some bears mistaken for large dogs. Sorry Stranger....I couldn't let that go by :-).
Hipplebeck
(01/11/2000; 07:38:00 MDT - Msg ID: 22693)
some thoughts
I think we are still quite a ways away from the dollar losing it's value.
The faith that is evident in the dollar in the developing world is still quite strong. Ecuador shows that. I can also say from personal experience that in Russia, everyone would rather have dollars.
In fact, that's how most deals are done. The ruble is the official money, but everyone uses dollars too. At least in the cities.
As long as there is a demand for dollars that is unfulfilled, it will remain strong.
The lies coming out officially about there being no inflation also adds to it's strength. If people are being told there is no inflation, I think it will take them far longer to realize the lie than we think. I have had this conversation, as I am sure you all have with someone, and it never ceases to amaze me that no one even gives these thoughts that we here that share the forum constantly entertain any time at all. We feel that "How could they not see what I see?", but the reality is that they don't, and until they do, the game can go on for a long time.
I really do see it as a great opportunity, though, because I need the time to accumulate gold, and without the extra time that ignorance gives me I could not save enough paper money to get the real thing without going out and trying to dig it up myself.
I am so thankful that I have found other people who think like me as it gives me more confidence that I do see the reality of our economic world.
Even though I know I could make a lot of money with what I have learned by selling out and playing the crooks game, I still feel like it is improper to live your life against the truths that you have found. There is a price to pay for morality.
Michael
Hipplebeck
(01/11/2000; 07:54:57 MDT - Msg ID: 22694)
more thoughts
I think that the Arab countries are quite content with the amount of dollars they are receiving. I am quite sure that there are lots of very rich people in these countries who own huge blocks of stocks in US companies. My guess would be that they own heavy interests in the worlds largest banks. Sure they buy gold for their portfolios, but their major assets have got to be in the US and other stock markets.
After all, for these guys, that's where the fun is. It a casino where you can play the most sophisticated gambling games there are. Not only do people not berate you for it, but it is glorified gambling. People look up to you. They are making money on oil, and they are making money on investments. We all know that the machine can not go on like this forever, but let's face it, the money machine is running pretty darn smoothly right now. We probably are in for a longer wait then it would seem. I got to go to work now so I can get some more paper so I can buy some more gold. My fondest hope is that I can hand down some to the next generation.
Michael
TownCrier
(01/11/2000; 09:06:43 MDT - Msg ID: 22695)
Two instant classics...
"...I also hold the precious in physical form, and buy more on a continuous basis.
+
I can't bring myself to go long the internet trash and the technology stocks because I don't trust the chef to avoid serving the earnings flambe in times of trouble.
...
When some one or a group loses control through leverage, the markets smell it and pull the guy/guys down. The all encumpasing power of government + Fed is the only thing preventing a raid on the stock market.
...
It is not quite the same as a cabal because it is made of many individual decisions responding to the results of the same stimulus, the same environment and market sentiment.
+
The gold banking scheme was leveraged to the gills and believed its own fiction. Only through restraint by the central banks, and by careful coordination among the doomed bankers, could this system work. One day a large player will walk away from the agreement and say that the smell of the roast banker was just too much for him and he will proceed to take a leg off the roast beast. This will lead to a stampede to get what is left."
--ORO (01/10/00; 23:11)
-------------
"Due diligence. What a concept. When two dot coms merge, do they perform due diligence?
"Make any money?" (nope)
"Gonna make any money?" (someday)
"What are your assests?" (We have a killer ad campaign.)
+
PHYSICAL GOLD:
"Liquid Assets?" (totally)
"Liabilities?" (none)
"Convertability into world currencies?" (depends on the strength of the currency)
"Let's see, 6000 years in business, ever been through a market correction?" (seen a few, would the great flood be a correction?)"
--Bonedaddy (1/11/00; 6:13)
JCTex
(01/11/2000; 09:21:28 MDT - Msg ID: 22696)
TEST
EXCUSE ME FOLKS, TEST, TEST, TEST
USAGOLD
(01/11/2000; 09:47:42 MDT - Msg ID: 22697)
Today's Gold Market Report
Market Report (1/11/00): Gold opened higher this morning with physical
demand moving the price in a northerly direction. Gold is being helped
by a report from the Richmond Federal Reserve that "certain
expectations, especially in manufacturing, are for a relatively sharp
wage hikes going forward." Wage hikes are generally associated with
higher inflation.Trading was quiet overnight both in London and Hong
Kong, but picked up pace as New York opened. The market seems to be
supported by physical buyers at the $280 level.

We continue to believe that the 1000 ton gap between gold supply and
demand will play a critical role in gold's pricing this year. In the
past this gap was filled by official sector sales and loan operations.
With the Washington Agreement now in place, coupled with the revelations
this past weekend by the Fed and the Treasury that they essentially have
a hands off policy toward gold, those negatives for gold have seemingly
been put in abeyance. Any economic crisis now, and there are several
that could suddenly find themselves on the front burner, could bring the
stretched fundamentals back into play. Keep your ear to the ground in
the coming weeks. Gold could start acting like its old self again.

That's it for today. We'll see you here tomorrow.
TheStranger
(01/11/2000; 09:49:03 MDT - Msg ID: 22698)
Bears and Dogs
Black Blade - Lest I leave the wrong impression by my awkward use of a double negative, I want MORE on bears and dogs, not less. My wife and I have found in the last year that we now examine all dogs much more carefully than we used to...even small ones! In fact, I may begin carrying a large stick wherever I go! I wonder what koan would advise.
TownCrier
(01/11/2000; 10:03:09 MDT - Msg ID: 22699)
Fed tweaks level of banking system reserves
http://biz.yahoo.com/rf/000111/ln.htmlThis says it all..."The (open market) desk is just hard pressed to figure out how all of these Y2K effects are going to unwind." --Kim Rupert, economist at Standard & Poor's MMS

Those that spend their days trying to anticipate the Fed's actions expected a small temporary addition today to banking reserves through overnight repo operations by the Fed, but instead, they got a small surprise with a drain of $3 billion through 2-day matched sale-purchase agreements. The Fed funds rate was running as high as 5.75% at the time of the operation.
TownCrier
(01/11/2000; 10:30:35 MDT - Msg ID: 22700)
How long will it last when EVERYONE admits its a bubble?
http://www.economist.com/editorial/freeforall/current/index_fn3028.htmlThe few on the sidelines have been steadily capitulating with the sheepish admission, "If you can't beat 'em, join 'em." At what point will they reach for something *real* to show for their time and effort on this planet...when goods prices have outrun equities prices??

A friend to The Tower told us of a professionally successful young associate and his wife who recently bought a large new house with the smallest possible downpayment. They had no furniture, and were not buying any, so that they could keep their funds and salaries actively pursuing profits through the stock market. Personally, we'd rather eat a nice dinner while sitting at a table, than have Mac'n cheese on the floor while surrounded by yahoo.com stock certificates.
It's all about your personal choice for quality of life....
Al Fulchino
(01/11/2000; 12:17:30 MDT - Msg ID: 22701)
TC: Why do YOU believe it is a bubble?
Let us assume the current stock market is a bubble for a moment. Now if common sense dictates that it is time for a warranted pull back, why do we see it stay afloat? Simple people have been convinced that the "market" is the money elixer. So in fact, not everyone admits it is a bubble. People are hypnotized, by the aroma, the headiness and they all feel that they are without danger while on this "high".

None of us should wonder when it will end. It may not end for months or years. There is a lot of money still out there to chase a dream with and there are many tricks up the sleeves of governments and central banks.

As an aside, I told my oldest when he was 13 and six foot plus, that his baseball superiority versus his age peer group would dissolve in a few short years as his competition would catch up in size. He listened but since he was having so much success at the time it didn't sink in.
The market is the same. So much success, so little listening.
Cavan Man
(01/11/2000; 13:08:03 MDT - Msg ID: 22702)
Dear FOA
I am not certain how many visitors here carefully read and digest what you write. Furthermore, I am even less sure how many of us really believe what you write. With my simple mind, I see the common cents of it all. Perhaps my mind is simple because I have not the formal education nor experience level of many consequently, my simple mind is also very open to new Thoughts; it is not so encumbered with preconceived notions. I'm a long ways back but still following you on the trail

I have read your posts from this morning which filled in some blanks for me generated by my reading and re-reading of Aristotle's five part series of last summer. I have just taken the time to read Aristotle once more. Each reading provides keener insight. Each reading gives me a greater sense of concern for future events as you seem to project them.

Here is my question:

Can the international monetary system transition to a new form; can ME oil be satisfied; can the international currency value of gold be reconciled with even the modest expectations of traditional (western)thinking gold market analysts; can individual, sovereign economies remain "whole" and healthy; can the paper gold market leverage be unwound; etc. without the advent of violence and aggression? How so?

Perhaps I should stop reading USAGOLD and go back to the comic section of our local and very poor newpaper?

Thank you.....Cavan Man
nickel62
(01/11/2000; 13:36:03 MDT - Msg ID: 22703)
Oro I enjoyed your Venus fly Trap analogy from yesterday.
I would like to second its entry into the HOF if it has not already been done. but I have a question. At the end you say using IMF data for PPP that the US has a 30% discount on its imports. the Swiss a 49% discount on its imports ,Germany 40% and French 30% and the Japanese a 45% discount on their imports. I assume that this "discount on their imports " is due to their ability to hold their currency more overvalued than it should be according to PPP and therefore extract an unpayable burden from the uninitiated lesser country that is caught in the debt trap.Is this correct? Or am I interpreting something wrong? And if I am correct is this overvaluation brought about by lowering the price of gold below where it would otherwise be and therebye creating an overvalued price for your currency ? Or is this a symptom of the fact that an overvalued currency has been achieved in some other manner and therefore the price of gold is suceptible to manipulation lower? Or none of the above? Thanks as usual.
5
silent runner
(01/11/2000; 13:43:25 MDT - Msg ID: 22704)
invesco fgldx
anyones input regarding this fund would be appreciated. thanks
nickel62
(01/11/2000; 13:53:26 MDT - Msg ID: 22705)
Invesco Gold Fund
Could you post what their largest holdings are? And I'll see if I can help you.
RossL
(01/11/2000; 14:13:10 MDT - Msg ID: 22706)
Invesco Gold - FGLDX
http://funds.marketwatch.com:80/management.phtml?ticker=FGLDX
Looks good except for the 8.5% invested in the over-hedged Barrick.
TownCrier
(01/11/2000; 14:19:02 MDT - Msg ID: 22707)
Good comments, Sir Al Fulchino, about current success blinding future assessments
http://www.usagold.com/GermanNightmare.htmlIn regard to your question, "Why do YOU believe it is a bubble?" I'm willing to to join the Fed Chairman's camp on this one, patiently leaving it up to the historians to call it a bubble after the fact. The comments offered in the previous post were specifically inspired and pertinent to The Economist article that was cited via the provided URL. In that article, even the investment experts were saying outright it was a bubble, but were throwing caution to the wind to join the chase for the promise of "easy money." (Personally speaking, gold at these prices is my idea of EASY money. In terms of the real effort expended to earn the equivalent U.S. Dollars as necessary to secure an ounce in-hand, when if ever before has real money been so easy to come by?)

It is probably much more important to our personal well-being to recognize things for what they are than to worry too much about labeling or categorizing them. Whether you, or I, or Alan Greenspan allow ourselves to openly call this a bubble is immaterial at the end of the day. What will be important, though, is the action that we took during this time. That action will be very material at the point when our historians (modern reporters) categorize and label the events that unfolded in the previous hours.

A good lesson by example are the events that culminated in 1923 Germany as explained in the link provided above. Looking back, we could easily laugh among ourselves now, and wonder if the common laborer thought that his skyrocketing salary was somehow the product of a new paradigm. The labels and explainations provided by economists, whether during or after-the-fact, did nothing for individuals. The lot in life enjoyed or suffered by each man in 1924 was determined by their own individual actions during this time. Calling it, or NOT calling it, a hyperinflation is immaterial, as is our bubble term for today's privileged "Teflon�" stocks.

Reminds me of a favorite science professor who would frequently say to a selected student in class, "Time will pass. Will you?"

Judging from your many fine posts, your future on this fine Earth seems quite secure, Sir Al. Unfortunately, it falls upon guys like us to support our government in its attempt to protect the others of the population from their own irresponsibilities. I'd rather be the baby-sitter than the baby-sat...its a better frame of mind to live with, don't you agree?
Mr Gresham
(01/11/2000; 15:43:59 MDT - Msg ID: 22708)
FOA -- Matrix?
I'm finally getting to view The Matrix, after having it out on a rental for 10 days. Certainly seems like a similar trip down the rabbithole to the picture you're trying to give us. Things are not "as we have been led to believe." Having a Guide makes all the difference, as my understanding struggles to keep up, much like the movie's protagonist. Back later, when my "Hollywood mind" has settled down a bit, and reality looks closer to something I can handle.


goldfan
(01/11/2000; 18:19:20 MDT - Msg ID: 22709)
ORO or anyone, bond rates and dollars?
http://www.usagold.comORO

I'd be grateful for help from you or anyone on this. Trying to imagine events if treasury bond prices continue to drop caused by inflation fears of overseas investors. The bonds are sold, the US$ converted to yen or whatever and the resulting $ are now in U.S.banks as deposits, ie Liabilities of the banks, which must be covered by conversion to assets. ie loans made by banks to whmoever. How does this scene become hyperinflation? or inflation followed by deflation? Can the Federal Reserve drain excess deposits by taking them off the banks hands as borrowings by the government?
I'm sure this must be elementary economics but I don't get it. Thanks for any help.

Goldfan
TownCrier
(01/11/2000; 19:09:58 MDT - Msg ID: 22710)
The GOLDEN VIEW from The Tower
Gold is the element of economics most in tune with the human condition, so it is appropriate that we take a moment to reflect on that human condition which is most in tune with gold...the struggles of the miners.

Yesterday you will recall that we reported on the plight of 15 miners trapped over a mile underground in a South African gold mine as a result of a 2.9 Richter scale tremor. At the depth the men have been trapped since Monday, the temperature can reach 40 degrees Celsius (104 degrees Fahrenheit). According to Reuters, African Rainbow Minerals said it was boosting ventilation to that portion of the mine, and rescue teams arriving from other area mines had thus far removed over 300 tons of obstructing rock in their effort to reach the trapped miners. South Africa's Minister of Minerals and Energy Phumzile Mlambo Ngcuka issued a statement, "All our sympathies are with the miners who are trapped underground (and) their families. It is a time of extreme anxiety and sadness for us all."

In a recent development, rescuers reported that they have now made contact with one of the 15 trapped men. In passing along an account of their condition, the trapped miner said five of his colleagues were alive with himself, but that four others were dead and the other five missing. The company spokesman told Reuters, "We have got water to the six miners who are alive, but they are still trapped behind a few meters of fallen rock and efforts are continuing to get them out."

In far less tragic mining news, South African listed gold miner Durban Roodepoort Deep's Australian operation at its Browns Creek gold mine in New South Wales was forced to suspended mining after blasting operations two weeks ago resulted in excessive underground flooding. After water flow and pumping tests proved the condition to be worse than anticipated, the company indicated that the mine may now have to be abandoned.

And now we shall complete our important study in contrast...

Reporting from New York today, the Federal Reserve announced it would be overhaulling its 1980's-era computer network, FEDNET, which connects the regional Fed banks and commercial banks. The revamped system is intended to allow for faster data transfer, support larger data flows, and provide increased security protection in the banking system.

Apparently the marketplace is showing some long overdue respect...gold is certainly holding up better than the paper being pushed by the Treasury (wherein the Fed plays middleman.) The 30-year bond continued it's year-long slide, losing another 1-3/32nds in price to reach the lowest levels seen in over two years. The yield has climbed to 6.677%. TheStreet.com reports, "There was no specific catalyst for the selling, just the usual suspects: Expectations that the Fed isn't nearly done hiking interest rates; and a heavy slate of corporate and other new issues. Making matters worse, there were few buyers to take the sellers out of their positions; the misery in the bond market is such that no one wants the darn things." No one wants the darn things...

Surely adding a measure of nervousness to the bond market its the scheduled speech by Fed Chairman Alan Greenspan to the New York Economic Club Thursday evening. Will he dare say, however tactfully, what is really on his mind?

Still on the Central Banking front, the weekly financial statement of the ECB revealed that the Dutch operations through the BIS were on hiatus last week, and the total ESCB gold assets held firm at 116.483 billion euros for the week ended January 7th. Elsewhere in Europe, the Swiss National Bank reported that their year-end value of gold reserves had increased by Swiss Francs 9.4 million. The change was said to be the result of interest collected on gold previously lent into the market...the Bank confirming that since signing on to the Washington Agreement in September it had not increased its lending activity. Thanks go out to the World Gold Council for that tidbit of CB news.

On this side of the Atlantic, the central bank of Canada revealed through its final financial statement for 1999 that it did not sell any gold during the month of December, giving them a clean track record for the entire quarter. Their gold reserves stand at 1.8 million ounces.

So, while Bonds take a beating, gold continues to look brighter. Spot prices last quoted in NY were smartly up $1.80 to $282.90 per ounce...even as an early report out of London predicted gold to remain in a tight range for the moment. Obviously, the traders in NY paid no heed, and COMEX futures for February climbed $1.70 on short covering, mixed with some fund buying...said to be prompted by the February contract's inability to fall below $280 last week in spite of the heretofore uneventful Century Date Change. The contract settled at $284.40. There were no visible changes in the depository stocks, although Scotia Mocatta IS moving their whole opperation across town. So....if you happen to be in Manhattan and you see a Brinks truck with a flat tire, you might want to stop and offer to complete their delivery...whatever it may be.

OIL

February crude futures traded through NYMEX were on a tear today. They ended the session up $1.10 at
$25.77, with expectations generally being that OPEC will now be extending their oil supply cuts at least until May.

Today's gains came amidst sentiment shared by most traders that the after-market release of API inventory data would show gains to U.S. crude stockpiles. And in fact, we can now tell you that the API data revealed an increase by 1.7 million barrels, but the after-hours markets clung to most of the day's gains, settling back by only 24� at first blush. One broker predicted this to Bridge News. "If the numbers are bearish, we may go off a bit. But there's a lot of interest in buying the market. We were buying for the funds like crazy this morning. It's a sign the technical market wants
to go higher." In addition to the conservative supply maintained by OPEC, there have been loading problems reported with North Sea oil, and a spate of refinery outages also cutting into the supply of products.

From our head-to-toe overview, it looks like we're still a long way from using i-gold.net, or burning e-oil.com, or eating food@hunger.org. They will alway require somebody to be busting their hump under tough working conditions in a real world. And until that unimaginable day arrives, we shall remain grateful to them all as we rely upon the fruits of their labors.

And that's the view from here...after the close.
FOA
(01/11/2000; 19:10:15 MDT - Msg ID: 22711)
Current events
Cavan Man (1/11/00; 13:08:03MDT - Msg ID:22702)
Dear FOA
---------I am not certain how many visitors here carefully read and digest what you write.
Furthermore, I am even less sure how many of us really believe what you write----------

Cavan Man,
Yes, I think you are right. There really is no point in going back so far. Nor is there any gain in diving so deep to explain political strategy just ahead. Mostly we want to understand the short term. Another warned me about this once before. Saying I should stay on the surface and discuss
events as they apply. Looking back I see why he doesn't send me anything now. The point has been made and the correct people have seen it. Now wait for events and discuss the market response.
So be it. I'll ride the soft river and stay off the hard trail.

Thanks Cavan Man, your words have helped, I presume too much, FOA
Cmax
(01/11/2000; 19:33:42 MDT - Msg ID: 22712)
FOA #22711
My esteemed FOA, for once I am going to differ with you.
This site was created for YOU, ANOTHER, and the BIG TRADER influence and perspective. This is YOUR forum, to express YOUR ideas as you see them. We are all primarily here to share YOUR viewpoints. There is *EVERYTHING* to gain in diving so deep to explain political strategy just ahead. THAT is why we are here, ....and I for one deeply appreciate your time invested in expressing your thoughts. Please turn a deaf ear to the odd heckler....they are the ones that should leave the discussion room if they don't like what they hear....this room was created as your platform by the venerable Kosares to begin with.
There is nary a day when you are not on my mind.
My deepest regards.
Cmax
Solomon Weaver
(01/11/2000; 19:42:18 MDT - Msg ID: 22713)
FOA and the wants of his audience
FOA

I too do not always believe everything you write...but only so can I learn from you, often testing my own viewpoint against yours.

What many on this forum also do not consider is that given the rate of technological advances, more of us will live to well beyond 100 years old than we believe today...so what you say about gold is like telling people that they should prepare for a retirement age of 95 instead of 65. In the end, many will live to see some of these things you speak of...even if they take a little while.

I enjoy hearing the views you offer...and am patient in seeing them unfold.

Poor old Solomon
lamprey_65
(01/11/2000; 19:49:05 MDT - Msg ID: 22714)
TownCrier: On Durban Deep
Thanks for the info on DROOY...as a holder of the stock, I was wondering what was causing the somewhat unusual selling pressure the past two weeks - I guess I know now. :-(

Lamprey
Ray Patten
(01/11/2000; 19:55:00 MDT - Msg ID: 22715)
FOA...we want the hard trail!

Don't listen to Caven Man.

When we understand the overall situation, we will be able to know the meaning of "current events" just as we can hear the tumblers of lock falling into place as the lock opens.
TownCrier
(01/11/2000; 20:08:50 MDT - Msg ID: 22716)
Cmax, perhaps I can widen your view a small bit...
Of course, only Michael can speak properly of the various reasons for establishing this Forum, and no doubt that the need for a well-mannered discussion forum was quite evident from the difficulty experienced elsewhere by would-be posters such as the many that have chosen to gather here...FOA and ANOTHER being the most notable examples.

As to MK's intentions for the Forum, we can draw a clue from my paraphrasing of his introductory words at the top of this page, and from the Hall of Fame:

Thes was established not only "...for all of us interested in the subject, but for the young people coming up behind us, who might make their way to gold in future years and need intellectual grounding to make their intuitive understandings stick. They aren't going to get it at most of the universities (unless things change), so they'll have to find it here. In that regard a tribute is owed to all who post their contributions for the enhanced thought and understanding of each person following this path toward illumination.
[...]
Fellow knights and ladies.......I want to thank all of you for making this such a fine place to gather. We keep this Table Round as our personal intellectual holding to advance our own knowledge and wisdom as well as the knowledge and wisdom of others. Each a member. Each a contributor. Each an important voice. ...
As with all our endeavors, ...don't forget that this Forum also started as an experiment -- an experiment that has gone very well. The credit belongs to you, the participant.
Let the discussion continue... Michael J. Kosares"

As for me personally, sitting here atop this currently chilly news-gathering outpost tower, I thoroughly enjoy every bit of commentary provided by FOA...whether it be regarding past, present, or probable-future events. Some people are content with generalities, while others require the blueprints of atomic structure. We continue to be fortunate that FOA and a great many others have willingly volunteered their time and passion to provide us with the entire available spectrum in this environment that strives to maintain a high signal-to-noice ratio. (All the ore without excessive overburden.) You yourself have been a good contributor in the past, and Cavan Man remains one of finest. Perhaps you've misinterpreted his message...I've never known him to pursue the role of heckler. That's the view from here, anyway...
SteveH
(01/11/2000; 20:11:49 MDT - Msg ID: 22717)
repost
www.kitco.comrepost--

Gianni Dioro (Yahoo and the Equities Markets) ID#437218:
-
Yahoo's earnings came out well below "whisper" numbers. An executive also said that revenue growth was unsustainable.

Looking at down volume compared to up volume painted a big negative picture. The Dow held up well considering this.

The breadth measured by the adv/dec has been negative for some time, but with adv volume leading declining volume, the markets have not crashed. Really this means that money ( borrowed ) has poured into a relatively low number of stocks and thus the rally is suspect. When the declining volume starts to overwhelm the advancing volumes, that is when the markets will collapse.
http://finance.yahoo.com/m0?u


RossL
(01/11/2000; 20:18:50 MDT - Msg ID: 22718)
Sir Gandalf the White

Thank you for the "Lost Ozark Silver" story. It makes one appreciate the sacrifices made for precious metals throughout the history of the world.
RossL
(01/11/2000; 20:32:10 MDT - Msg ID: 22719)
Charts of the week
http://www.investech.com/
Keep an eye on the gorilla index!
PH in LA
(01/11/2000; 20:33:16 MDT - Msg ID: 22720)
A plea to FOA: May the discussion continue!!
Please, FOA, forgive my own insensitivity in not disagreeing with Cavan Man publicly the moment I read his comment "I am not certain how many visitors here carefully read and digest what you write...(and) even less sure how many really believe what you write". It struck a discordant note when I read it and it sounds even more discordant when I read your fully justified reaction to it.

Since Cavan Man seems so uncertain about who and how many "read carefully and really believe what you write" let me assure you that I, for one, read, re-read, try to digest, and then read again (to the point of virtually committing to memory) your words for meditation and contemplation. There is no question in my mind of belief or disbelief, simply one of understanding. I'm sure that many would agree if given the chance.

The problem in any communication is all-too-often one of expressing oneself truly. Reading the words of Cavan Man makes me wonder how truly he expresses himself. For in addition to his doubts and introspection, he serves up a generous serving of complex questions at the same time. And certainly, his participation in past discussions has always shown an intellect interested in widening its understanding. In any case, his poorly-expressed misgivings do not convince me to abandon the quest for understanding, nor to retreat to the comics page of the newspaper.

All day I have looked forward to your next post in which you promised to "offer a view as to where we are and where we are going" relishing in advance your understanding and perspective. Please be assured that very many here hope you will set aside any disillusions and post your much-anticipated comments. I remember a discussion here once about how events really do look very different depending on "which side of the river one stands on". I already know how they look from this side... what I really look forward to is hearing what they look like from your side. Because hearing that helps bring into focus the view from over here even better. PH in LA
Cmax
(01/11/2000; 20:39:46 MDT - Msg ID: 22721)
(No Subject)
No Towncrier, my view has been quite wide. I distinctly remember the origin of this site as being offered to FOA, due to the heckling from many posters at Kitco. I say this respectfully, as I do appreciate your input too�but please don't put words into my mouth either�.I never refered to Cavan Man as a heckler. His message was not referred to, as such was not misinterpreted by me. The chilly tower is very high, but my feet are firmly planted on the ground, and as such, I wish to stimulate and encourage FOA's postulating, and not detain it. If FOA ever felt inhibited from expressing his full thoughts as a man too far ahead of his time, I would gladly finance such a site again for him. But as I am very sure that Kosares shares the same view, that obviously would not be necessary. All the best to you, Towncrier, and keep up the good work, but stay grounded a little too�.."lest we forget from whence we came."
R Powell
(01/11/2000; 20:43:33 MDT - Msg ID: 22722)
From there to here
I started by reading an interview of Mr. Bill Murphy by Jay Taylor wherein I found a reference to www. fame. org which lead me to many paths. Those I chose led me to the Denver Gold Group where I clicked upon an offering entitled Gold News. Guess where that brought me? Many trails lead here. Important news, I found a gold coin in my mailbox yesterday!It is beautiful,thank you.
nickel62
(01/11/2000; 20:56:11 MDT - Msg ID: 22723)
I agree with the sentiment of Ross L about the Invesco
Gold fund. Looks fine the non gold stocks are all leaders in their businesses and the major golds are there. Barrick is hated by most gold bugs as you know.
Cavan Man
(01/11/2000; 21:25:37 MDT - Msg ID: 22724)
FOA and All (This is my last message and read here)
Please forgive me. You have completely misunderstood what I said. That bears repeating; YOU HAVE COMPLETELY MISUNDERSTOOD WHAT I HAVE SAID. I hope that is clear.

My comment was taken completely wrong--COMPLETELY. I did not mean to speak for anyone here but myself and I HAVE SAID MANY, MANY TIMES THAT I BELIEVE WHAT FOA AND ANOTHER HAVE SAID. But wait a minute. There are thousands of people from all over the world and from all walks of life that do visit this site and I think it is reasonable to conclude that a certain percentage of the population (reading this forum) do not understand nor agree with FOA. Isn't it reasonable to conclude that all do not believe with the same conviction I do? Well, isn't it?

IN FACT FOA, I NO LONGER OWN GOLD BECAUSE OF THE INFLATION ARGUMENT ALTHOUGH IT IS A GOOD ONE. I AM HOLDING IT FOR MY FAMILY BECAUSE OF YOU AND YOUR FRIEND AND FOR NO OTHER REASON. I HOPE THAT IS CLEAR AND I HOPE YOU UNDERSTAND.

I posted this as a sincere compliment to you especially and to your friend a few months back and I will close with it now. Good luck to all. Although you have really misunderstood what I wrote, in parting, I ask your forgiveness and the forgiveness of our host. FOA, please continue with your Thoughts here for the benefit of all because, THEY ARE RIGHT ON THE MONEY! BTW, how many times have I said that? Answer: many.

".....if you can get the right (book) at the right time you taste joys-not only bodily, physical, but spiritual also, which pass one out above and beyond one's miserable self, as it were through a huge air, following the light of another man's thought. And you can never be quite the old self again. You have forgotten a little bit: or rather pushed it out with a little of the inspiration of what is immortal in someone who has gone before you."

T.E. Lawrence

God Bless All Here.

ORO
(01/11/2000; 21:28:35 MDT - Msg ID: 22725)
FOA - Delving deep
Quite frankly, the forum has evolved to be a specialist in the unique view ANOTHER and yourself came to present. Most of us have "got it", each in his own way.

Those of us sticking around have an interest in delving deeper and making a better thought out case for the market pro, and for the economist to hear. This is the only site at which the bulk of conversation deals with monetary issues as they pertain to gold.

If you are interested in doing PR on the "surface" there would not be any reason for you to post here. The audience here has got the message, the few new posters who come in are not going to be thrown off by a deeper discussion running in parallel.

In order to prevent the occasional people who come here with simpler questions from labeling your nom de plume as a busybody talking miles above their heads, you may want to split your messages by using a second "handle" that deals with the principal issues rather than their mechanistic detail.

I, for my own purposes, relish your posts and often disappear for a day or more to read and reread the more interesting ones that contain the better details and the underlying political and economic considerations, the identification of the characters in this high drama, even if only by institutional association.

I am very grateful for your doing exactly what Cavan Man is berating you for.

Cavan Man - I think I may have sucked away too much of FOA's attention with my continuous blizzard of questions, comments and prognostications offered for review. If FOA is willing, I am allways waiting for more detailed information and more of the deep perceptions that ANOTHER sometimes called "on the surface", but which are profound in the extreme.

FOA, I am working on a detailed (oh no!!) response to your last two big posts. They were truly remarkable - obviously why there were no remarks forthcoming. For my part, my response is long and full of questions and requires some thought as well as a couple of visits to my spreadsheets, which have grown to the point where they tend to crash my computer. As with any rich meal, silence is not necessarilly a bad sign.
R Powell
(01/11/2000; 21:30:21 MDT - Msg ID: 22726)
I Didn't see the insult.
Does anyone really know how many visitors there are here? Or how many carefully read and/or digest? Does anyone really know what these unknown visitors really believe? The sign on the front door told me I was visitor # 973035.
ORO
(01/11/2000; 21:33:02 MDT - Msg ID: 22727)
Cavan Man - don't run away
This forum would be as much a loser if you left as you yourself would be.
Cavan Man
(01/11/2000; 21:33:39 MDT - Msg ID: 22728)
Town Crier and PH
Thank you very much gentlemen. Your kind words soften the literal shock I had when I logged on this evening.

Farewell cyber-friends.

"Many happy returns"

Winnie the Pooh
Mr Gresham
(01/11/2000; 21:34:06 MDT - Msg ID: 22729)
FOA --- 22711
FOA:

I second Ray Patten;

deeper is better.

What kind of teacher is it who DOESN'T challenge his students? Those are the ones I remember...

There's a lot of history for us to catch up on, or bring into context. Without knowing who you are, we just kind of have to fish for the stuff you know that ties in to what we know. It took me 13 years to finish college, and I had been one of the "bright lights" in high school. But I waited until I really LOVED the subject matter (Economics) and I was really there the final two years, not just filling a chair. That's what you're looking for, isn't it?

It is the love of learning that keeps one young.

Solomon Weaver
(01/11/2000; 21:38:31 MDT - Msg ID: 22730)
when the little buyers really step in, what will they be able to buy?
Don't listen too hard to me...I am just a little guy.

I see that some of the posters out there are in the heat of this stuff on a daily basis (PM trading)...for me it is mainly a way to while away some enjoyable evening hours with a hot pot of Earl Grey tea and think about if some of the coins I have might make it to the olympics soon.

So tonight, two thoughts are running through my head together:

1. Silver is the poor man's gold.
2. When the little guys start buying PMs again....

Today I got the great Market Overview report from the Tower (took forever to download .pdf file but worth the weight oops I mean wait, must be a Freudian slip)...something stood out for me....India, one of the most populated and poorest nations of the world had bought an average of 1 gram of gold per person in 1999. If the world followed suit, the demand for gold would double and most of the material would flow into the hands of people who might never dishoard it. But a gram is almost nothing as about 1/30th of an ounce...there are a billion people in this world who live in developed nations and earn salaries which have been pumped up by petrosteroid economics...for them (today) gold can be purchased in ounces.

Since people learn slowly, and most Americans who think they understand investment are heavily committed to the stock market and have no clue about gold, I personally do not believe that a catastrophic meltdown in the worldwide stock indexes will cause the e-trade minions to go rushing into gold. As a matter of fact, my limited experience points to the fact that when massive margin calls come in, it is often the positions in the portfolio which are still intact that are liquidated to generate funds (thus sell gold to pay for margin). I also just have this feeling that when TSHTF, it will be the small guy who is fleeced, while the big boys are able to negotiate counterparty swaps that divide up the spoils amongst them. In the end, there will be millions of little guys, who will have very little stomach for investing in anything, and very little funds left over anyway.

The outcome that I expect is that after a big shakeout in the paper markets for gold and fiat, the big boys will have the liquidity for the most part and they will corner the market on gold. By the time the average little man is able to see that gold is a worthwhile part of his portfolio, the price in his currency will be impossible to pay.

For example, the average yearly income in India is $300, or about 1 ounce of gold. The average family in America earns closer to $30,000 (the POG which FOA sometimes discusses).

If the POG per ounce would be close to one year average (pretax) pay in the USA, then the only way that the little guy could afford to own gold would be to buy shares in a gold depository (for example a gold backed certificate or currency). The flow of gold into jewelry production and minting would almost cease as the need for the establishment of new physical gold monetary reserves would drive the price up. If gold were to rise so dramatically high in value, it would become dangerous to wear real gold in public (assuming that the grabit hasn't already made it "patriotic" to sell it back to them for fiat). And at the same time, gold would be viewed as the great haven of value like today's US stock market...so you can bet that the little guy will gradually get involved (on a paper basis as he does today with stocks).

But now, look at silver, which currently trades at about 1/60 of the value of gold, and during the bi-metallic past in the USA had a ratio of 1/20. (Historical question: Gold Eagles now have a face value of $50 and Silver Eagles $1...how old is this official 50:1 relationship??) For the sake of arguement, let us assume a 50:1 ratio. This means that when an ounce of gold costs an average yearly salary, an ounce of silver costs about a weeks salary...thus, still affordable. So, by the time the sheeple are flocking back into the PM markets, the only metal they will be able to afford is silver (since sheeple usually take the route of jewelry). In some way, this relates to Gresham's law it seems...the gold will go even further into hiding and all the mysteries and myths that go with that, and silver will start to do the work that we see today in gold (re: jewelry and new commemorative mints) - by the way...I think that new Silver Eagles are a real beautiful coin and I doubt they will be unpopular when one is worth an average weeks pay.

There is also something about the silver market which we should consider...whereas gold is never really consumed and always winds up in a hoard somewhere, silver is used and there are not really significant above ground hoards (at least as compared to gold). Those which exist will certainly be sucked up really fast by industrial companies which use silver if the price starts to rise. My interpretation is that because of the very scarcity of silver above ground (and yet it is relatively inexpensive to mine) that silver will NEVER AGAIN be used as money IN THE WAY THAT SILVER CERTIFICATES WERE ISSUED.

Forgive me as a novice, but my analysis is that gold will continue to be used as a monetary instrument (creating creditworthiness and liquidity behind digital titles of ownership) and that silver will be used for beauty and "in-hand investments" of "hard money/asset". In principle, this predicts a "concentration" in the use of gold (into vaults) and an expansion in the use of silver (into the hands of world citizens).

Thus, I return to my thought that silver is the poor man's gold and when the poor men all want some, the price may seem as gold is today.

Poor old Solomon
ORO
(01/11/2000; 21:45:26 MDT - Msg ID: 22731)
goldfan - bonds
The bonds being sold is a sorry story -

Yen were created to purchase these bonds on carry trades. They have put the trader in a situation of holding bonds and owing Yen. When he sells the bonds (lowers bond price), he will receive dollars that will be used to purchase Yen, (dollar drops against Yen), the Yen will return to the bank that created them and extinguish the Yen and the debt. This being a poppular trade, it is crowded and leaves much more unwinding on longer term positions.

Does this answer your question?
Peter Asher
(01/11/2000; 21:57:50 MDT - Msg ID: 22732)
goldfan (1/11/00; 18:19:20MDT - Msg ID:22709)

Follow the money!

A bond is a security that can be purchased with whatever currency the bondholder is willing to take for it. It has changed hands. The more 'selling' of the T-bills that occurs, the more that after market reduces the demand for new T-bills by competing with them for the funds of the worlds bond purchasers. Therefore, the treasury must be willing to sell fewer bonds or raise interest rates to win out over the yields of the now discounted bonds that are in existence.

So, as Existing T-bills come due they must be replaced by higher rate bonds or simply paid off and less debt is rolled over. Either way the deficit side of the ledger is increased. Either way more tax money is needed. Higher rates compete with other securities and drive up all financing costs cutting profits and hurting stocks by market competition, lower earnings and inflation. Higher taxes reduce everyone's earnings, create a recession and then there could be inflation or deflation depending on the ralationship of purchasing power to production capability. I have maintained that a recession can go either way, depending on whether credit is allocated more to producers or more to consumers.

Following is a story from the time of the inflationary recession era.

Peter Asher (01/14/99; 16:54:49MDT - Msg ID:1814)
In the 1970's, we were producing hand-crafted wooden furniture. One of our "hot" items was wide plank butcher block table tops and kitchen counters. We were using hand-held belt sanders at great labor expense, and so I went into the bank to see about a loan of several thousand dollars for a planing machine and a drum sander. I showed figures on how the labor savings would increase our income far more than the cost of servicing the loan.

The loan officer says, "No", looks out the window at my 12-year-old van and says, "HOW ABOUT A NEW TRUCK"! So I say, "A new truck won't increase my income." He says, "I can sell your truck for the full loan amount if you default, but I'd get next to nothing for the planer and sander."
Galearis
(01/11/2000; 22:04:36 MDT - Msg ID: 22733)
The Silver Institute and the Silver Users Assn.
Please excuse this little off-topic excursion, but it is of importance for all with an interest in pms and the machinations of the manipulators of these markets:

Recent above ground supply figures of silver deficits as reported by the Silver Institute website may be seriously in error. The S.I. is associated with the Silver Users Association. Be warned, be aware.
Solomon Weaver
(01/11/2000; 22:10:42 MDT - Msg ID: 22734)
FOA, please teach as you always have
There is a little story that is told in the east...to try to get students to understand their failure to see beyond their own illusions...

It is to compare the quest for knowledge as to that of a fish trying to understand water...since the fishes entire existance and sensory field takes place in the water, he is unable to understand any existance which does not start with water...as a matter of fact, he will not really understand the nature of water and may even deny that it exists (humans had the same problem with "the ether, and the vacuum".

Much of the things which FOA describes involve a world where an incredible change in the dollar enters the story...a change in a world which has been so central to the way humans share economic data and create value...the last 50 years were the dollar years and an immense amount of international value was created...and it is as if we swim in this ocean of dollars...not understanding the very medium in which we trade...

The ideas that FOA wants us to believe about the future of the dollar can seem like telling a fish to understand what water is when he has always misunderstood it (or let us say that he has had a false understanding of it). If hundreds or thousands of readers worldwide read in on what this round table discusses, only those who understand that the nature of water (dollar) must be re-understood will be able to understand the depths of FOA's analysis. For the sake of those who do, I hope that FOA will continue to shake the perceptions of the very foundations upon which we stand.

Poor old Solomon
Canuck Gold
(01/11/2000; 22:12:54 MDT - Msg ID: 22735)
Cavan Man, FOA interpretations
For the record, I agree with ORO and Mr Gresham regarding the depth of analysis provided by FOA. I was following Cavan Man's posts today and saw nothing that should have warranted such an adverse reaction. My take on the discussion is that Cavan Man is trying to get up to speed but hasn't absorbed the knowledge base to fully appreciate some of the deep discussions. Like a pre-med student obseving their first open-heart operation, if you will. I think Cavan Man was possibly thinking out loud that some of the discussions seem beyond belief to the uninitiated and uninformed but make perfect sense to those who have taken the time to study the offerings in depth. So Cavan Man, if you're still lurking, please don't let a few defensive rebukes drive you away. There's room here for professors and students alike and sometimes an innocent question from a rookie (and I'm not suggesting that's what YOU are) can get the professors to open up a whole new line of thinking.
Peter Asher
(01/11/2000; 22:25:52 MDT - Msg ID: 22736)
Galearis (1/11/00; 22:04:36MDT - Msg ID:22733)
In error which way ????
TownCrier
(01/11/2000; 22:47:07 MDT - Msg ID: 22737)
Hello again, Cmax...
Thanks for the comments. These words truly made me smile: "The chilly tower is very high, but my feet are firmly planted on the ground, and as such, I wish to stimulate and encourage FOA's postulating, and not detain it.[...] All the best to you, Towncrier, and keep up the good work, but stay grounded a little too...'lest we forget from whence we came.'" I am pleased to assure you that I am myself nothing but the smallest of men. And when it is my honor to have a turn on the rooftop of The Tower, I always take the stairs.
;-)

May there be Peace unto us all, and unobstructed views to every horizon...
Galearis
(01/11/2000; 22:59:20 MDT - Msg ID: 22738)
@ Peter Asher
The error is in the reporting of remaining above ground supplies available to the market. Suddenly we have two years more supply, instead of the 6 mo. that has been everyone's most recent understanding. Rhody, for example, over on the Kitco forum, is of the opinion that they are now including Warren Buffett's Ag investment/posession buy as available bullion. This is of course nonsense.

A question about the accuracy of their figures was emailed to the S.I. THE EMAILER GOT A PHONE CALL FROM SOMEONE IN THE S.I. WHO, AMONG OTHER TIDINGS, TOLD HIM OF THE S.I'S RELATIONSHIP WITH THE SILVER USERS ASSN., AND THEN QUESTIONED HIM ABOUT HIS INTEREST AND KNOWLEDGE OF THIS AREA. IMO the S.U.A. is so worried about true supply deficit information coming to the attention of the investing public that they apparently have on staff the expertise to hack into a server from an email address (just like the police are able to) and drudge up a phone number and address of the emailer.

Be careful who you email, sir! The S.U.A. has a certain reputation of being rather hard-nosed and unforgiving.
goldfan
(01/11/2000; 22:59:39 MDT - Msg ID: 22739)
Communication glitches
http://www.usagold.comFOA ORO Cavan Man All...

I hope no one or several of us would be upsetting enough to drive you away from this forum, this council. Sitting around the campfire, it may look very different depending from which angle one sees it, yet it is the same fire, capable of warming or burning any of us. What is good is to remain there, and speak one's own mind, without fear.

I am playing catchup with you and many others here. I have a good mind but I'm pretty ignorant about international finance, though after all the time I've spent on your words, not so ignorant as many people I know and don't who never think about this stuff at all. I am intensely interested in studying the economics of owning gold, the possiblities for a new way of organizing our trading structures and wealth saving structures after the great collapse. Predicting what that collapse will look like when it comes, and what we might do about it.

I want to write what I learn simply, so those of my friends and loved ones who depend on me to give them an elder's advice can be informed and have the option at least to make wise choices.
So I need the continued work of FOA and ORO and all of you, at whatever level you choose to write. I'll ask questions and push for explanations until I'm told to back off, which I will do with good will if I'm being a pest.... So far, I've been truly grateful for the quick responses and thoughtful responses I have always received here, just for example from Peter Asher and Oro today.

The stages of team work are four.

Forming (getting together and being polite while checking each other out and starting to to do the work),
storming (disputes and arguments among the participants, lots of projections while they try to figure out motives and so on, and power struggles),
norming (working through the issues and finding renewed ways of dealing with each other)
conforming (doing the work according to the new creed).

then, go through all four again at a tougher, higher level of effort, and so on...as long as the team survives. I always notice that it is most often different ways of using words that cause the most trouble, It's worth taking a lot of time to ask what each other means by "that word".

I see this forum as a group capable of great good work, able to be pretty tough with each other, hopefuly without blowing each other out of the water, able to be really caring and supportive of each other and newcomers...that's what I see anyhow..a strong tree growing, lets not lose any branches...
FWIW
Goldfan

goldfan
(01/11/2000; 23:14:54 MDT - Msg ID: 22740)
bond sales, interest rates and hyperinflation
ORO, Peter Asher, thanks and I've got more ...

I guess I have a start of a handle on the yen carry trade, how it works, but I'm wary of saying I understand how it works, or what it means to "unwind those positions".
What I reallly asked was, as follows,

(I'm) Trying to imagine (future) events if treasury bond prices continue to drop caused by inflation fears of overseas investors. The bonds are sold, the US$ converted to yen or whatever and the resulting $ are now in
U.S.banks as deposits, ie Liabilities of the banks, which must be covered by conversion to assets. ie loans made by banks to whomoever. How do banksd get rid of too much deposits? How does this scene become hyperinflation?

Im thinking of somethng ORO you said recently which I took to be that the US$ wouild go to zero relative to other currencies as all the overseas dollars "come home". What actually happens as these dollars "come home"? What does this phrase mean, in terms of actual events at banks and so on?

Thanks again for the help.

Goldfan
Bonedaddy
(01/11/2000; 23:20:12 MDT - Msg ID: 22741)
Cavan, man, think about this?
I find that I live life under the influence of certain convictions. One of the convictions is that we, all too often, are not cognizant of the times in which we live. The first time I recall having this notion I was thinking about my father. He had served in both WW II and later in Korea. Those were certainly "epic" times.
I asked myself, "did he realize that he was participating in such events?" The thought did not occur to me until after he passed from this life, so I cannot ask him if he realized it. But, dear brother Cavan, where I could not ask him I must ask you. Do you realize that we, though strangers, have met, as no others in history have done before us? And that there are things going on that very few can see? And that we engage in conversation, over time and great space, observing these events like neighbors across a backyard fence? We have met ANOTHER and FOA, and Stranger, and Peter, and many others because we share a common belief! These are indeed the richest of times!
Yes, a little misunderstanding is inevitable. But, we are learning to communicate in a new manner, none before us have come this way! Take courage from the experience of Stranger. He was banished for a time, only to return and be roundly welcomed by all. I myself am a fool.
My brain is so dense that it threatens to suck in and destroy entire solar systems. Yet, I continue to communicate here. Please, do not withdraw from our little cadre, you may ask the question that holds the key that will unlock another mystery for us all. The GOLD is in play! The bad guys are out in force, but we shall prevail.

There are those who play for money,
there are those who play for fame,
but there are still those who only play,
for the love of the game.

(How can those who play for the love of the game ever be defeated?)
goldfan
(01/11/2000; 23:37:53 MDT - Msg ID: 22742)
Peter Asher (1/11/00; 21:57:50MDT - Msg ID:22732)
Peter thanks for the lesson on treasurys.
I wonder how the banker's attitude to loaning money for a planer would change in a low interest rate environment, where he was desperate to put his banks money to work? Or does it ever happen this way?

I know an old granny in a nursing home, she's 103 years old. The home has been cutting bacl and cutting back on the care and services.The owner needs to build a new place, and haas to compete for capital with the .coms's of our era.I think it is wrong to ask that every enterprise compete with ever other as if they were all just ways to mke money out of money. Investment that is made only to mke money on money is investment for the wrong reason.IMHO I think every one who invests, including banks, should do so only because they have savings which they want to put into something they understand and want to support. So they can retire having given back something to the community, and have the right to live in old age on the interest from that gift.

And I'd still like to know what will happen to our banking system when all the US$ now overseas start to "come home".

Thanks

Goldfan
she-gold
(01/11/2000; 23:38:42 MDT - Msg ID: 22743)
Debt Bomb
http://www.epinet.org/briefingpapers/debtbomb.html the link is a great read!

THE TICKING DEBT BOMB
Why the U.S. International Financial
Position Is Not Sustainable

by Robert A. Blecker


Seems to this humble fem that Easy Al's in a tight spot.

External Debt has to be major source of concern. May Al was betting that the technological revolution and new economy would spur exports more than they have. Maybe he's still betting it will all work out. However, assuming the trade balance doesn't turn around soon (ie. immediately):

Either the FED will have to raise interest rates sharply enough to slow the economy appreciably (recession) in order to cool off consumer demand and reverse the ever-increasing trade deficit and external debt....

Or, the mounting external debt will drive foreign money out of the U.S. in fears of a debt crisis (Depression, ala Mexico, Thailand) requiring sharp increases in interest rates to find buyers for our bonds...

Or, the overvalued bubble will crash on it's own (Depression) driving foreign money out of the U.S. requiring ... sharp increases in interest rates to find buyers for our bonds...

take your pick.

It seems we're all talking about multiple scenarios leading to the same eventual result. Recession/Depression and higher interest rates.

But it seems by no means certain that hyperinflation will result. The U.S. will not let the dollar to float completely free, lest the depreciated dollar lose it's standing as the de facto world reserve (ie. to the euro). The amount of pain involved with keeping the dollar in it's current place in the world should be substantial.

I suspect the resulting turmoil will make the dollar so vulnerable that other factions demand bigger pieces of the world currency pie. Gold shines. The dollar ends up suing for peace. And the winner(s) is/are....

This is as much as my non-economist mind is able to synthesize. Comments anyone?

Thanks ORO, TownCrier, FOA, and everyone else (too many people to name) for the CONTINUED education.


Golden Truth
(01/11/2000; 23:42:00 MDT - Msg ID: 22744)
TO F.O.A AND CAVAN MAN.
Hello F.O.A please do not get "discouraged". I can see how easy this could happen, you put so much of your heart and soul into what you do. While at the same time people find it hard to believe what you say is true, it's because we are of small minds and behave like children, when we don't get immediate satisfaction, please forgive us!

I know you are bigger than all of this, and you have to admit this is a stressful time for GOLD owners. Including you, right? :-) I don't think Cavan Man meant any harm, i think he might be letting things get to him, and it was his way of fishing around to see if he could shake any more GOLDEN nuggets of truth from you. He trys so hard to make sense of all your knowledge as we all do!

Yes i truly believe that Cavan Man believes what you say, as do i very much. I've got a bunch of guys reading your stuff where i work and buying GOLD for there first time. All thanks to you, So PLEASE, PLEASE don't stop going into detail like you do! Any one that i know that reads your stuff always reads it more than once!

If they don't read what you have to say. They are the FOOLS not you! or the rest of us. I find that anyone with a brain who takes the time to read your most excellent posts can and does understand them!!!

Thanks for being here F.O.A, alot of people, do really depend on your incredible insight. Take a week off from the Forum you have my permission :-)) but please do not forsake us we need you!

Cavan Man you take 2 weeks off and then come back, you need a rest man :-) You've grounded me i few times remember? I always grumble at first and then realize, it was time to cool my jets! P.S I know you meant no harm to F.O.A what so ever, i follow him, just as you do, and i can tell a dedicated follower,and if there ever was one, it would be you!
Just sometimes it's a little stressful waiting for every thing to unfold, don't give up now man are you stupid(Big Smile) you've come to far to quite.
We are the few the proud the "Sane" Gold owners in an insane World. Nobody said it was going to be easy.
Also listen to ORO, Hi ORO! Oro is a saint or has the patience of one,he just keeps plugging along. Oro you truly are a testament to the human spirit, THANKS!! for hanging here with such an insecure motley crew.

Lastly good to see you back STRANGER i read your posts when you were over at that other site, i could sense you weren't that comfortable over there. Glad to see you back here. P.S I never once left your inflation camp, and it looks like the Inflationists are a tad ahead of the deflationists!
I feel kind of sorry for any one who sold their house hoping to by back a bigger one for less money.
Inflation here we come YE-HAH!

G.T
ORO
(01/12/2000; 00:08:02 MDT - Msg ID: 22745)
She-gold - Blecker
Blecker's article got me to start taking numerical measurements of the US external accounts situation to account for Eurodollars. Eurodollars do account for roughly ten times the debt that the US lists on its "outstandings", which is what Blecker used. The numbers he used were severe underestimates of the situation.

Also, 5.4 $trillion as of June were of foreign owned US assets of various kinds which produce an income stream of another 35 $billion dollars outgoing. Foreign bank deposits in the US and Treasury holdings of foreign central banks amount to 3.8 $trillion with the bank deposits eating 8 $B a month of interest.

After checking these numbers I came to the conclusion that the Eurodollars would join with the dollar income produced by foreign owned US assets in seeking a new home in the land whence they came.

I understood, further, that Blecker's remedies are unworkable to the extreme, as the low interest rates he suggested are necessary for this to unwind would actually make the reversal of capital flows start up in force. The only thing making dollar holdings an attractive proposition for the foreign investor is the "safe" excess returns available. If these are too small, the dollar investors would dump their assets and cause long rates to rise rather than fall. Within the US, a borrowing boom on short term credit would ensue and real asset prices would baloon sky high. This is what happened earlier in the 90s, but then we still had a chance to undo the damage if we did not insist on seigniorage after this started, since we made out like bandits on the debt trap set for Asia and Latin America, I guess we did ok and had us a Clinton Greenspan Rubin party to take away the last chance of survival for a few good years of fun.
Peter Asher
(01/12/2000; 00:10:48 MDT - Msg ID: 22746)
ORO, Goldfan?
First Goldfan! Thank you for the acknowledgement.

Goldfan you said:

The bonds are sold, the US$ converted to yen or whatever and the resulting $ are now in U.S.banks as deposits,

And ORO you said:

When he sells the bonds (lowers bond price), he will receive dollars that will be used to purchase Yen, (dollar drops against Yen), the Yen will return to the bank that created them and extinguish the Yen and the debt.

I said:
I was seeing the bond as a security that can be purchased with whatever currency the bondholder is willing to take for it. Interest payed to the new bond holder would be in dollars, but why should the bond seller necessarily receive dollars for the bond itself? Can't a Japanese sell a T-bill he owns to a Swiss for francs or to a German for Marks or for that matter to a Frenchman for Sterling?

Why would the sale of the "Pre-owned" T-bill specifically take place in dollars??

Peter Asher
(01/12/2000; 00:18:54 MDT - Msg ID: 22747)
goldfan (1/11/00; 23:37:53MDT - Msg ID:22742)
Collateral has become senior to the ability to pay. It is considered more important to be made whole on the default, then to have an ongoing performing loan.

Tomorrow evening I hope I'll have time to recount the Quintessential movie observation of this, from the 1946 classic, "The Best years Of our Lives."
Peter Asher
(01/12/2000; 00:20:29 MDT - Msg ID: 22748)
Bonedaddy (1/11/00; 23:20:12MDT - Msg ID:22741)
Nice post!
ORO
(01/12/2000; 00:22:47 MDT - Msg ID: 22749)
Peter Asher - right, but
The liquidity of only two bond markets allows these purchases and sales to work on low bid-ask spreads. The main one in NYC, and the secondary in London.

Both trade bonds in dollars only.
koan
(01/12/2000; 00:28:51 MDT - Msg ID: 22750)
of dogs and bears
Stranger and Black Blade - you take this subject much too lightly because you don't really understand the gravity of the problem. Each night I am riding my bike down the trail, and up ahead looms a large four legged dark looking creature facing me with great interest. I of course want to know exactly what this creature is and specifically what his interest is? Does the creature mearly want to use my leg to mark his territory, or does it want to take my leg to its territory - to devour - see the distinction - admittidly subtle, but very important. It also generates vey straightforward thinking along the lines of - do I procede or do I recede. The other problem that arises is that in order to make that decision I must get closer, but I only need to get closer to decide if I should get closer - see the catch 22 - I need to get closer to decide if I can get closer. So every night as I go out on my bike ride the problem of bears and dogs, which seems academic to you all city dwellers is to me a great philosophical problem that if I get it wrong will make this whole discussion moot as I end up in the stomach of some very large dog. So from now on I expect our discussions regarding bears and dogs to contain the seriousness and respect it deserves . Happy New Year to you both. I post a lot over on si at Canadian Momo Puppies under the alias koanhead - what else. Come on over some time. koan.
Strad Master
(01/12/2000; 00:47:24 MDT - Msg ID: 22751)
FOA!!!
Dear, esteemed Friend Of All at this forum,
May I add my voice to the chorus of those here who look forward each day to your fascinating and meaningful postings. I, like PH in LA, have been anxiously awaiting your promised "offer (of) a view as to where we are and where we are going" and would feel quite bereft of your wisdom if you were to stop sharing it. I certainly can't claim to understand the more arcane economic references you make (I am, after all, a musician, not an economist) but they have always stimulated much thought and a desire for a more broad-based understanding (something I feel I am slowly but surely getting). On the basis of some of your kind postings in response to my own questions, I recently converted my platinum holdings to gold. Consequently, I want ou to know that your words are not only taken for the profound economic and pilosophical musings that they are but also have a very pragmatic effect. I hope that after reading the many postings here tonight you will be moved to not only return to posting but to posting in even greater depth. I know we would all willingly be challenged even more.
BTW, while I have you, a thought occurred to me while reading "In The Footsteps Of Giants" the other day. You and ANOTHER have, for obvious reasons, shrouded yourselves in considerable mystery to protect your position. However, do you ever envision a time when you and ANOTHER will feel free to reveal your identities? If so, what might the conditions be for that to happen? Of course, it goes without saying that most of us here would be honored to get to meet you face to face someday.
Thanks in advance for your kind response. Strad
she-gold
(01/12/2000; 00:50:44 MDT - Msg ID: 22752)
ORO
www.usagold.comThanks for responding. I truly don't belong on the same page with you and your peers here. I try to get the essense of what you write, and struggle to assimilate it.

Yours and Parish's analyses pertaining to the current equity accounting scams are brilliant. Period. How interesting it will be to hear the earning warnings from companies when the market turns and the SOPs dry up. Employees demanding real wages again.

Seems that the internet and technologies and companies could have grown without resorting to such reckless experimentation with our future. What will history say about the current state of conflict-of-interest financial pseudo-journalism? Why can't you and Parish get your analyses published in the mainstream? (in the states, that is. Didn't the Economist already publish the Microsoft thing already?)

I don't know why, but it's the debt crisis that scares me most of all. Markets can correct and even crash. Maybe people would lose their 'investments' or fun-money or SOME of their retirement. I think the economy would go on. But when the market tanks in the face of all this debt... Too painful to think about.

I tend to think my patients (i'm a physician) that don't know they have cancer, until the end, are luckier than the ones who find out incidentally. I'm beginning to feel more and more like the latter.
ORO
(01/12/2000; 01:31:21 MDT - Msg ID: 22753)
She-gold - me too
Each time I look behind the polished image presented to us by the pop media and by the pros who sell us financial paper for a living, I find someone asking what I mean by "is".

I see more and more idiocy applied in various forms despite the knowledge of reality. Not because people who should know better doubt their own knowledge, but because these people have to ignore what they know of the future if they are to survive today. How are you going to sell a Munder internet fund if you can document to your clients that to the last one, none of the companies in the fund are involved in profitable business?

Here is a good one, Yahoo now has 95 $million in cash, would you stress that ""WOW! just a short while ago they didn't have any, boy how quickly they grow". Or would you stress the fact that nearly all of it has come from ESOPs? Would you stress the fact that they have a price to book ratio of 120, and that the 95 million dollars are supporting a market cap of 110 BILLION? That these are the most expensive dollars anyone can imagine having? Each special Yahoo dollar is worth 1000 "regular" dollars because it sits within the company books (as opposed to their losses - which do not).

The debt situation is even worse because policy makers don't even collect statistics on some items like accrued interest. The degree to which markets have detached from the economies that support them is unprecedented. The global financial economy that uses our currency is three times larger than the whole world's "real economy", and that is 8 times larger than the US economy. Could the US economy ever hope to support the global currency used by the rest of the world?

tedw
(01/12/2000; 01:40:00 MDT - Msg ID: 22754)
Redeemable in what?
http://www.usagold.com
I went into the bank today to cash a check. After the teller
paid me, I asked her a question."The Federal Reserve notes used to be redeemable in silver. I could bring them in and get silver coin.What are they redeemable in now?"

She got kind of a funny look on her face, and said "I dont know,let me look." She actually looked at FRN."

I said, "Its a note,but for what? What can I redeem it for?"


Finally, she said "Its redeemable in goods and services. A lot of people like them"

Is it any wonder that our Country is in the shape its in.
The average American has absolutely no understanding of the
Constitution and his heritage.It is a shame on them and the public brainwashing system that calls itself education."


"Congress shall have the power to COIN money.....No state shall make anything but Gold and Silver Coin a tender in payment in debt"---(This being interpreted means Congress has the power to have issued fiat money and States can make that tender in payment of debt)

THE INMATES ARE RUNNING THE ASYLUM!!!
tedw
(01/12/2000; 01:40:03 MDT - Msg ID: 22755)
Redeemable in what?
http://www.usagold.com
I went into the bank today to cash a check. After the teller
paid me, I asked her a question."The Federal Reserve notes used to be redeemable in silver. I could bring them in and get silver coin.What are they redeemable in now?"

She got kind of a funny look on her face, and said "I dont know,let me look." She actually looked at FRN."

I said, "Its a note,but for what? What can I redeem it for?"


Finally, she said "Its redeemable in goods and services. A lot of people like them"

Is it any wonder that our Country is in the shape its in.
The average American has absolutely no understanding of the
Constitution and his heritage.It is a shame on them and the public brainwashing system that calls itself education."


"Congress shall have the power to COIN money.....No state shall make anything but Gold and Silver Coin a tender in payment in debt"---(This being interpreted means Congress has the power to have issued fiat money and States can make that tender in payment of debt)

THE INMATES ARE RUNNING THE ASYLUM!!!
Simply Me
(01/12/2000; 02:31:05 MDT - Msg ID: 22756)
People, Places and Things
I'll probably get myself in trouble commenting on squabbles here in the forum...but then, maybe not. (I often feel like Eyore here..."Thanks for noticin' me.") But something my mother used to say keeps ringing in my ears when I see spats that go on Post after Post.
"Small minds talk about people. Better minds are interested in events. Great minds discuss ideas."

Even though I begin at "ground zero" in this arena. I am here to learn all my simple mind can grasp. I've never been good with numbers, and was therefore encouraged into pursue topics far removed from ecomonies large and small. But I find I have a need to know...as we all do, whether we realize it or not. So I am here to learn about Gold and Oil and What a Dollar IS or IS NOT. I don't care what the DOW did today. I do care WHY it did it. I don't care what the POG is today...because I now know WHY I own gold. These are sign posts I will spend the rest of my life learning to read. And I have only just begun to learn the ABC's thanks to this forum.

Thanks to the great minds who discuss the economies of the world here. Thank you for communicating your thoughts without "dumbing down" your posts. I thoroughly enjoy the challenge of understanding what was incomprehensible to me just a few months ago. I appreciate you more than you'll ever know!

I enjoy the arguments, too...except when they involve personalities. But I suppose we all must prove we're human at least once a day.

Interesting insight yesterday. Good Sir FOA, I wonder what "point has been made" and who "the correct people" are who "have seen it". Am I asking a small-minded question?

Looking forward to the day when I grasp enough of this subject to join in the discussion of ideas.
simple me

Cmax
(01/12/2000; 05:09:55 MDT - Msg ID: 22757)
Cavan Man and TownCrier
Peace.
Hermit Club
(01/12/2000; 05:17:48 MDT - Msg ID: 22758)
Golden Truth
Sir, I have not sold my house, but am of the thinking that
there will be a need for high liquidity,and many bankruptcies in the not too far future. Wouldn't that bring down home prices? such as back 10yrs after 1987? Difficult
to predict...Your insight would be appreciated!
Thanks to all for this great Hall.
and FOA, we watch this supergold market TOGETHER no?
There are many students in this fortress, we can't all put up our hands at once... please feel free to discuss any past, present or future detail. WE are LISTENING!

thanks again.
ss of nep
(01/12/2000; 05:29:35 MDT - Msg ID: 22759)
Plastic and the Bank of Canada



On 1 Jan. 2000 I read an article in the National Post newspaper titled "From Solid Gold to 63 Cents".
The story was about the Canadian $.

Much of the info in the story seemingly came from a
Bank of Canada publication
Titled "The History of the Canadian Dollar",
so I called the BoC to order a copy.

The person I spoke with said yes I could get the publication and I said great and
I asked if I could pay with my Credit Card ?

The reply was NO, the Bank of Canada does not accept payment by Credit Card.

So, I went the Bank in person to pick up the publication.


Hmmmmmmmmmmm



JCTex
(01/12/2000; 06:33:07 MDT - Msg ID: 22760)
FOA: Nor is there any gain in ...
"Nor is there any gain in diving so deep to explain political strategy just ahead..."

FOA, that is one of the very things that makes this site unique and uniquely valuable. Like someone posted several days ago about ORO, I read your posts [and ORO's] and then go bang my head against the wall. Then I go back and read again, and again until I either get it, or think I have. Your perspective, experience, and learning is most unique and I THANK YOU FOR SHARING IT!

I would ask you not to back off, but rather step it up. I'll go on banging my head and appreciating the education. For those who do not want to bang their heads, they can skip on over to the next person's post. Everybody wins, everybody happy.

What I do not think is unique is my opinion.

Thanks, again.
JCTex
(01/12/2000; 06:39:24 MDT - Msg ID: 22761)
MK
As long as I am embarrasing myself and saying nice things to people, let me add you to the list.

I have gotten more and a better education at this site than I got in five-years at The University of Texas.
Leigh
(01/12/2000; 07:10:21 MDT - Msg ID: 22762)
FOA
Dear FOA: I was very surprised last night to read your response to Cavan Man's post. Cavan Man never meant to criticize you! The way I read it, he was trying (in a roundabout way) to tell you how much we all appreciate you and how hard we (of limited understanding) are trying to understand your message. He also had a question for you, which you disregarded.

Cavan Man has been one of your biggest fans for a long time. He has often complimented you and defended you against critics. By misunderstanding his message, you have hurt him very deeply, and I imagine his hurt will stay with him a long, long time. I can understand if you are weary of posting, if you're too busy to post, if you're tired of our lack of understanding. No one can fault you if you want to take a break. But please don't make Cavan Man the "fall guy."

My toddler has a video in which the barnyard animals go to a school to learn to recognize "friends" (songbirds, sheepdogs) and "foes" (foxes, hawks). We goldbugs have a lot of "foes" in the world, and we need to recognize who they are so that we don't get misled. What we DON'T need to be doing is damaging our "friends."

Best regards, Leigh
lamprey_65
(01/12/2000; 07:26:01 MDT - Msg ID: 22763)
More Gold For A New Market?
http://www.crbindex.com/news/story2203.htmlFrom Bridge News:


Swiss Press: Roth says SNB can sell gold via auctions, or BIS
Zurich--Jan 12--Swiss National Bank directorate member Jean-Pierre Roth said the Swiss central bank has the option of selling part of its gold reserves either by auction, or through the Bank for International Settlements. "I can't
say now which we'll choose, but we don't regard auctions that highly," Roth told the Finanz und Wirtschaft newspaper Wednesday. (Story .12731)

Peter Asher
(01/12/2000; 07:43:41 MDT - Msg ID: 22764)
ORO
Thanks for clarifying the discrepancy. The Devil is not just in the details, but in the difference between theory and the actual physical marketplace.
Hipplebeck
(01/12/2000; 07:49:26 MDT - Msg ID: 22765)
Leigh
That was wonderful
Michael
Twice Discipled
(01/12/2000; 07:50:01 MDT - Msg ID: 22766)
FOA, all ...
Ok, I am going to break a forum rule to show what I see as a very relevant parallel. When I read my King James version of the Bible, I must adopt a somewhat different approach for comprehending and reading the scriptures presented. This occurs for two reasons, first, the scholars who read and translated the original transcripts used a form of early English (forgive me for this simple non-scholastic term) in which writers used a very poetic form of English. Since this does not coincide with my normal thinking I must work extra hard to first get the old English semantic meaning and secondly to have my hear so inclined that I may understand what God was trying to communicate through the Word. I find this very much like FOA and other's words here at this forum. He too comes has a form of expression and understanding unlike most here. Why do you think we now have so many denominations of churches - because God's people could not agree on interpretation of the scriptures and could not agree to disagree while focusing on the things important to God not man. Let us not be divided by the things which are unimportant to our goal, but stand united for Gold.

P.S. Since in our everyday conversation we use body language and many other signals to attempt to communicate clearly our intent, it is very difficult for the sender to clearly communicate intent and for the receiver to reconcile these intents. Let us continue at this fine university and be careful when we try to conceal our intent for amusement or other purposes in fear that it may be misinterpreted.
silent runner
(01/12/2000; 08:10:49 MDT - Msg ID: 22767)
ROSSL AND NICKEL62
thank you for yesterdays response regarding invesco gold fund
FOA
(01/12/2000; 08:21:11 MDT - Msg ID: 22768)
Thinking and talking out loud?
ALL:
What a mess! Cavan Man, (I know you are still reading) I used your Thoughts as a measurement of what I was doing. This is a "very" large group to walk with, as such we often only hear the nearby discussion, yet many are along for this walk and choose not to talk. So, I find myself walking in the middle, the front and the rear, in a effort to not only be close and hear the talk but to "see" the map they read. In life, I have seen how often "the more verbal ones" project the direction of the quiet groups and I take this in. Cavan Man, you did not change my will to hike, rather your post made me "think out loud".
There is no leading or following here, as we are all on this journey whether one acknowledges it or not. I am only a small part of the group. It's just much more interesting is we can see the real "natural wonders" on the right, left, behind and in front, instead of just the next step before our aching feet. Yet, I understand how some would rather see the trail as only a series of completed single steps. Each with definable distance, impression and easy to collaborate. Ha! Ha! Indeed, it may be more of an American Journey if one can "float on the surface of a river" within easy view
and "earshot" of those walking the hard trail! (smile)
Mr. Lawrence, I'm sorry I spoke so loud what I should have thought so quietly. You will return, yes?

I do thank everyone for their kind words and honest directions. I'll continue to talk and "listen" as we walk this golden trail.

FOA
PERMAFROST
(01/12/2000; 08:25:03 MDT - Msg ID: 22769)
The Dollar
The dollar sign stands--as the money of a free country--for achievement, for success, for ability, for man's creative power...incidentally, do you know where that sign comes from? it stands for the initials of the United States. The USA was the only country in history whose wealth was not acquired by looting, but by production, not by force, but by trade, the only country whose money was the symbol of man's right to his own mind, to his work, to his happiness, to himself.

Besides;

the dollar is backed by oil. As FOA corroborates in his message ID: 22663 of 1/10/00.

nickel62
(01/12/2000; 08:54:11 MDT - Msg ID: 22770)
Simply Me
Your mother was evidently a very smart woman.
USAGOLD
(01/12/2000; 09:31:05 MDT - Msg ID: 22771)
Today's Gold Report: Swiss Lean Toward Liquidation through BIS
Market Report (1/12/00): Gold opened weaker this morning in quiet
trading after yesterday's good showing (up $1.80 at the New York close).
We will be watching as the day progresses to see if yesterday's positive
trend reasserts itself. Europe and Asia were quiet as well. Gold Fields
Mineral Services releases its 1999 survey today. The Swiss National Bank
is trying to decide between gold auctions or selling through the Bank
for International Settlements to disperse of the 1300 tons recently
approved by the Swiss parliament. The sale could still be blocked by
public referendum. FWN (Financial World News) SNB director Jean Pierre
Roth says, "I can't say now which we'll choose, but we don't regard
auctions that highly." Though there is no way of knowing for sure how
this is all going to shake out, since the Bank for International
Settlements acts as Europe's central banker to central bankers, the
implication in going with BIS is that the gold would be bridged to
another acquiring central bank(s) at an agreed upon price and this would
be neutral to bullish for the overall price. The reason: the gold would
never be put on the open market, but simply moved from one palette at
BIS to another.

That's it for today. We'll see you here tomorrow.
Canuck Gold
(01/12/2000; 09:53:52 MDT - Msg ID: 22772)
FOA (1/12/00; 8:21:11MDT - Msg ID:22768)
I would like to expand on your thoughts if I may, FOA. Walking a path with ones view limited to the next few steps is generally a safe venture in the local park. It would be very foolish to do so in a jungle, where one should spend more time looking to the side, behind and above than on the path ahead. An attack by a hungry beast could come from anywhere, but it would be unlikely to be a frontal one.

CG
ORO
(01/12/2000; 10:01:35 MDT - Msg ID: 22773)
FOA - some comments - Part I
OA (01/10/00; 20:39:02MDT - Msg ID:22663)
FOA (1/11/00; 6:23:10MDT - Msg ID:22690)

Many thanks for your replies to my many questions and comments. Truly marvelous.
I am hoping you would stick around today since you post mostly on weekend, and I on weekdays and we
end up communicating on a weekly bassis. I am always impatient to discuss the last posts.

Wrote most of this up yesterday and the day before, but decided to wait till you went ahead with the
discussion of current motives and the plan for the future.

I am trying to put the two issues in perspective, (1) the break in the gold backing and (2) the need to price
oil at a higher dollar price for the dual purposes of (2a) "strategic", locally controlled oil, and for the
simple (2b) prosperity of the American oil patch and its highly connected people.

Which do you see as having been more significant? Or was it a monetary decision based on a new concept
in commodity money? Or, what I consider more probable, that it killed so many birds in one stone that it
was just too attractive to let go without one good try? The additional seigniorage from this concept would
also have made it attractive.

Besides, considering that the US was then so far outsude of any possible internal remedy to its gold
receipt (dollar) printing problem, it was just a matter of a few months till it would all have broken apart in
1968 - the Fed and the government then facing the hard choice between having a banking system or a
currency. I can see that the system was saved in 69, when the London gold market moved to gold pricing
in dollars and the OPEC countries stopped taking currencies other than dollars. The US managed to even
stretch that arrangement past the breaking point.
--------------
Yes, among the true drivers of the US economic boom was the cheap domestic oil it enjoyed till the mid
60s. Economic freedom in the US was limited since Roosevelt took away our few remaining economic
freedoms and the cash. The timing of the break in US oil production belies the truth of your analysis of the
thinking behind this ingeneous way of solving a stupid and costly problem. The steep drop of US oil
production, as if off a cliff was impressive. But there were many alternatives to the solution chosen; oil
could be imported and stored, and that would have set the price for internal production. Oil imports could
have been taxed to provide local and "most favored" neighbors with better prices. The reason the US
went off of gold did have to do with oil offering backing for the dollar, on an "as needed" bassis, but there
was a reason that was necessary. The reason was the meteoric rise of government expenditure in that era.
The US was throwing fiscal and balance of payments caution to the winds till the last day before going off
the gold standard. That day marked the end of the government expansion relative to the economy. The
14% of GDP level seen in 1969-1971 was never seen again. In reality, we are back below 1959 levels at
11%, while the Federal government has shrunk to some 3.5% of GDP from the former peak of near 7% in
1970..

The question that comes at this point, is why were the Arab oil suppliers willing to do this? Was it because
their oil would continue to be priced in gold, and this whole thing with the dollar just did not matter?
Why did Europe go along with this scheme?

I think it was the "strategic" element of the time, a malevolent and reluctant Soviet system and China in
complete chaos in the "cultural revolution", led by psycopathic crackpots, that played a part in
convincing Europe and Oil to back the scheme. There was a need to continue support for the US so that it
could retain/gain superiority over the Soviets. The "exorbitant privelege" had to be maintained for both
the sake of the US and of Europe. For Arab oil, pricing was fine so long as they got their "fair" amount of
gold per barrel. The Europeans would pay for the US military sevice by taking US dollars. Do you see this
as the "whole" of the strategic significance of the deal?
ORO
(01/12/2000; 10:03:24 MDT - Msg ID: 22774)
FOA - some comments - Part II
The problem of oil as money is in two ways, it is wealth when it is in the ground, but it is a medium of
exchange when it is taken out, shipped and used. It must retain a wealth money to back it up. The wealth
money was to be found in the gold exchange of oil to gold, as I take your view. Or, as ANOTHER put it,
gold and oil must travel in opposite directions.

The next issue, that of the US government floating currency in proportion to oil production through the
60s, in effect assuming that the oil, rather than gold is what actually backs the dollar, I can see that
thinking in much of the theory written in the decade before, namely by Friedman and the Chicago School,
but the problem I had then, and have now, is that the currency itself does not in reality allow for any value
whatsoever so long as there is no direct arbitrage between the currency and its backing. In the US there
was no arbitrage into oil. It was only by the tight control of oil supplies in one tiny block, and the
happinstance of gold just being controlled on the other side of the trade that made this work, and as badly
as it had.

The economic expansion of the 50s and 60s in Europe and Japan was no less than that of Asia in the 80s
and 90s, astounding. Similar to that growth that the US had under a tight gold standard from the end of the
Civil War to the first World War.

The reality of deflation in a commodity money economy is fine if the banking system is either a "free
banking" system (government is not involved but for prosecution of fraud), or the banks are regulated to
disallow them the fractional reserve system completely, so that the fiction of having bank debt balances
being presented as money is removed. Thus the bank issues bonds or depository receipts (only for vault
reserves) but can not stretch the meaning of customer balances to mean "cash". Thus banks are forced to
either live up to their fiction in free banking, or prohibited from the fiction altogether.
The interest rates of the period before the Fed then were tremendously low. There was such a thing as a
perpetual bond. Innovation was tremendous. Though this period was punctuated by bank runs galore, the
system - as a whole - worked. This despite banks being allowed their fiction and their being supported by
many legal priveleges. There is no economic reason for fiat currencies at all.

The only reason is political. To allow government seigniorage and to allow its sometime friends in banking
the assymetry of risk that raises their profitability and assures the great banking famillies of retaining
control of their franchise at public expense. It also ended up costing them "ultimate" control in that their
banks are now edifices of contracts that are all backed by the government printing press and thus in
constant danger of political expediency changing against them.

The expansion of currency in relation to the growth of the economy is simply another way for government
to tax its people. In the case of the US, it was a way for the US government, in its true Roman idiom, to tax
the world as a whole. That it was necessary is arguable. I would venture to say that by 1959 it was not
necessary at all. Europe had grown to the point of being able to support itself militarilly. The US was
fearful of an armed Europe going communist, not needing the US and its military. Not paying
tribute/protection money.

No, FOA, there was never a danger of deflationary spirals forming if the US had not insisted on socializing
banking costs as the cost of the political bargain for subjugating the whole of the country's wealth to direct
Federal government control. Did the war/wars both cold and hot make this the only politically acceptable
way? I think that was not the only way, even when going into a prolonged "cold" war. What it was for is
obviously to "disappear" the cost to both Americans and Europeans. The decision to back the dollar with
oil was based on any new concept, it was simply a new way for the US government to retain control of its
economy through currency control. I could venture a guess as to Hayek being an intellectual backer of the
compromise plan (compromise between reality and the wish of the Johnson and Nixon era bureaucracy to
retain hegemony), since he understood well how oil is important economically, and how a currency works. .

Second point on deflation is that it is healthy for the debt system. It removes assets from the weak and
moves them to the strong. Businesses often fail, but rarely do the assets of the business disappear. It is
only those businesses built on complete folly or on speculation that routinely fail leaving behind no assets.
It is this environment that spawns 1% short/2% long interest rates, at which the rate for gold remains to
this day.

Regarding oil as money, my second point is that oil has a couple of problems as money backing - one is its
low value density, it is too expensive to move around for trade. The second is its susceptibility to political
disruption. Both as wealth when it is in the ground and as delivery contract relying on retention of smooth
transport conditions (as exchange money), the black gold is not as safe as the actual stuff, and hoarding it
is very costly. The only ways to trade it are in the form of obligations ("oil debt") or as title to oil
reserves.

While dwelling on this, there is still another set of details to this issue. The electronic settlement demands
on currency make no difference as to its backing. It can be gold certificates, it does not have to be fiat
paper (a promise as empty as the vault). Even as broadly usable a commodity as oil, its marginal utility is
lower when available at greater quantity - its price relative to other goods falls. A money must have a
steady marginal utility. As the world grew to make better use of oil out of necessity,due to an artificially
inflated cost and an artificial scarcity, the world lost much to the new oil backed dollar. It had to deal with
an oil cost based on the cost of producing oil in the "strategically" preffered but economically absurd
location. The capital cost, the wasted engineering talent, and the years of discomfort in cramped cars and
public transport (particularly in Europe) are but the tip of the enormous ice-berg this piece of idiocy cost.

There is no benefit whatsoever derived from the oil being local but for its strategic significance for military
and political reasons. No amount of theory can find a benefit from the waste of resources on a problem we
did not face (at least not for another 30-50 years at the time) and from the uneconomic consumption of the
intermediate range reserves. Now we have broken the natural cost structure of the oil industry and put in
a big hole between the low cost oil and the high cost oil. In the meantime, we have destroyed the coal
mining industry with a boom and bust cycle, we drove natural gas exploration too early and wasted it, We
broke down the economies of many nations. This folly did not allow the growth of the world economy to
proceed unempeded by the restraints of gold, it slowed down the world's growth and diverted its energies.

I suggest two things regarding the ill-conceived ideas of the decision makers of the time. (1) Their motive
was not to secure "strategic" oil supplies alone, but to make sure the whole world pays the price of this
strategic decision, whether they want to or not. (2) In the way a large debtor can destroy his creditors, the
US and the global banking system built around its rag of a currency did not want to lose control of their
banking and commercial empires through the process of bankruptcy, and resorted to threatening their
creditors with it. The resulting rollover of US debt resulted in perpetuation of the problem for the next
generation, and allowed the continuation of American debt accumulation.

The US, in banging on the heads of its allies with the need to have them bear their "fair share" of the
economic cost of the cold war, had been making an enormous profit of international seigniorage in selling
the G7 and the emerging economies military services. The BIS did not demand revaluation of the dollar in
gold terms because it had no choice. Not even the geographically protected Swiss could claim immunity to
Soviet missiles.

While CHEAP oil (in that its production requires fewer resources per barrel) was the driver of the US
economy of the 50s and 60s, it was still the wrong choice for money. It never had the correct set of
properties; physical, geographical, nor - for that matter - economical. Oil was not "worth" more at the end
of the sixties than we were paying for it, but the dollar was corrupted by the inflation of its supply and
could not represent its face value in gold. The gold price of oil was higher than it was worth, not lower. You
had indicated the price was too high and less gold is now traded per barrel of oil, more in line with the
realities of natural occurrence.

To put things more succinctly, the technological improvements in the use of oil did happen, but they were
too slow and were readilly available in the late 60s. They were slow to come to fruition in widespread
implementation because the oil was priced too high in gold terms. Why? Because of the pricing being a
function of the fact that the dollar was forced to trade at face value of its gold denomination, while its
supply was expanded to great multiples of its backing. Throughout the 70s gold prices rose till the dollar
was near its historical level of coverage by the gold backing it. Not surprisingly, oil was finally found and
produced at precisely that point in time. However, the price of oil in other goods was too high, and the
price of gold was still way too low. The proportional price of oil and gold still left the ratio far from that of
natural occurrence - by a factor of ten. This is the reason the Arab oil countries accepted this deal, and
why the US offered it (or was it the other way around?). It allowed the US to retain its horrendously
overvalued dollar collecting a toll on worldwide oil.

ORO
(01/12/2000; 10:04:28 MDT - Msg ID: 22775)
FOA - some comments - Part III

The concept of the leaders of the time, BIS included, that money supply should be coupled to economic
development is a great piece of lunacy, second only to the idea that a central bank stabilizes the banking
system. These are bureaucentric ideas of central control, as in Soviet Russia, making unwanted choices
for individuals. The setting of interest rates by the central bank eliminates the market's choice of time
preference, replacing it with a single comitee making the choice. It eliminates the economy's single most
important piece of information and replaces it with an arbitrary decision. Obviously, the pointy heads of
the "perfect logicians" were stuck in the dartboard of decisionmaking.

But let that stand for now and move to the issue of alternate options for maintaining a "healthy"
(politically, not economically) domestic supply of oil. The actual target of any policy would be to raise the
price of oil relative to everything else, or to lower its cost of production through subsidy.

#If the US was interested in this outcome alone, it would have simply subsidized oil exploration in
"approved" areas where US military has easy access. The downside is that all the burden of subsidy
falls on the shoulders of the US government, who then needs to finance this from taxes or from
printing currency. This would either slow the economy or devalue the currency while still slowing the
economy after a miraculous period of wasted resources and capital. It also has the odd tendency to
not produce the necessary international seigniorage that selling your gold 10 times over could
produce when coupled with a goodly trade deficit.
#Another option is tarrifs on imported oil. The tarrif would be a net income generator for the US, but
would cause costs of oil to local industry to be higher than they are to foreign industry. The result
would be that the tarrif on oil would translate into a margin benefit for foreign petroleum product
manufacturers. The foreign manufacturer would gain market share away from local manufacturers
and further damage the US production base, already suffering from the dollar's overvaluation. The
dollar was then some 2.3 times overvalued. The dollar would have to come down to the point of the
economy being able to export on a fair value bassis, or below that. The important point is that the
tarrif solution is incompatible with seigniorage. It was, therefore, not helpful in the collection of
global payments of the tribute that financed the cold war.
#The choice that was made, was to continue overpricing oil in gold, for the benefit of the oil meisters,
while constructing an elaborate debt trading structure to avoid the dollar from facing the reality of
its value. .

----->Regarding the dollar stabilization - "Yet, right after the Mexico default crisis, the whole system came
back to life. "

I take that to mean that the debt crissis that the 70s inflation created when the rug was pulled away (rates
raised to the stratosphere and liquidity drained from the markets virtually overnight), was among the
significant events that changed the structure of global dollar trade and put an end to the old way of doing
things by (1) (in effect) unloading America's debt service on the emerging nations. I believe other
additional factors were (2) the maintenance of high real interest rates and (3) the transfer of oil purchases
of gold off the public markets that created this era of stability. (5) Other, more minor elements, were the
(5a) peaking of the baby boom's entry into the workforce (and the world of excessive spending), and (5b)
the coming online of oil wells in Alaska, Gulf of Mexico, North Sea. The "Strategic Oil".

Growth:
Growth centers for the world were as follows:
1950s - Germany, Austria, France (to a lesser extent)
1960s Japan, South America (into the early 70s - they actually benefited some from the oil shock)
1970s Hong Kong, Singapore, Taiwan, Japan, China
1980s China, Korea, Phillipines, Malaysia, Singapore, Taiwan
1990s China, Phillipines, Thailand, Vietnam, Laos, Malaysia

By my estimate, the West, the US in particular, has skimmed "off the top" 40%-50% of the benefits of
the industrialization or re-industrialization of these countries in terms of living off of this increased
productivity. As Germany rebuilt, Asia went from feudalism to modern industrial Meccas, Americans
enjoyed the benefits. By 1970, the US went from being nearly half the world economy to being 1/3 in dollar
terms, and less than 1/4 in real production. How could anyone conceive of the dollar being sufficient for the
world's commerce based on values the US provides. Today, the US is still 1/3 of the world economy as
measured in dollars, but well under 1/5 in real production-probably closer to 1/6. The US managed to lose
its technological leads in all industries but for computers and communications. Even so, these industries
are operating deeply in the red and subsidized by investors from the whole world trying to keep the one
real industry still going for the US.

--->"Still, in all fairness, the old system was built on a much slower creation of production efficiencies and
couldn't accommodate this modern surge of wealth (and debt). Let's face it, the world has no precedent for
the last 30 years of growth. By adhering to the fixed money supply, currencies would have risen in value
creating a deflationary effect on the debt created from this growth. Our first experiment with this came as
the US decided"

This is wrong. The old system provided some of the highest growth rates any country has seen at any time
in history. The "new" economic excercise whereby the failed British banking structure was adopted by the
US is the one that could not retain steady growth but would gyrate in broad swings without allowing prices
to fall. The flexibility envisioned turned out to be a straight jacket of fear. How many times did the pointy
heads of the "perfect logician" economists get stuck in the dartboard they used for decisionmaking?
How many got pricked with the Donkey tails when playing "pin the policy on the economy"? Why should a
world be subjugated to the interest rate roulette game be thought to provide for better growth potential
than one which is not?

Stomp stomp stomp. The oil money idea.
OK, so oil is better than nothing.
But the low marginal utility of oil - which expanded into lower and lower value uses as its production
increased through to the late 60s gave the impression to the stone heads managing the Fed that a money
backed by oil would be better than one backed by gold. Obviously, that is not a possibility. Conversely, it
is not because it is better money that they chose it, but because it was worse. Because backing a currency
with oil could allow ever expanding seigniorage excused by oil backing. As a result, they allowed the dollar
to inflate endlessly against its gold backing. Furthermore, as the oil backing was of the exchange form
rather than redeemability form, arbitrage between the currency and its backing was not possible. The
arbitrage that did work, as you described the period up to the closure of the gold window, was bewtween
dollars held by European central banks and Federal reserve gold (actually belonging to treasury).

Considering the sheer senselessness of many European central bankers of the century (see Germany
1914-1924, and any other country outside of Switzerland) , I find the idea of their making the right
decisions today quite refreshing, even if it leaves me somewhat the skeptic.

---->" Our first experiment with this came as the US decided to keep gold in the money universe but back
the currency with oil. Better said: "continue to settle oil in dollars as long as the rate (oil price) creates
more value from production than the inflation of the currency takes away"

Well, I have two problems here. One I discussed above, that the oil backing is not effective because of
oil's falling marginal utility. The second issue is that the oil price under the circumstances of the 60s and
the 70s did not produce that result. The price had to be inflated in dollar terms in the US in order for the
production to remain within the US. Otherwise, the production from the much lower cost wells in the
Persian Gulf states would have pushed out all US production. What this meant is that oil was not producing
higher value from production because there was more domestic oil, but only that the high prices prevented
lower marginal utility uses from consuming more oil. So the benefit was not there. The excess pricing of oil
of the period was causing only the higher value production of oil products to be produced because lower
value products could be produced only by the use of cheaper oil from the Gulf.

The currency was thus stuck with two mistakes, if not three:

#Using a low marginal utility commodity for monetary commodity caused a natural depreciation of the
currency with oil. Each new barrel of oil was worth less than the last one.
#Inflating the currency relative to oil backing in order to retain local control of some production (for
strategic - not economic i.e. money losing - purposes) through higher relative prices for oil.
#Not understanding that the mechanism that did make this work was the arbitrage of gold to oil at a
fixed exchange rate. A part of this is not understanding that oil prices in gold were set too high by
OPEC and the Texas Railroad Commission. (See note)

----> [As theory came to practice] "oil now backed the dollar as world oil payments were settled in dollars.
In return, gold now backed oil from a US guarantee of an open market for the metal. Over time, a portion
of oil dollars could be replaced with real gold through actual physical purchases or in
participation with evolving world gold banking (paper gold). Even though the dollar gold price had surged,
the higher oil prices were allowing a percentage of those dollars to be converted back into gold at the old
gold/oil rate. Slowly, the old dollar holdings (prior to 71) were effectively being used to reclaim gold. The
expansion of the world dollar money supply was seen as reflecting the more modern importance (value) of
oil in the economy. As long as growth in the production of economic goods outstripped dollar price
inflation, the dollar could be expanded to match the unrealized value held in oil. "

Here I come back to the point of gold being the money, and the dollar arbitrage to gold going through oil.
The "unrealized" value of oil was not there and could not have been there but for a short instant after
catalytic conversion was discovered and allowed the creation of more high value distillates out of the oil.
The process of producing all other petrochemicals but for ethylene and propylene (which started out as
waste products used for heat up to the 50s) was of lower value than the previous products.
The growth you speak of did not happen in the US. It was in the Emerging, newly industrialized countries.
The growth of these countries had more to do with the introduction of a modicum of economic freedom and
loosening of European and American capital controls than anything to do with oil. The marginal return on
putting a hand plow farmer on a metal stamping machine was orders of magnitude more productive than
anything that could be found in new uses for oil (substantial quantities of it).
The stars of growth over these 30 years, these countries that kept the infinitely inflatable dollar affloat
were: China, 11 fold growth; Taiwan, 10 fold; Korea and Singapore, 9 fold; Malaysia, 7 fold; HongKong,
and Thailand, 6 fold; Indonesia and Egypt, 5 fold each; Turkey, India, Pakistan, Phillipines and many other
countries grew better than 3 fold, compared to significantly less than doubling of US production and
somewhat better production growth in Europe and marginally better in Japan.
The value unlocked was not in the oil but in the compression of the industrial revolution in the emerging
countries from 400 years into 40 (or less).

It is the entrapment of the people, government and businesses of these countries in debt traps of all sorts
that created the dollar's value. Oil provided an anchor, EM debt provided the buoyancy thay kept the USS
Dollar afloat.

Note: If gold were not jealously hoarded by the CBs of the world, but instead allowed to trade freely with
oil, the correct pricing could be found by the market. Having restricted gold availability through this
hoarding, and then diverting the market's price finding ability by artificial support of the dollar's value. and
by the use of gold banking to dilute demand, oil never got a chance to find its "real" price.
Gold banking was controlled by the CBs by their usual method of promissing liquidity in case of trouble,
and dictating a sub-market interest rate.
Gurn Blanston
(01/12/2000; 10:28:46 MDT - Msg ID: 22776)
5/5/2000 and gold?
http://www.usagold.com/cpmforumWhat will happen to the price of gold (silver,oil) if the 5/5/2000 alignment of the planets causes severe weather, earthquake, volcanic eruptions, etc.? Richard W. Noone in his book, "5/5/2000, Ice: The Ultimate Disaster," gives an interesting description of what the alignment of the planets has done in the past (he has a video about it, "Enter Darkness, Enter Light" - frankly, I think the video is better than the book for keeping your attention).

I would think that any severe results of that alignment would raise the prices of PM's and oil "astronomically." (interesting if true - no?)

Assuming that 5/5/2000 will result in severe Earth problems, will we hear anything about this upcoming(?) event from the mainline press? Under the assumption that there might be something to this idea, if there is no advanced information about the possibility of problems resulting, we could be in for a big surprise.

Agree or disagree, but be gentle. I am only trying to be helpful to my neighbors. "Ants prepare for the winter not out of fear, but because they know it's coming."

I may be going out on a limb here, especially after the "cry wolf" of Y2K. But, please keep the above in mind as we pass the "Ides of March" and the coming uptick(?) in gold (and oil?). I, for one, will be watching to see if the "big players" start to move the markets anticipating the "5/5/2000" events.

Noone's book is a tedious read, but filled with interesting stuff: a lot of pyramidology, Masonry, earth cataclysmic history, etc.; but, well documented.

Gurn Blanston
TownCrier
(01/12/2000; 11:10:47 MDT - Msg ID: 22777)
This may assist your understanding of the fundamental problems
http://biz.yahoo.com/rf/000111/bcs.htmlAs you read this article about Japan's battle with deflation, keep the mechanics of the yen carry trade in the back of your mind. (�.C.T. = yen were borrowed into existence; yen were brought to the foreign exchange market to bid for dollars; dollars were brought to the financial market to bid for U.S. securities.......a grand self-reinforcing process to be unwound at some point (already happening).....U.S. securities to be sold for dollars, dollars to be sold on the FOREX for yen, yen to be used to settle the original loan.)

If you also keep in mind the "genetic code" of our modern currency, you'll more clearly understand why the Bank of Japan faces the situation that they face today. This "genetic code" is that each new currency-unit borrowed into existence must eventually be extinguished from existence when the loan is repayed.

Private entities such as hedge funds borrowed vast sums of Japanese currency into existence, causing an inflationary effect that depressed the relative value of their currency, and thereby aiding their country's export economy. As the �.C.T. unwinds, the yen are extinguished from existence, and without other borrowers to play at mid-wife and pick up the borrowing slack, it falls upon the Bank of Japan to either sit back and watch the economy implode, or else become the party to the Japanese government's scheme to become the borrower and lender of last resort.

It is this very form of public reactive currency-creation that leads to general malinvestment and ultimately the end days in the timeline of that fiat currency system.

Read the article, understand where we are, and protect yourself with meaningful savings in gold...an independent and incorruptible monetary asset.

It might help if you understood that some forms of "paper gold" also act like a fiat currency such as the yen described above...suffering from similar ills and a fiat currency timeline. When the yen, or any fiat currency, reaches the end of its timeline, the currency is worthless and all that remains are the hard assets of the nation. What property/assets do you own outright, and on what property must you pay rent (property taxes)? When the paper gold system reaches the end of its timeline and is deemed worthless, all that remains is actual gold metal. Can you see that metal in-hand is the proper protection against the failure of both systems (paper money and paper gold)?

Please recognize where we are along the timeline. If we were not so far along, there is little chance that this issue would have captured your attention and drawn you to gold (and most notably to this Round Table.) Many of you have gathered here perhaps because you sense more keenly than our fellow citizens where we now stand in time...just as some wildlife can sense a coming earthquake. (You probably didn't have this same sense all your life...it is a recent phenomenon, no?) It didn't matter what your knowledge of economics was, just as an animal doesn't understand plate tectonics or Richter scales. What matters is that you somehow arrived at this sense, and have somehow found this Round Table, and now you want to learn more. Kinda like the movie "Close Encounters of the Third Kind," isn't it? Spooky....
TownCrier
(01/12/2000; 12:20:20 MDT - Msg ID: 22778)
Gold producer hedging up sharply in 1999
http://biz.yahoo.com/rf/000112/wx.htmlGold Fields Mineral Services reported that gold miners vastly increased their hedge positions in 1999 over 1998 levels...to 445 tonnes from 88 tonnes.

But there's more to the story. GFMS said, "However, following the European agreement (to limit gold sales and lending) and the resulting price spike, producers changed direction and began large-scale restructuring and buy-backs of hedged production. GFMS estimate that overall in 1999, net producer hedging came to 445 tonnes."
beesting
(01/12/2000; 12:45:31 MDT - Msg ID: 22779)
On Stocks--Who is the PPT--Plunge Protection Team!!
I haven't seen this posted before, so lets make some educated guesses on why the Stock Markets are behave-ing in an unprecedented manner.

First statement:
The U.S. Government wants out of the Social Security ponzi scheme, in the long term. So, they are doing everything in their power to encourage controlled private party retirement plans. Which means total encourage-ment of all kinds of long term investment plans including stock investment. The trouble is most in U.S. Congress,and Senate, are not expert economists, they are professional politicians with short term goals(length of term in office).

Second statement is about stockmarket "Specialists" The PPT:
What is a Specialist?

From the A to Z of investing book written in 1986.(may be outdated):
Specialist- A stock exchange "MEMBER" who trades only in a few stocks and is charged with maintaining an orderly market in them, buying or selling for his/her own account in order to prevent large price swings or when there are no other order takers.A specialist must have considerable capital in order to MAKE a market in a stock and must obey strict exchange rules(???) to prevent taking unfair advantage. The specialist also executes any LIMIT ORDER a floor broker cannot execute(and collects part of the floor brokers commission for this service). Each specialist works at a specific trading booth on the exchange. On the New York Stock Exchange in the mid-1980's there were some 410 specialists grouped into 57 trading units with about 27 stocks per unit; on the American Exchange there were 200 specialists grouped in 27 units, each trading about 35 stocks.((Book doesn't mention NASDAQ)) Although orders were often received through computers, they were still executed manually........((end)).

My comment:
These Specialists ALL have to work for or with Brokerage Firms that have a "SEAT" on the exchange.These Seats are limited!!!

Third statement:
"ALL" Stocks traded on exchanges are under the control of Brokerage Firms!!
What does this mean?
It means,the companies that issue the stock(partial ownership of the company) cannot sell( under agreement with brokerage firms)directly to the public. They have to sell their stock, through a brokerage firm. Stock is supposed to be backed by company assets, or future projected assets. Hence a large company can issue more stock as their total assets grow. But, as Sir ORO has pointed out, if a company uses "authorized stock issued" in their "book" asset base,it's not a true value of "TANGIBLE" assets.

Back to the brokerage firms;
It's my belief that if a company issues stock, the brokerage firm acts as an agent to sell said stock, for the company that issued it. This may be how it is done:
Brokerage firm "X" receives 100,000,000 shares from company "A". Company "A's" stock is already selling for(hypothetical) $50 per share.
Brokerage firm "X" instead of flooding the market with company "A's" new stock issue, which would drive the price down, feeds the market(new stock buyers) a small amount of stock at a time, and keeps the stock price as stable as possible($50).Therefore, diluting(inflating) company "A's" original stock issue, but keeping the share price from going down,creating what we have been calling a stock bubble!

Onward!
The large brokerage houses have "Billions" of shares of stock in their books'some in safe keeping for clients, some as yet unsold. All the stock has a (street) market value(collateral).

The "SPECIALIST" mentioned above has almost unlimited credit backed by the brokerage house's pool of stocks, therefore aided by computer analysis of current trends in stocks, the specialist can at his/her discretion,enter the market to make it rise,enter the market to stop falling prices,(PPT) or watch on the sidelines.

It is in the best interests of the U.S. Government, and all the large brokerage houses to keep the bubble expanding,however the more stock that is put into"circulation" the less real value it has. Because not too many people in the U.S. "own outright" anything of real lasting value (GOLD) anymore, they don't realize what's going on right before their eyes, so they keep buying stocks.

In the 1970's people began to realize the more dollars the FED issued the less value the dollars had(they called it run away inflation at the time). Now the FED, with the approval of the U.S. Government,can issue all the paper money they want to, KNOWING MOST OF IT IS GOING INTO STOCKS,and there are no public outcries of run away inflation.
If I have made mistakes in this post,one and all, please feel free to correct them....Thank You.

Those in the Know....Buy Gold....beesting.




Mr Gresham
(01/12/2000; 12:52:02 MDT - Msg ID: 22780)
Oro
"The question that comes at this point, is why were the Arab oil suppliers willing to do this? "

At the crudest level, my cynical mind wants to answer: "Because we've got your sons (at our universities)" but I suppose appealing to the ancient world's idea of hostage-holding is a bit too far out for our "modern" times, eh? Seriously, I'll bet there was a sea change as those American-educated sons of the House of Saud came home to run the family business. I'd want to study more on that, but remembering people like Yamani, it seems we were dealing with a new level of self-confidence in the Arab world.

Also, around that time (1968-69) you had the world scratching its head over Vietnam -- "what national interest was USA bashing itself to serve over there?" and the feeling that ANYONE could become the target over very little provocation, including friends. (like the village of Ben Tre -- "we had to destroy it to save it" -- or My Lai) Or Nixon's "madman theory" face-off with Soviets. The rest of the world thought, "better let these people have their currency hegemony until we're in a better position to stand up to it." If there's one thing rooted in Europe and Arabia, it's the broader concept of historical time.

One question that's been on my mind all year in reading you and FOA: How does fractional reserve money creation work in the Euro world and the yen? (And who gets the advantage of seignorage?)

I did go to the Euro (ECB) site and see the bonds that were listed as linked to the new currency, but it really was beyond my understanding to answer my question just from there. Must we await an Edward Griffin (Monster from Jekyll Island) from Europe? Or is it basically the same story? Anyway, my limited understanding of money creation began from reading that book last May, and I'm still wondering which flavor of salt to take with it.

And FOA, I feel like I still have homework to do from our previous exchange, but my next questions required finding and reading more from earlier months -- I have memory of things being discussed that I didn't comprehend at the time and my approach wants to read it all together and then ask the one or two "next step" questions, rather than ask for a re-hash of the whole. But then, I often feel frustrated by time, even while spending much of it here.



Gandalf the White
(01/12/2000; 12:54:03 MDT - Msg ID: 22781)
< ; - )>>
Sorry to advise you Beesting, that someone or something has misguided your thinking. -- The "PPT" are not the Specialists that run the books at the stock markets! -- The PPT is the FED and its broker, GS, that stop the massive spikes in the NYSE so that the Sheeple do not lose the "buy-on=dips" brainwash that has been steeped into the DayTrader generation!
<;-)
ORO
(01/12/2000; 13:36:57 MDT - Msg ID: 22782)
Mr Gresham - The Questions
Well...

Hostages? Even in 69, when they could do anything they wanted with super impunity, the "security" agencies were not allowed to do major assasinations, only the Brits and Israelis did that. The written and unwritten rule is that world leaders are "off limits". (Their job is to secure their control over as many people as possible - the more people under surveilance the bigger the budget and your pay - the more people you control, the more influence you have - headless monster with carte blanche)

The hostage of the allowed sort is what used to be 15 or was it 17 thousand tons in the NY Fed depository, from which a thousand tons disappear every two three years. That may have been a hostage. I noticed some relationship between gold disappearance from there and SDR balances, but the data are too few to make use of. Lets call it a subliminal relationship - and I don't know what to make of it.

The next issue -
Vietnam: The most reasonable explanation I could come up with was that the war was not real for the US or the Soviets but was real for the Vietnameses. For North Vietnam it was an independence war, for the Soviets it probably had to do with pressuring China. For the US, (1) it was a matter of credibility with Europe (i.e. the French who wanted to disassemble NATO and chuck the "extravagant privelege"), (2) Try to recruit China to the US side after the rift with the Soviets and the internal chaos left China surrounded from North, West and South. Had the US not remained there till the Chinese were capable of putting their army together (remember that the only proffessional army China had was with Chiang Kai-Shek in Formosa) the overwhelming numbers of people with sticks picks and shotguns were no match for battle tested and Soviet armed Vietnamese. Only after years of training and arming did the Chinese manage to put their army together in the mid 70s. When the US finally left, the Chinese were just barely ready to defend themselves.
To get some idea of what the Chinese capabilities were, you need look only at Campuchia (Cambodia), where Maoist Khmer Rouge took the little red book to its literal extreme. The Iron Rice Bowl that nearly decimated China, immolated a nation of 6+ million into 2- million in 4 years.

An aproppo aside: The Vietnamese were invited by everyone but the Khmer to take things over. The held their nose and did the deed.


Euro: The banking structure is identical to the US. However, the currency issuance is supposed to remain within nominal backing at market rates. They intend to unleash the golden dragon and hitch a ride on it in order to expand the money supply with the gold price. This allows them to book profits from marking to market the gold, and then makes it possible for them to do deficit spending without covering the deficit with bonds. Essentially issuing closed end Euro gold fund shares with a constant value of 1 Euro and a changing NAV per share and varying number of shares.
I think it has a gold bubble mechanism inside it and it will eventually cause disaster. However, it is better then Assignats or pre 1924 Marks, or Israeli Pounds, or Reals, or Pessos, Rubbles.....

As to above, FOA, please correct me if I'm wrong.


TownCrier
(01/12/2000; 14:29:47 MDT - Msg ID: 22783)
Hear ye! Hear ye! "This Week in Gold" has been updated
http://www.usagold.com/wgc.htmlAfter taking a break for the year-end holidays, the World Gold Council has gotten caught up with their weekly gold market commentary...which continues to be provided to USAGOLD.com for your reading convenience at the link given above.
beesting
(01/12/2000; 14:38:17 MDT - Msg ID: 22784)
Hi Gandalf #22781.
Thanks for responding to my post on the PPT, but please reread the defination of "Specialist" from the book A to Z of investing.
The specialist with the APPROVAL of the FED and Goldman Sachs who HE/SHE works for in some capacity, is keeping the market orderly.
My understanding is-- The "specialist" would have to work for or in conjunction with the Brokerage Firms. What individual could buy and sell billions of dollars of stock a day and not have all the profits eaten up by commissions or taxes? The book states their were 610 specialists on the American and New York Exchanges alone. At the rate of buying and selling today,these specialists would all have to be billion airs if they were operating on their own.
The FED does have an account with GS,but the actual trading is done by brokerage firms,and their appointees or employees."Specialists!" or, floor traders.
I may be wrong but until someone can prove my theory wrong, I'm going to stick to my original analysis.

Gandalf, thanks so much for your 5 part series also.
Please go ahead and prove my theory wrong.....beesting.
TownCrier
(01/12/2000; 14:50:26 MDT - Msg ID: 22785)
REUTERS FOCUS-Price panic seen behind record gold hedging
http://biz.yahoo.com/rf/000112/1x.htmlIn reviewing the stats for the past year, Paul Walker, a director for Gold Fields Mineral Services, told Reuters, "I think it was panic hedging. We estimate that producers hedging added 360 tonnes to physical supply in the third quarter alone. When looking for an explanation of the price fall, it is a very important factor."

In an update to its Gold Survey 1999, GFMS said that the producers changed directions after the Washinton Agreement of 15 European central banks. The update estimated that official sector sales totaled 441 tonnes, with 399 coming in the second half of the year, "This includes a significant level of sales from outside of Europe, most of which are unlikely to be reflected in published official statistics." GFMS also said "Little positive impact from the European agreement on gold is expected in the short term, supply of liquidity is adequate and official sector sales will be above the average level seen in the past decade."

Does anyone care to discuss wherein GFMS's vested interests lie...a stoolie for the established bullion banking enterprise...
beesting
(01/12/2000; 14:53:20 MDT - Msg ID: 22786)
Gandalf, another thought on PPT.
Remember PPT stands for Plunge Protection "TEAM". A Specialist may be just a member of that team along with the FED and ALL the brokerage houses.....Thanks Again....beesting.
ORO
(01/12/2000; 15:05:24 MDT - Msg ID: 22787)
Posts to FOA - Some graphics
http://members.xoom.com/Nebucadnezer/GovGDP.htmlThe link has the complete text plus some graphics relating to the text.
The Traveler
(01/12/2000; 15:51:29 MDT - Msg ID: 22788)
Introduction
http://www.usagold.comGreetings and good tidings to all Forum posters (and to those who lurk in the shadows). I travel through cbyerspace searching for that which I covet - meaningful wit and wisdom. Such is truly a precious commodity these days as much lead is offered through all mediums by the incoherent and dysfunctional members of Hobbes� "great unwashed."

Having examined your Forum's offerings and determined them to often be of value, I desire to briefly present my credentials and trust that you will judge me to have sufficient credibility to merit a seat at your table. I will not post often.

I am first and foremost an opportunistic capitalist. I with others relentlessly search the world for risk/ reward profiles on all classes of assets that are seriously miscalculated AND have a high probability of being favorably adjusted within an acceptable time period. At present, of five "plays" being profiled, gold ranks second.

For more than 20 years, I have also been a lender at a Top 10 commercial bank. As I have been taught the old school way of finance and business, I am these days considered by the youngsters as a moody dinosaur. I counsel many clients who perceive their net worths to be north of US$100 million. I have traveled extensively in Western Europe, North and Central America and SE Asia including China. I have a deep understanding of western civilization, economic history and theology - an inseparable mix if one is to understand you. Lastly, though I own significant physical and paper quantities of oil & gas and gold, neither provides the bulk of my income or wealth yet (timing is everything).

With these disclosures made, I present this 1986 quote for the consumption of this predominately American Forum. Amplify the point made in light of today's circumstances and also try to ponder this from the perspective of an European or an Arab or another who got their fingers smashed when Nixon closed the gold window in 1971. What probability of success do you now assign to the Euro, warts and all, for rivaling and eventually dethroning the US$ as the more stable and thus more desirable reserve currency?

"If I were a Japanese nearing retirement, and enjoyed a life expectancy which in that longevitous country, I am told, would be about 85, I would not look with equanimity on my generation converting, year after year, $50 billion of current output into financial claims on a foreign nation on which my government seems to exert relatively little influence. I would rather see some of that output sold at home in a way that enabled me to accumulate financial claims on my neighbors. Our social bond and my vote will enable me to collect these claims even in times of stress. Americans are and show every sign of remaining, in contrast to Japan, a short-term oriented, mercurial, polyglot, multiethnic, mobile and heavily armed people. Claims on such a people need to be accumulated and exercised with care." Thanks to Albert Wojnilower.

Best regards to all.
The Traveler
(01/12/2000; 16:02:29 MDT - Msg ID: 22789)
BGO's Aldebaran (Cerro Casale) Prospect
P.S. - Sir Canamami, the project now has 29 million ounces of gold classified as geological resources of which 25.7 million ounces are P&P. The copper content is 7.5 billion pounds. The project exceeds the hurdle IRR at $345 gold and $.90 copper. On or just before the first bar is poured, the stock (as currently capitalized) has an 85% probability of exceeding $5/share IMHO.
Strad Master
(01/12/2000; 16:24:17 MDT - Msg ID: 22790)
Welcome to you The Traveller
May I be the first to extent the heartiest of welcomes to you!! You seem a to have especially fine credentials to join this esteemed forum. (Particularly whhen contrasted with my own economic credentials, which are that I play beautiful music on a Stradivarius violin and I own some gold.) I hope you post often as your obvious wit makes it seem likely we'll always enjoy your contributions.
You said a few things that pique my interest:
The first is: "I counsel many clients who perceive their net worths to be north of US$100 million." The word that jumps out at me is "perceive". Unless I am reading into your words, that implies that these clients actually don't have what they believe. Could you elaborate? (Personally, I would love to perceive my net worth to be north of US$100 million but were I to do so, I'd probably be forcibly removed to a sanitarium!)
Second, you write about five undervalued plays that you are presently tracking - gold being number two. Would you mind telling us what the others are and with all five (briefly) why? I, for one, would find that fascinating information.
Again, a warm welcome to you.
Strad


Journeyman
(01/12/2000; 17:22:46 MDT - Msg ID: 22791)
Rape, pillage and plunder @Oro
As to the factors Oro (Oro, I think we just became blood
brothers -- yea, yea, you're the smart one and mother liked
you best) explains so well, especially in MID#22773 thru
22775, as to how the US banks & grabit screwed the rest of
the world, well, a rather famous quote usually used by
liberals, reinforces the point that it wasn't by mistake,
but, rather almost surely by design:

"We have about 50% of the world's wealth but only 6.3%
of its population. In this situation, we cannot fail to
be the object of envy and resentment. Our real test in
the coming period is to devise a pattern of
relationships which will permit us to maintain this
position of disparity. We need not deceive ourselves
that we can afford today the luxury of altruism and
world benefaction--unreal objectives such as human
rights, the raising of living standards, and
democratization." [*7 George Kennan quoted in Sheila
D. Collins, "From the Bottom Up and the Outside In,"
CALC Report, 15, no. 3 (March 1990):9-10] -James W.
Loewen, LIES MY TEACHER TOLD ME, (New York, NY:
Touchstone 1996), p. 216

But something US citizens shouldn't overlook with a combined
overt tax bill (so-called "income tax" plus F.I.C.A. ---
Federal Insurance Contribution Act --- better known as
"Social Security") of somewhere in the neighborhood of 45%,
plus the ~20% in hidden taxes built into all products, plus
sales tax, inheritance tax, occupation privilige tax, etc.,
etc. -- we citizens aren't by any means the main
beneficiaries of all this thievery. So who is?

Regards,
Journeyman

P.S. Oro, I also agree completely that the gold standard was
not only viable and "moral," but also practical! Ah, I think
you said that didn't you?? With a minor exception, Napoleon,
inheriting the aftermath of the massive fiat money inflation
in 1790s France, paid for his government and wars up-front
with hard currency.

TownCrier
(01/12/2000; 17:44:41 MDT - Msg ID: 22792)
The GOLDEN VIEW from The Tower
In another day of calm metal markets, spot gold prices last quoted in NY were$282.10, down 80� to finish squarely in the middle of this week's narrow three-dollar trading range. The financial markets have been all over the map, and bonds have been strongly down, yet gold remains sturdy...the economic world's Rock of Gibraltar. If it isn't currently doing handsprings and cartwheels when priced in your currency, then you obviously find yourself in a pocket of economic stability. We encouraged you to enjoy all that life has to offer you in such a peaceful location in time and space.

On the other hand, if the price of gold is rising, and looking rather "exciting" in terms of your currency, your part of the world is probably falling apart (like in Ecuador or Turkey where gold has dramatically risen to 7,028,822 sucres and 152,642,832 lira, respectively.) You likely won't be thankful for the specific price of gold as much as you will be thankful that you had the good sense to have gold to begin with. You will find yourself measuring your future safety and wealth in weight, not in the shifting and failing currency. You must agree, having an account of 152.6 million lira becomes meaningless whaen prices are soaring, whereas an ounce of gold lets you plan your future.

Here in The Tower, we can't think of anyone we know that would want the premium on their fire insurance to increase, or worse, would want to HAVE to USE their insurance. And with fire insurance, the premium you pay gets "used up." You have to renew it every year, and (hopefully) never have anything to show for this expense. Gold is supremely different. If your part of the world takes a bad turn at some point in time, this gold will be there to see you through. But better still, gold never gets "used up." With each "insurance payment" added in subsequent years, the more you have. The money (savings) you put into gold remains as gold. Best of all, and unlike fire insurance, if your individual condition should change, requiring you reevaluate and access a portion of your wealth that has been committed to gold, the process is easily reversible. Just try to do THAT with ten years worth of fire insurance payments.

Some of the best advice we received early on...be the master of your universe. Gold is there to serve YOU, and not only you, but gold will serve all of mankind equally well. It is that fundamental view that brings us to shout news into the night skies from this golden Tower, instead of pursuing a post elsewhere in this wide world of opportunity. The common belief here in The Tower is that if you are not true to YOU, you are shortchanging yourself of the best possible experience while upon this finest of the nine planets in this neck of the galaxy. How many attempts do you anticipate having to get it right...the way you want it?

Hey...the view really IS better when standing on a soap box!

In the COMEX world of derivatives, the February gold futures were traded down 70� to $283.70, and there was no change in the COMEX-held gold inventory--used largely as window dressing.

Here's a Bridge report that reveals the the world is indeed changing in small steps...
New York--Jan 12--Merrill Lynch will exit all agricultural and metals
commodities activities for private client businesses, instead refocusing their
activities on financial futures and options, and on clearing for other futures
and options for corporate and institutional clients, the company said in a
release Wednesday.
***
Reprinted at USAGOLD with permission. For details please go to:
http://www.crbindex.com/reviews/index.htm
No further reproduction without written permission

U.S. government paper continues to take it on the chin. The price of the thirty year treasury bond fell further today, pushing the yield up to 6.701%, the highest level in 30 months.

OIL

Following a report that oil ministers from Saudi Arabia and Venezuela (Ali Naimi and Ali Rodriguez) will meet in Amsterdam tomorrow to discuss the oil market and the potential to extend the supply cuts, February crude traded on NYMEX gained 51� to close at $26.28. Although market participants were said to have given little heed to the comments offered by Bill Richardson, you've got to admit that pawns are moving and deals are being worked out for the U.S. Energy Secretary to volunteer the statement that 'the U.S. will take no steps to control oil prices,' as reported by Bridge News.

And that's the view from here...after the close.
Gandalf the White
(01/12/2000; 18:25:40 MDT - Msg ID: 22793)
Oh Beesting !
Throwing down the gauntlet like that to The Wiz, to PROVE you wrong, is not fair after you complement me for the Serial! -- BUT, give me some time to pull together the data and I shall show you that the Specialists are individual entrepreneurs, and do not act in consortiums. -- Perhaps we could just take The Stranger's arbitration?
<;-)
beesting
(01/12/2000; 19:15:52 MDT - Msg ID: 22794)
@Gandalf the White #22793.
Fair enough Sir Gandalf,I eagerly await a third party's arbitration concerning Specialists, but only after they read the definition posted earlier today from my investment book, and tie that in to current stock market conditions.
My best to you & The Hobbits......beesting.
Ray Patten
(01/12/2000; 20:38:19 MDT - Msg ID: 22795)
Y2K & crude oil futures.
http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002IiB
In case you're thinking of doing something silly because Y2K is over, please watch crude oil futures after you read the above link. The futures have rallied over $2 per barrel on bearish news. I have been trading futures too long for that not to set off warning signels in my mind. The crude oil futures may tell us what is going on weeks before we hear it on the evening news. Get ready to buy Gold with both hands.
(That's a trader's expression!) The poor shorts won't know what hit them.
RAP
(01/12/2000; 20:42:52 MDT - Msg ID: 22796)
5/5/2000 another Y2K???
http://drumright.ossm.edu/astronomy/forces.htmlDuring a conjunction, according to doomsayers, the gravitational attractions1 of the planets act
in concert rather than cancelling out. This extra force is supposed to stress the crust and trigger
volcanic eruptions and earthquakes. This mechanism sounds plausible at first, but careful
examination shows it to be just plain, bad science.
goldfan
(01/12/2000; 20:46:01 MDT - Msg ID: 22797)
gold and cocaine
Somebody here recently was wondering whether the Federales might confiscate gold with the excuse they are trying to kill the drug trade. I wonder how they could confiscate gold, when they obviously are abysmally incompetent to stop the drug trade through consfiscation of the product. My recent research indicates there might be as much as 1000 tonnes of cocaine sold annually in the U.S, this translates to about 1700 tonnes cocaine equivalent of all drugs at $150.00 per gram street value (conservative). A total of $230 billion per year.This is a lot of patronage. If these guys want gold, maybe they will get it.

FWIW
Goldfan
Solomon Weaver
(01/12/2000; 21:34:33 MDT - Msg ID: 22798)
ORO (notes from biotechnology)
ORO You write:
Here is a good one, Yahoo now has 95 $million in cash, would you stress that ""WOW! just a short while ago they didn't have any, boy how quickly they grow". Or would you stress the fact that nearly all of it has come from ESOPs? Would you stress the fact that they have a price to book ratio of 120, and that the 95 million dollars are supporting a market cap of 110 BILLION? That these are the most expensive dollars anyone can imagine having? Each special Yahoo dollar is worth 1000 "regular" dollars because it sits within the company books (as opposed to their losses - which do not).

---

In the biotech sector (where companies sometimes go years without having significant "revenues" other than issuing shares, they just call the problem BURN RATE.

Poor old Solomon
Solomon Weaver
(01/12/2000; 21:52:45 MDT - Msg ID: 22799)
THE SWISS SALES MYTH
lamprey_65 (1/12/00; 7:26:01MDT - Msg ID:22763)
More Gold For A New Market?
http://www.crbindex.com/news/story2203.html
From Bridge News:
Swiss Press: Roth says SNB can sell gold via auctions, or BIS
Zurich--Jan 12--Swiss National Bank directorate member Jean-Pierre Roth said the Swiss central bank has the option of selling part of its gold reserves either by auction, or through the Bank for International Settlements. "I can't
say now which we'll choose, but we don't regard auctions that highly," Roth told the Finanz und Wirtschaft newspaper Wednesday. (Story .12731)
----------
IF THERE ARE ANY REAL SWISS LURKING ON THIS FORUM, WE WOULD LIKE TO HEAR FROM YOU.

I lived there long enough to see MANY Voter referendums...and the outcome on most is that they do not pass!!!!!

A GOLD REFERENDUM will certainly be discussed a lot...THE SWISS VOTED AGAINST JOINING THE EU...WHY SHOULD THE SAME "ROESTLI BRAETLER" FOLK ALL AGREE TO SELL GOLD????

THE IDEA OF DISCUSSING AUCTION VS. BANK SALE BEFORE THE REFERENDUM is like asking AL Gore what color shoes he intends to wear to his innauguration!!!!

This news is just PR garbage which gives a convenient overhang of surplus gold which may "just hit the market any day" and can be used rhetorically to convince the public that CBs are all selling gold.

I see only three options for Helvetia...

1. Mint Massive Quantities of new coins and sell them to the citizens.

2. Sell the Gold to Euro Bank for strengthening the Euro.

3. Sell the gold to UCB to cover their shorts.

Poor old Solomon
Solomon Weaver
(01/12/2000; 21:53:48 MDT - Msg ID: 22800)
Sorry, I meant to say UBS not UCB

elevator guy
(01/12/2000; 21:57:24 MDT - Msg ID: 22801)
@Gurn Blanston, and RAP
I remember a few years back when the planets "lined up". There was all sorts of wild conjecture about what might happen. I waited excitiedly for the day to arrive, but on that day, nothing happened. Absolutely nothing.

Which leads me to believe that during any period in history, there are always those making wild conjectures about anything and everything.

However, 5/5/2000 has some signifigance with regards to the pyramid inch and its time line allegory. So once again I will excitedly watch the day approach! I guess I'm a sucker for apocalyptic predictions. Maybe it adds excitment to an otherwise safe and sane life.
Chris Powell
(01/12/2000; 21:58:51 MDT - Msg ID: 22802)
Gold reaches House speaker and BBC
http://www.egroups.com/group/gata/337.html?More progress for GATA.
she-gold
(01/12/2000; 21:59:08 MDT - Msg ID: 22803)
ORO
http://www.igc.org/trac/feature/planet/casino_bello3.htmlBeen reading up on the far east Asia crisis. The parallels between Pre-1997 Thailand and Late 1990's USA are frightening. Easy money. Wild speculation. Only instead foreign investors lending to Thai banks towards financing and developing real estate (without real capital investments to support industries), the current rage in USA is foreign investors lending (external debt) to the USA towards financing and developing unproven technologies (ie. internet). Eventually foreign investors wake up to the fact that their investments have gone to unsustainable speculation. Extrapolating forward: Watch more and more tech companies sing the Yahoo song of unsustainable revenue growth. As their stock valuation crumbles, so too will their earnings in a feed forward mechanism as they lose the tax write-off of ESOPs (supporting earnings) and the selling of puts goes from generating revenue to diluting their stocks (thanks to to You and Parish) . And with business and consumer spending/debt growing by leaps and bounds, watch the external-debt to GDP ratio (currently about 4% and growing rapidly) climb to 6-8%, the level which did in both Thailand and Mexico. Watch the irony of having hedge funds and speculators eventually exploit these USA vulnerabilities and the chorus of Easy Al-and-gang finally calling for control and transperancy in these hedge funds.

Who's going to come to the rescue. The IMF??
THX-1138
(01/12/2000; 22:00:18 MDT - Msg ID: 22804)
Regarding the Swiss
I think the biggest thing to consider about the issue of the possible Swiss Gold sales is will it take place?
If the Swiss people vote not to sell the nations gold, what will be the effect?

Should we be prepared to watch massive short covering, rising gold prices, and the bursting of the stock bubble?
Or will we still see the price of gold falling, more rumors of Central Bank gold sales, and the market going up?

Gold - the only money worth holding.
RAP
(01/12/2000; 22:23:14 MDT - Msg ID: 22805)
elevator guy-5/5/2000
I got all these Y2K supplies, maybe I'll get to use them yet?
elevator guy
(01/12/2000; 22:25:05 MDT - Msg ID: 22806)
Amazing surface of gold!
http://www.knowledge.co.uk/frontiers/sf042/sf042p26.htmAtoms ascending and decending on crystals like angels on Jacob's ladder!
elevator guy
(01/12/2000; 22:26:50 MDT - Msg ID: 22807)
Yes, RAP
Me too! You could donate them to the less fortunate, or just keep them for earthquake preparedness. (A good idea in So Cal!)
Farfel
(01/12/2000; 23:25:58 MDT - Msg ID: 22808)
Re: SWISS GOLD SALES...
I, for one, expect them to sell their gold, since the Swiss, like so many other nationals, are just another subsidiary of the USA and they will always do what Uncle Sam commands. They may not think so but with their gold sales, the world will realize that the long vaunted historical independence of the Swiss nation is no longer in existence.

I am planning to take notable, HEAVY short positions in the Swiss Franc very soon. Once they sell their gold and the "myth" of a gold-backed currency is thoroughly and completely destroyed, then I expect huge panic dumping of Swiss Francs from all over the world. There would be absolutely no reason to continue holding Swiss Francs when the "psychological gold link" is severed from its currency. Makes much more sense to own US Dollars thereafter.

The Swiss Franc will soon join the ranks of other destroyed national currencies such as the Canadian and Australian Dollars.

Long suffering goldbugs would do well to short the Swiss Franc as a certain means of recouping their losses.

Thanks

F*

Ulysses
(01/12/2000; 23:51:39 MDT - Msg ID: 22809)
Traveler
http://usagold.com29 million ozs of gold,huh? Didn't you work for BreX?
Aristotle
(01/13/2000; 01:17:56 MDT - Msg ID: 22810)
How much wisdom in our anals of history; how much deliberate choice?
ORO,
On the whole, this output is your best yet in both clarity of thought and presentation. Kudos. A distinct pleasure to read.

But, (there's always a "but" isn't there?) the sheer size and comprehensive scope of the material, defies any reasonable means for me (if I were to be so bold) to provide some of the feedback you are seeking. The ability to apply digital "post-it" notes to your on-line text would be required--to rave at the many flashes of brilliance, and to suggest possible course-corrections or avenues for further thought and discussion.

Taken as a whole then, you are possibly making one mistake in your inferences/conclusions regarding the official decision-making process that rests behind the scenes now in monetary history. You are possibly giving the officials of the day too much credit. With your 20/20 hindsight you are able to see the events of the day with the benefit of a perspective they did not share. You do a marvelous job of making the several important arguments from the several sides of the issues, but in truth, these guys were often flying by the seat of their pants, reacting as necessary to bail enough water to keep the boat afloat. It would seem that even when considering the conference of Bretton Woods in 1944, (and the IMF revamping summit in Jamaica in 1976,) the world has not seen such a concerted, thorough, and intelligent thought given to monetary matters as your suggestions would imply until the era of Maastricht arrived.

To wit, the dollar wasn't backed with oil because it was carefully calculated to be the most superior form of monetary arrangement. You have had little trouble poking at the flaws of such a scheme. In the eyes of the officials involved at the time, what was done was perhaps the most expedient course of "policy," for the day, and the concept of oil "backing" the dollar by any fair assessment is most probably a de facto result of the path of least political resistance coupled with our perceptive advantage of hindsight. Meaning, at the time, it was not expressly determined that oil would replace Gold in a new form of "commodity standard," but effectively, hindsight reveals that's effectively what we got -- the approximate result of evolving policy and trade agreements that maintained dollars as the currency of oil settlement (even after the Bretton Woods notion of Gold for $35 went beyond a blushing fiction to unabashed fantasy--followed by the reality of nothing when the window closed in 1971.) Even in those following days, many significant players expected this condition to be temporary--with Gold to be refitted to the monetary framework under some new form of workable terms. (Or should I say, they expected the monetary framework to be refitted to accomodate meaningful Gold settlement--we all know that only Gold is "money" in this modern world.)

To reiterate, I'm not calling into question the quality of your analysis and arguments, but rather, that you have given credit (of dubious quality, to be sure) to the policy makers where none was due. You've assumed a "Method" where, in fact, there was only "Madness."

Final food for thought: policy is set by politicians (not by intellectuals), and the quality of those so employed has not changed much between then and now. (At least by giving them too much credit you've avoided the other popular fallacy of assuming them to be hopeless and complete idiots. ) But had the likes of an ORO or Antal Fekete been given full latitude in shaping the policy of that day, there is little doubt in my mind that we would all be better off today. But as it is, we are only now after 30 years repairing the financial architecture with the euro, bringing Gold back out of the shadows.

And as always, being a mere child in the world, I reserve the right to be spectacularly wrong in my perception of these issues. After you consider how much rationalization is appropriate for painting our history as a deliberate and calculated act, you are free to carry on.

Gold. Get you some. ---Aristotle
Simply Me
(01/13/2000; 01:53:31 MDT - Msg ID: 22811)
nickle62
Mom was a molecular biologist, computer programmer since the 70's, has a string of letters after her name, and still IS the very bright babysitter of a 9 mo. old great grandchild. She knew Y2k was going to be a bust...and has been collecting gold in jewelry and coin ever since she could afford it.
Thanks for noticin' me.
simply me
Aristotle
True Story
While out at lunch today, I overheard a small bit of conversation between a couple of university students as they passed by. They both seemed lively and healthy, burdened though they were with heavy book bags. The girl said to her friend "Why didn't I buy some AOL? Why DIDN'T I?!"

It struck me as odd. Here we have a young lady in school with a whole future of possibility before her, and yet she is bemoaning regrets with the same conviction as an old man who spent his life in and out of prison (but mostly in) who says "Why didn't I learn an honest trade? Why DIDN'T I?!"

Since when is the stock market the "End all, be all?" That young girl sounded as though she had somehow managed to throw her life away, leaving her without expectations or prospects. Sheeeeeesh!

Let me give it a try since it seems to be all the rage these days. "Why wasn't I born with a silver spoon in my mouth? Why WASN'T I?! Why wasn't I given a certificate at birth entitling me to a life of ease? Why can't we ALL simply be given an allocation of AOL stock at birth so that nobody has to worry about such things as social programs or unemployment because nobody would need to work. Instead of sending aid packages of rice and medicine to the Third World, wouldn't it be easier to drop AOL stock from cargo planes? Well, WOULDN'T IT?!" Reality is a good thing. Too bad so many people don't see it as clearly as they should. But perhaps some leniency is in order--this was a youngster, after all. I'm comforted that none of our working adult population is caught up in such a delusion. Right??

Gold. Get you some. ---Aristotle
Netking
Rate hike due for UK
Simply Me
Weak Hands
Just a report from street activity. Gold and silver is being dumped all over the place! Small time dealers don't even want it because the premiums have crashed. At the recent FUN Show (Florida United Numismatics),the biggest Eastern US coin show of the year...even one of the biggest Silver Dealers in the country didn't want to buy silver last week!

I think most of the problem is that Y2k stashes are now being liquidated. Another source is the folks who bought on the upswing in the POG last year...held on to it through Y2k...and are now disillusioned to see the POG low and the stock market high. Yep, Americans like their instant gratification...and when they don't get it, they have a temper tantrum and throw the offending item away.

I really don't get it. Do Americans really not recognize the difference between intrinsic value and marketing glitz? They buy Pokemon Cards, Beanie Babies, and collect the new State Quarters. I've heard of people collecting Beanie Babies hoping they'll go up in value enough to pay for their childrens' college educations! People pay hundreds of dollars for a Pokemon card...a piece of printed cardboard! They actually think that, with the millions of people collecting State Quarters, that someday THEIR collection will be worth something! But they're selling their gold and silver. It's pitiful.
Simply Me
Aristotle
Hello, Aristotle. I guess she got that way because her parents are paying her tuition by selling their Beanie Babies at Flea Markets on the weekends.

Americans are caught up in "The Show"...real life is being lived like it's a TV series! The kids who grew up with Gilligan's Island, Walter Cronkite, and a modern American education are idiots!

or maybe it's me. I really should be working on my retirement fund...I'm off to buy some Lottery Tickets!
simply me
Simply Me
Walter who?
OOooops! Please change Walter Cronkite to Dan Rather in that last post. My age is showing.
simply me
PERMAFROST
To the Forum...
So;

are we to believe the pagan [Aristotle] when he says that the dollar is NOT backed by oil--please arrest needless mincing of words--or the holy trinity [ORO, FOA, and the "holy spirit" ANOTHER?] when they make noises to the effect that it is?

The fact is, it is NOT--de jure, de facto; in reality or in illusion.

ATTN: ALL THOSE THAT EQUIVOCATE THEIR PERSONAL SPECULATIONS
TO ACTUAL FACTS;

You are doing this willingly because the content of your
postings display articulate intelligence and
considerable knowledge. The only conclusion I can deduce
from these FACTS are that you are either trying to
surreptitiously mislead your following or simply making
an [---] of yourself. Unfortunate in both cases.

TO THE FORUM PARTICIPANTS:

Your fawning and obseqious behaviour towards the local gurus places you in the same ship [the Titanic?] as the sheeple you frown upon.

I've been reading this forum for a month; thence follow my observations for those who care to read them:

1) Only A=A. If gold=A then NOTHING ELSE equals A. Period.
No Euros, dollars, dinars or liras.

2) Positing premise #1 to be true, all those here claiming
that the Euro constitutes the lifeboat off of the
Titanic [the dollar] are LYING, because YOU know that
they know better!

3) Now I ask YOU who previously considered yourselves to be
so well informed; WHY would they do such a thing? Do
they have a hidden agenda or are they plain you-know-
what?

When they disparage one fiat money [the dollar] and sing the praises of another [the Euro] they are talking from both sides of their respective mouths. Sheer dishonesty!



Simply Me
Reading is FUNdamental
Hello Permafrost. Your reference to Aristotle's comment: "are we to believe the pagan [Aristotle] when he says that the dollar is NOT backed by oil"
...was taken out of context. Later in the same paragraph, he states,
"...it was not expressly determined that oil would replace Gold in a new form of "commodity standard," but effectively, hindsight reveals that's effectively what we got...".

Agreed, the Euro is just another fiat currency. Fiat by any name stinks. I believe the debate is centered more on which fiat currency stinks the least...or rather which currency places the least burden on the fewest people.

I like my coffee black and my dollars strong, but I can't fool myself into believing that I will always get what I want. There is too much want in the world...and they want I've got (can't say as I blame 'em).

We're not children. Of course there's an agenda involved. What's yours?
OK, I'm ready to be steamrolled.
simply me
FOA
one quick post
ORO,
Thanks for your "some comments" posts 1, 2, 3,. I have only read them quickly and am pressed for time. Will reply (rebuttal / agreement (smile)) to these excellent thoughts before I post my next "overview". In the mean time something to consider; by the late 60s, dollars were not "arbitraged"
into gold with the effect that "hard monetary theory" had envisioned . It was becoming more of a "concept" as the money supply continued to grow much faster than gold was shipped out of the country. This "soft" link to gold was growing as dollar production was being fuelled by the oil
perception. Officials brought into the concept that for much of our natural future, oil would always make "things" cheaper, faster and in greater supply. As such no amount of future debt and the money supply growth that followed it, was too much! This process of making the evolution of "oil
productivity backing" a more real backing than gold.

Sorry I cannot write now,,,,,,,,,,,,,,,,,,,,,FOA

-------------------------------------
ALSO:
Welcome Traveller and all the new posters here!
-------------------------------------

USAGOLD (1/12/00; 9:31:05MDT - Msg ID:22771)
Today's Gold Report: Swiss Lean Toward Liquidation through BIS

Hello Michael,
The background of this Swiss statement is more exciting than the announcement! We have offered for some time that future "official" Euroland sales would evolve into ECMBs (European Member Central Bank) buying gold "off market" and out of the reach of the LBMA . First the Dutch and now the Swiss have begun to open the door to this. The full 2,000 tonnes of gold covered in the Washington Agreement may not come to be used as collateral behind current gold paper. Truly, they (ECB/BIS) are cutting them off and starving the market. The next step will be the revelation that the "transfers" are occurring at higher dollar prices (and probably lower Euro prices, if they are done in that currency) than the spot market. Behind the stage, we have been "on the road" to higher physical prices ever sense the "agreement" was announced. The BIS has always had the power to break the Bullion Bank's from market controll by changing it from contract form into physical. Our current price doldrums do not indicate the frantic nature of life in this new "fast lane". Most traders are watching the paper markets and feel they are "dead in the water". This perception will change in the next act of paper destruction. We have had act #1 and each ensuing one should be more severe. Lease rates rise, paper prices gun up, major loses then a load of more
gold contracts dumped to force the price down. I bet they have run out of small lenders after the last run around. If so, (maybe the next go around) the contract discounting begins?

Note: Michael, I received your News And Views and read it for the first time. What a wonderful commentary it is! Everyone should get it!

Thanks FOA

FOA
(No Subject)
Aristotle (1/13/00; 1:17:56MDT - Msg ID:22810)

Aristotle, I could have just posted your item and not said anything! Just read it and had to note it. Good stuff.

Quickly Gone for good now,,,,,,,,,,FOA
SteveH
Permafrost
Points taken. It is all about market share. It would seem there can only be one king (or queen) of the hill. Be it Euro, dollar, yen, yuan. It doesn't matter. What matters is less debt, good following, committment to future value, and people who trust it. Lacking any of that, problems ensue.

My fascination with the forum is that this is as good as it gets in human dialogue. Murphy speaks of the cafes of Paris in which Camus, Satre, Merleau-Ponty, and the like sipped wine and discussed great thoughts that took until much later to become the Existential movement. It was all the rave at my University.

So what it if is a mutual back-patting society. What matters is the discourse and where it takes us. I for one have benefitted. There has never been the likes of the Web to bring it all together under one roof, to chew on things real-time (virtually speaking) and then move the dialogue forward at such a rate of spead. Truly a world-class education. So, what if I have to read Oro's unedited comments three times sometimes for the hidden value. I do it for the love of knowledge.

So, with that in mind, what is your take on the future of the dollar?
PERMAFROST
In response to 'Simply Me, was it?
"...hindsight reveals that's effectively what we got..."
This is merely Ari stating that he's of the opinion that past official policies of the USA and the countries they "influenced" RESULTED in a manipulated marketplace wherein a certain [by no means "fixed"] correlation between the dollar and the price of oil (or vice versa, dependind on the "spin" of your quantum particles) was brought into existence.
Even assuming Aristotle's words were written in stone, YOU are still confusing an alleged (by Ari) RESULT with an actual CAUSE of that result, or fact (irrationally assumed by the lot of them) that never was the case: THE DOLLAR WAS NEVER PEGGED TO OIL!
Since you agree that fiat stinks up the place, why the useless academic thumb twirling about which stinks less? My good man; is the idea NOT to extinguish your existence in the toilettes--regardless whether its previous occupant just rid himself of yesterday's Mexican dinner or a couple of glasses of beer?
My agenda you ask? To wake all of you up to the fact that fiat currency is anathema to a "human-friendly" system. We don't need it; and we don't need any other form of "medium of exhange" in electrons or paper that can be manipulated to expropriate wealth from people.
Their agenda? That we need ANOTHER fiat currency, the Euro, because...(now you fill in blank)

Gold is an empirical standard or criterion with an a priori sheen we cannot fathom; our eyes and hearts covet it. We don't know why...
BUT we know that money that is not wealth is a lie. Lies make life complicated and oftentimes miserable. I don't want to live in a system based on lies because it hurts me.
Clear enough?
The Invisible Hand
question: BIS and Latin Union
http://www.bis.orgThe Latin Union was formed in 1865 by Napoleon III. It encompassed France, Switzerland, Italy, Belgium and Greece. (Austria-Hungary was not allowed to join). This Latin Union had one reference coin, the Napoleon, the gold coin of 20 francs. The other reference coins (the Swiss Vrenelli of 20 francs, the Italian Napoleon of 20 lire and the Belgian Louis of 20 francs) were identical to the Napoleon except their outlook.

Article 27 of the Statutes of the BIS states that three of those members of the Latin Union (France, Italy and Belgium) are ex-officio Directors of the BIS, the other ex-officio Directors being Germany, Great-Britain and the USA.

Question: Is the Latin Union perhaps one of the (fore-)fathers of the BIS?
PERMAFROST
Steve H...
...I have walked by those caf�s in Paris God knows how many times...Today, they are patronized only by the affluent and the Japanese tourists that can afford the exorbitant prices! and the church across the street from Les Deux Magots? was it,--I believe the oldest church in Paris--is a favourite of mine, by the way. And it's free...By the way, I have a degree in philosphy. From Cal State LA of all places!
You're right Steve; nothing wrong with being friends and sharing thoughts. But I sensed a whiff of insipid and insidious tendencies and aired out the room. See? now we got fresh air, and that's good as well.
The dollar? Let me think.
PERMAFROST
Steve H and the dolllar dilemma
Steve,

I believe that were the dollar to go, the Euro will join it in "money heaven". Remember: the overwhelming majority of half a century of human labor and goods produced has been "converted" into dollars or has come to be perceived as a claim (!) on dollars, in this perverted scheme of things. (As if physical things were LESS real than Notes redeemable only in lies.)
Fact: the REAL backing of the Euro is other fiat currencies, the dollar making up most of that. When the Euro block sell, they get dollars for their wares. Not Euros. Refer to my previous posts as to its deleterious effects.
Jesus went on the cross. I think the human race will immolate themselves on a pyre of dollars, a fire that may be kindled by Euros...
The Euro, IMHO, was birthed by the same people that came up with dollar scheme to prolong the death throes of a dying civilization. In money-speak, the Euro is just Yen-carry trade II. No?

PERMAFROST
AND...
The rulers/oligarchy that Alan Greenspan is just an humble employee of than will flash all the gold they hold[it was only "leased" remember, at least where the CBs are concerned; or just "changed palettes" at the BIS as someone else noted] before the "dazed and confused" faces of the masses and solemnly proclaim: "We have REAL wealth as you can see for yourselves. You [the People] got nothing [dollars]. So we'll issue Notes redeemable in wealth (gold)and you will do as you're told to earn a few of them in order to survive. Because, remember my friend, we destroyed your family, tribe, village and nation and solidarity and trust in each other. We own your ass and soul like we never did before!" Deja Vu?
The dialectic pendulum will swing back again--except that, unlike what Hegel postulated, the synthesis always stinks!

That's what common sense whispers in my ears...

But wait! What IS common sense except what both Greenspan and the gurus here speak of...

Silence is not enough to express what really is the case.
PERMAFROST
AND...
The rulers/oligarchy that Alan Greenspan is just an humble employee of than will flash all the gold they hold[it was only "leased" remember, at least where the CBs are concerned; or just "changed palettes" at the BIS as someone else noted] before the "dazed and confused" faces of the masses and solemnly proclaim: "We have REAL wealth as you can see for yourselves. You [the People] got nothing [dollars]. So we'll issue Notes redeemable in wealth (gold)and you will do as you're told to earn a few of them in order to survive. Because, remember my friend, we destroyed your family, tribe, village and nation and solidarity and trust in each other. We own your ass and soul like we never did before!" Deja Vu?
The dialectic pendulum will swing back again--except that, unlike what Hegel postulated, the synthesis always stinks!

That's what common sense whispers in my ears...

But wait! What IS common sense except what both Greenspan and the gurus here speak of...

Silence is not enough to express what really is the case.
Canuck Gold
Cerro Casale project in Chile
http://www.bema.comI lifted the following from the Bema web site referenced above. Just follow Mineral Properties to Aldebaran. Traveller opined that their stock should be worth around $5 by the time the gold is produced (or words to that effect). In 1996, Arizona Star's (a Bema subsidiary) stock price peaked at over CDN$17 before falling back. I bought some stock at CDN$8 and held it until around April or May 1997 when I sold for CDN$12.50. Following the Bre-X episode, the stock started to slide and didn't stop sliding until just before the Washington Agreement when it went from around CDN$0.70 to CDN$1.55, but has since fallen back down to around CDN$0.70. As stated below, Arizona Star will retain a 25% interest but it is my understanding that they won't have to spend any money to develop a mine. Bema's stock price peaked at around CDN$10.50 during the same period and trades around CDN$1 today. Personally (though this should not be interpretted as a recommendation) I would expect the stock price of both companies to exceed CAN$10 if gold moves to US$400.

"Arizona Star Resource Corp. is a gold exploration company operating in Chile. Arizona's success comes with the discovery of the Cerro Casale deposit on the Aldebaran property. Arizona Star owns 51% of the Aldebaran property until Placer Dome Inc. completes its commitments. Placer Dome will earn a 51% interest in the Aldebaran property with Bema Gold and Arizona Star Resource Corp. retaining a 24% and 25% interest respectively."

CG
USAGOLD
Today's Gold Report: Gold Rush in China; Carry Trade on Ropes
Market Report (1/13/00): Gold was down slightly in New York this
morning though the metal is well-supported with physical demand
according to this morning's press reports. Bridge News reports that gold
legalization has led to a gold rush in China. China Daily reports large
sales of bars at Beijing's Caishikou Department Store. The legalization
of gold in China, and its resulting potential for a huge increase in
overall demand, comes at a time when worldwide demand has been rising
dramatically anyway. Simultaneously,mine production has failed to keep
up. In previous years the gap between production and and demand (1050
tons in 1999) has been made up by official sector sales. With the
Washington Agreement to limit sales and leases now in place, the ability
to fill that gap becomes problematic at current prices. Gold Field
Mineral Services says that since implementation of the Washington
Agreement to limit European central bank sales and leases, producers
"changed direction and began large-scale buy backs of hedged
production." Beyond the buy-backs, one should not dismiss the obvious
inference: the gold carry trade which has by-and-large restrained the
gold price for nearly a decade has now been relegated to the scrap pile
of financial history. Even if the gold bears were to find enough metal
(which is unlikely) to keep the price down, they would be hard pressed
to find takers in a mining industry gone conservative in the face of
public pressure and stockholder complaints about management acting
against the very metal that serves as a source of profit for the
company. At the same time, bullion banks badly stung by the actions of
the European central banks are going to be a little more cautious in
future gold operations. Gold Fields is predicting an average price of
$280 in the first half 2000 with a high of $305.

That's it for today. We'll see you here tomorrow.
Gurn Blanston
Thanks RAP/Elevator Guy re: 5/5/2000
http://www.usagold.com/cpmforumThanks for your polite responses re: my 1/12 post about Richard W. Noone's "5/5/2000 : Ice: The Ultimate Disaster." I looked at the site RAP(?) recommended and agree that article pooh-poohs any serious results from the alignment of the planets. If you look at Noone's book (library? Or $12+ on www.amazon.com), you'd be likely to believe his premise of widespread earth calamities.

I, too, still have my Y2K-preparedness stuff. I plan to hold onto it.

Gurn Blanston
beesting
Gold Bars Retailing for $388.79 in Beijing.
http://www.kitco.com/_a/news/4558.htmHeadline: Gold Bar sales robust in Beijing.

The bars were priced at 104 yuan ($12.50) per gram in the store,higher than the price of jewlery, but customers still poured in.For complete story click URL.

Using the formula one ounce equals 31.103 grams, we come up with a price of $388.79 per ounce.
Those in the Know....Buy Gold.....beesting.
goldfan
reply to Permafrost
PERMAFROST

I think, IMHO, that anything I have in my hand that I can exchange for gold right now is as "good as gold". Whether I keep it for awhile before exchanging it, depends on my subjective judgement or bias or faith about whether I can so use it as a medium of exchange in future. One thing I vote for in my voting is people who seem to me able and willing to try to manage the exchange rates of "My" currency so I can buy what I want and need with it in future as well as now, so I can save it and it will keep its value, so I can feel like its worth exchanging my work for. Also, I would have more of such "faith" in a currency printed by a country rich in oil, than one which is not, other things being equal. (Unless, of course a country like Switzerland, rumoured to be rich in gold and demonstrably willing to support their currency with appropriate taxation.)

( I wonder if it's theoretically easier for a small country to maintain currency than a big one?)

I too wish my ancestors hadn't gotten away from using gold for this purpose. However, I didn't know why or even that I should have this wish, until I had read and pondered the words of people like Aristotle, FOA, ORO and many others here.

I'm happy to visit here and contribute my two cents to the ten dollar discussions these folks engender. As a friend of mine used to say, "you can't have a zoo without the animals!".

Incidentlaly, I think FOA said or implied that when the oil deposits in the US ran out, and the strategic location of the worlds oil shifted to the ME, then it was no longer so possible to believe or have faith in the US ability to "back" its dollar with oil.

Goldfan
Galearis
and interesting Kitco post
Date: Thu Jan 13 2000 09:52
rhody (@ Mooney your 8:41 re SILVER directions:) ID#408236:
Copyright � 1999 rhody/Kitco Inc. All rights reserved
Your guess is as good as mine, as this metal's price is even more manipulated than gold's. I think the fundamentals in silver are even tighter than any of us ( with the exception of Ted Butler ) believe.
If you consult the Silver Institute web site, you will find that at the present deficit in production ( scrap + new mine ) vs consumption ( fabrication ) there is a deficit of 105 Moz for 1999. But this same group projected a deficit of 144 Moz just last year. The actual vs the projected show a 27% divergence. This means that the SI is either a very poor source of information on silver supplies or that
their data too is manipulated. When I noticed this discrepancy on the weekend, it occurred to my that this site may also be designed for disinformation. The chief source of disinformation/manipulation in the silver markets is the Silver User's Association ( SUA ) . I e-mailed
the Silver Institute ( SI ) about whether they had funding, data source or any other relationships with this Association. That was Saturday morning. On Tues evening I received a long distance phone call from
Washington D.C. in answer to my e-mail. The gist of it was:

1. The SI accepts no funding from the SUA
2. The SUA does work with the SI on mutual "projects"
3. The SI and SUA do have overlapping personnel
4. The SUA is an organization almost 50 years old which is "withered"
and moribound with it's total workforce one part time secretary.

Much of the info stated in 1 to 4 above I do not believe, but what I do believe is that 2 and 3 are correct, and that means the data on the SI is bogus, and will tend to exaggerate the supply side of the silver market IMHO.

The phone message left me with a number of questions including, Why go to the trouble and expense to phone long distance to answer my three simple questions? The answer to that question may be two fold. l. They could be very diligent in their provision of info to interested investors.
2. They were more interested in finding out who I was and
why I was interested in the SUA, which is an organization of which few are aware, and a phone message allows them to ascertain more about their concerns than answering mine. In short, if you believe #2 above, this would suggest that the SUA is alive and well and worried about their machinations in the silver market. I further believe that I was speaking to a representative of the SI, but who also was a member of the SUA.

So this was how I spent some of the holidays, and it is my belief that pressure is building in the silver markets, but you won't see it in the lease rates, or figures posted on the SI web site, but it is there in the form of anecdotal phenomena like long distance but unnecessary phone calls.
The Invisible Hand
question: BIS and Latin Union - Extended Post
http://www.bis.orgThe Latin Union was formed in 1865 by Napoleon III. It encompassed France, Switzerland, Italy, Belgium and Greece. (Austria-Hungary was not allowed to join). This Latin Union had one reference coin, the Napoleon, the gold coin of 20 francs. The other reference coins (the Swiss Vrenelli of 20 francs, the Italian Napoleon of 20 lire and the Belgian Louis of 20 francs) were identical to the Napoleon except their outlook.

Article 4(1) of the Statutes of the BIS states that the authorised capital of the Bank shall be one thousand five hundred million GOLD FRANCS (emphasis mine) and article 27 of these Statutes states that three of the members of the Latin Union (France, Italy and Belgium) are ex-officio Directors of the BIS, the other ex-officio Directors being Germany, Great-Britain and the USA.

Question: Is the Latin Union perhaps one of the (fore-)fathers of the BIS?
__
In my previous post, today's # 22823, I forgot the capital, sorry.
RobertG
Various Comments
Simply Me (Msg 22814) - Weak Hands - Excellent post. You hit the nail on the head as to the preponderance of shallow think in the US. I hope the readers realized you were jesting when you made the reference to buying lottery tickets. A financial planner I heard a few years back responded to a question about buying lottery tickes by stating: " The lottery is a tax on stupidity". Never will forget that comment.

Permafrost (Msg 22817). Another excellent post, loved the reference to the holy trinity. Also enjoyed your comment about the "fawning and obsequious behavior toward the local gurus", although I would not have phrased it quite so harshly. I think a lot of the comments on this forum toward the holy trinity are made "tongue in cheek".
Luv_G7
Should we Trust GFMS?
To Michael Kosares:

You quote a report from Gold Field Mineral Services in today's Market Report. I have suspicions about the alterior motives of GFMS, and have witnessed then talk down the gold market on numerous occasions since before the Washington Agreement. I believe they have several analysts with close ties to the bullion banks. They seem to be happy to report either bearish or reserved sentiment.

If I'm right about this, should they be quoted as though they're a reliable source?



goldfan
ORO (1/12/00; 1:31:21MDT - Msg ID:22753)
ORO

You said

--The debt situation is even worse because policy makers don't even collect statistics on some items like accrued interest. The degree to which markets have detached from the economies that support them is unprecedented. The global financial economy that uses our currency is three times larger than the whole world's "real economy", and that is 8 times larger than the US economy. Could the US economy ever hope to support the global currency used by the rest of the world?--

Here's what I make of this, am I right?

The credit balloon (only a bubble when it bursts) is that world US$ levels are 24 times the size of the U.S. economy (yearly GDP).
Like someone with an income of $10 000 with a mortgage of $240 000. He can't pay the interest and so just goes on adding to the debt. ....until foreclosure.

No government or citizenry is capable of the tough actions ( taxation) needed to maintain the stability of paper currency.

So the balloon will burst, the currency will be extinguished, either directly in a deflation, or first by hyperinflation, then revaluation at rates near zero purchasing power of the old currency.

The events that will trigger the end chaos are near, but unknown, unpredictable. We are at a "saddle-point" in chaos dynamics. Some small cause will trigger massive collapse and re-organization. Hopefully, it will not be an entropic collapse, but a deterministic one. A collapse into a new order, a new order that is also unpredictable right now.

Since my house could be destroyed by fire, I hold fire (shelter) insurance. Since my my "paper" wealth could be destroyed by "fire", I hold gold as purchasing power insurance.

Goldfan
PH in LA
Aristotle, ORO, Simply Me, Permafrost
"Aristotle (1/13/00; 1:17:56MDT - Msg ID:22810) How much wisdom in our annals of history; how much deliberate choice?"

Aristotle: Yes! Yes! Yes!!!

ORO: Aristotle put my thoughts into words. His finger is on what appears to be a fundamental flaw in your thinking. In studying history, the facts are "what happened". Exactly "why" and "how", although interesting and much of the reason we study it, lie in the realms of interpretation and are not facts. This is what makes history so much more compelling that the present ever can be. Afterwards, we DO know more about "how" and "why" it all happened than we do now in the present. Granted, studying history is always an interpretation... but every effort made to minimize the interpretating (sic) keeps us closer to the facts... the more we know about "what" happened the easier and more true the "how" and "why" can fall into place. Please don't get me wrong; I admire and enjoy the work you are doing. As Aristotle says, there are many flashes of brilliance. One detail as an example: "Gold for oil" was a very loose arrangement that never achieved formal marketplace-transactional status. It was a concept that operated "in general" and in the broadest of terms, a concept invented by Another as an explanation, an interpretation. FOA said once that it was "political" in nature. It was never a "fact". You will find no receipts, no paper trail. Did it happen? Yes! Did they "make" it happen? Not really! It just happened. The "making it happen" was something that we impose with the advantage of 20/20 hindsight. It is an illusion only we can take advantage of. At the time, it would have been denied (except by those mesmerized by their own power (a process musicians call "believing their own publicity"). Yet they were there. This is what makes FOA's guided tour so fascinating. Pointing out the sights as we go along... Is this guy a time traveler from the future? Sometime it seems like it.



"They actually think that, with the millions of people collecting State Quarters, that someday THEIR collection will be worth something!" Simply Me
(1/13/00; 2:24:52MDT - Msg ID:22814)
Simply Me:
My 6-year-old daughter has started a collection of state quarters which I am happy to encourage. But to give her a little more reality when she studies geography, not to make her rich. It's not because millions are also collecting them, it's that clad coins will never be anything more than pretty gewgaws. Gold and silver are intrinsically valuable substances; always have been, always will be! Their value stays with them when made into coins. Coins containing gold and silver are more than pretty gewgaws... they are valuable, pretty gewgaws.


TO THE FORUM PARTICIPANTS: (FROM PERMAFROST)
"...fawning and obsequious behavior towards the local gurus places you in the same ship [the Titanic?] as the sheeple you frown upon." Permafrost

Welcome Permafrost!
Please think long and hard about removing the chip from your shoulder. Everyone here will consider your words and thoughts much more seriously if you do so. Its presence only serves as a stumbling block, getting in your own way; and can never advance your own agenda unless that agenda is merely to offend and insult, an agenda that would be truly pointless.

Now, getting down to brass tacks:

"When they disparage one fiat money [the dollar] and sing the praises of another [the Euro] they are talking from both sides of their respective mouths."

Friend Permafrost: These matters are not contemplated in strictly black and white terms. Nor in shades of gray. My computer monitor is set to "millions of colors" and even that is an abstraction. The shades of colors present in reality are infinite. Let's try to keep that in mind. Truth doesn't come out of one side of the mouth or the other. We can consider ourselves lucky if any comes out at all. If it does, it comes out of the whole thing. Trying to specify "which side" it comes out of seems like nit-picking to me.

To my knowledge, few here think of our understanding and quest as a "lifeboat off of the Titanic". The dollar is NOT going to cease to exist anytime soon! Yet the �uro WILL take on some function as reserve currency even if only within the euro zone. Hell man, just by coming into existence it already has! Is it a panacea for all the ills of fiat currency? Not at all. The dollar has been overvalued for many years. It will correct downwards as the power of reserve status is diluted and eventually (more or less) wrested from the USA long term. The beauty and logic of the path that FOA is pointing to leaves room for all the advantages inherent in a modern digital fiat currency, yet at the same time (by periodically marking gold to market) gives gold its traditional role as wealth. Store of value = wealth = gold. Convenient digital transaction = fiat. This WILL happen. In fact, it has already happened! Trying to deny it will only result in missing the path and wandering in the wilderness of incomprehension. Is that your own "agenda"? If so, leave me out of it! If not, toss the chip into the trash and understand our journey. You are more than welcome to join us!

TownCrier
Click link for some decent background comments by analysts
http://biz.yahoo.com/rf/000113/1k.htmlOn this first day of the new 2-week reserve maintenance period, the Fed added $2.995 billion in temporary reserves using overnight RPs.
Viper
Ashanti Goldfields

I recieved this article via e-mail & thought some of you may find it of interest.

Thursday January 13, 1:26 pm Eastern Time

Ghana court adjourns Ashanti Goldfields case
ACCRA, Jan 13 (Reuters) -

Hearing of a case in which four shareholders of troubled Ghanaian mining group Ashanti Goldfields Ltd are seeking to have the existing directors removed was adjourned on Thursday, a company spokesman said.

James Anaman, General Manager Corporate Affairs, told Reuters that the minority shareholders, who also seek the sale of part or all of the company's mining assets, had asked for the adjournment so they could better prepare the case.

The Accra court set hearing for January 19.

The four are seeking the holding of an extraordinary shareholders meeting of the company.

No further details of the hearing were immediately available.

Ashanti has said it will ``vigorously defend'' the proceedings.

The four shareholders - who hold 4.2 percent of Africa's third largest gold producer and are led by Adryx Mining and Metals Ltd - want the extraordinary general meeting to elect a new board and to obtain authority to sell its mining assets.

Ashanti said in a statement that it had already started talks with a number of gold mining companies which had expressed interest in acquiring a joint venture stake in its Geita project in Tanzania. Ashanti needs $110 million to bring its promising Geita mine into production.

Last month Ashanti said its counterparty banks had agreed to extend until January 13 2000 a deadline for it to pay up for derivative contracts.The company came close to default in October after a spike up in gold prices flipped its derivative contracts from profit into loss.





BH
Test
test
TownCrier
HEADLINE: U.S. to start buying back government debt soon
http://biz.yahoo.com/rf/000113/5j.htmlU.S. Treasury Secretary Lawrence Summers announced that the Treasury would begin to buy back some of the nation's outstanding debt...a tool in the debt-management toolbox that hasn't seen action since the 1970's. In truth, this amounts to imposing an "early maturity" on the various Treasury notes out there in the world. Where will this cash go when it hits the streets?

Does this so-called management of the nation's debt get filed under the "smoke" or under the "mirrors" category?
ORO
PERMAFROST and SteveH - My take on Euro
Though I find the grouping of myself with FOA and ANOTHER quite the complement, even if you did not mean it as such, I do not like the Euro that much better than the dollar. Nevertheless, as for the battle for "king of the hill", it is quite obvious that the Euro is better grounded - in the reality of the current game to become reserve currency.
The ability of the ECB to shoot down the dollar is there, the evidence of it actively doing so is there as well. Particularly its taking over of the international bond markets. It is all too obvious what is to be gained by Europe by use of the Euro to displace the dollar and provide a more convenient (to their minds) currency than gold for the bankers.
Since you two seem to share my dislike of fiat currencies and my strong preference for government having little or no ability to control money and banking, why not go to the point of actual disagreement - that PERMAFROST does not see the Euro as a different animal than the dollar and does not think that it would work if confidence in currencies is hurt, in general, by the damage done to the dollar in the attempted transition to the Euro.

As Keynes noted, the problem for anyone attempting to transition to a cash gold economy is that the central banks hold the bulk of the liquid gold. The forms of gold in the markets are no longer amenable for use as money directly. The material wealth is in the central bank vaults. The amount of monetary gold in individual's and banks' hands is very small and has grown smaller than in the early 70s, when another attempt was made to give gold a final blow and take it out of use as any sort of money. The work of the past twenty years in the gold markets has brought gold out of private monetary use in the West and turned it into semi-monetary and non-monetary form as jewelry and the like which are hidden away in Asia - India in particular. The proportion of gold held by central banks is now greater than ever. From holding about 56% it has gone up to 70% as gold moved from private Western individuals and banks to the semi official hands of the Oil states. These have contracted for further deliveries into the next 5-8 years.

The main point of this is that the market is restrained from making gold the money of ordinary use by the simple fact of its being in the hands of Central Banks. This leaves the CBs with the choice as to how to maneuver. Had they decided to finish selling the gold as was a popular item of discussion among economists in the postwar period, then they would make gold the money of general use, and their role in the world would be reduced to nothing of significance. At that point, the fiat currencies would simply be ignored by the markets, governments would need to sieze goods in order to obtain them, or would need to use the market's money on the market's terms.

In the interest of self preservation, the Central Banks have kept the gold in hand while screaming bloody murder at any suggestion that they make use of it as money. Yet despite their many words condemning gold and the constant rumors (much promoted) of massive sales, the CBs sold very little of their gold holdings, and even that was done largely only between them (many a bureaucrat will recognize his brethren are the bureaucrats of other countries rather than his own civil countrymen}. Thus, whatever choice the CBs have is only between their capitulation to the markets or their putting of gold holdings to use when (rather than "if") the currency system collapses.

Whatever alternatives can be devised by the CBs individually or acting in concert, will inevitably be based on gold, but would not subject them to the threat of having the gold withdrawn (as a gold redeemability standard would). What is left is that the gold back a floating currency that is iredeemable. As long as the markets are convinced of there being a sufficient reserve behind the currecy, they will bid for the currency rather than take up gold directly.

The second thing in this is that aligning the interest of the CB and the government with higher fiat and quantity prices for gold is a boon to any politico bent on another traditional something for nothing deal (obviously their favorites). By taking up gold off the markets during a confidence shift away from the dollar, the ECB and its members can gun up the price of gold - and thus the backing for the Euro. The markup of the gold by the mark to market regime allows the CB to print Euros rather liberaly, and these Euro can be used to fill the coffers of governments, which, in turn provides the bonanza: deficit spending without the issue of bonds.

These are realistic considerations (so far as how I understand things to be) rather my personal preference. Given the choice, I would have it so that the following financial items would be eliminated: CBs, IMF, BIS, Fannie Mae and Freddie Mac, bank regulatory systems controlled by governments, fiat currencies, gold in government vaults, SEC, FDIC, Federal Pension Insurance, currency, CFTC, CofC, Departments of commerce-labor-energy-HUD-Agriculture..... and much more.

Later - comments to PH, Ari, FOA
BH
FOA
http://www.usagold.com/

Below is a message that I intended to send on behalf of the silent majority here. It was mailed originally to MK and he encouraged me to post it myself to the forum even though it became obsolete in the meanwhile due to your message
# 22768.

Here it goes:

Dear Sir FOA,

I'm only a lurker here - I didn't dare to sit on this noble table so far.

But if I may speak now in the name of the very many people all over the world like me
(I'm sure I have their permission and support):

I'm not able to express myself in english very well, but please understand how thankful we are and how tremendously we have learned from your comments and Sir Another's
Thoughts.
Not only in Economics and Politics, but also in your words of wisdom.
As for me, I have completely changed my attitude - from a short term trader who got more and more sick of this 'New Era' bubble mania to a peaceful long term holder of physical gold, not caring anymore of todays greedy paper world.

Sir FOA, we all are full of hope to see you again here now and in future with your fascinating guidance through this exciting time. Please understand:
Many of us are following you and Sir Another on this Golden Trail, but w e don't have and will never have your understanding of all these developments, so we are lost without your ongoing help and encouragement.

I think, due to your all-day occupation (and due to our silence,of course) you are not aware how much we appreciate and respect you and your work and how much you have already influenced not only our behavior in market matters, but also in our private life.

Further, very many of us could never hope to find such an incredible forum(thank you, MK) where -besides you and Sir Another- so very excellent people like Sirs ORO, Aristotle, MK and all the other contributors so generously share
there analysis and insights with us.

And where honesty, moral and ethics still have a home. Please keep this forum alive, if only for this reason; it's so rare nowadays.

Please consider also all the other postings on this topic and particularly Leigh's #22762.

That's all I wanted to say. Now I won't bother any more, going back into the shadow, gratefully listening and learning.................yes?

BH

PS: I think it is no coincidence that some of today's rude tirades came in exactly right after yesterdays turmoil. Please take it for what it is IMHO: An attempt to make you definitely resigning from this forum, to silence you
and to split this whole forum

To all: Friends watch out and read Leigh's #22762 (last paragraph). After all it's your forum and there is nothing like this,it's unique - still
TownCrier
HEADLINE: Japan's expansionary policy could end in tears
http://biz.yahoo.com/rf/000113/ey.htmlThis is a good follow up to the "Japanese situation" we posted from The Tower yesterday (check it out if you missed the commentary on the �.C.T.---TownCrier (1/12/00; 11:10--MsgID:22777)) As it has essentially fallen upon the Japanese government now to fuel the Japanese economy with new yen, economists see trouble on the horizon.

In this Reuters report, Kazuo Mizuno, general manager of Kokusai Securities' Economic Research Department, says "If the current spending spree continues, Japan will have no choice but to raise the consumption tax to double-digit figures in a few years to pay off the debt. Japan's economy stagnated for two years after the previous hike in the consumption tax. The stagnation could be much longer next time around given the larger magnitude of a hike needed."

Click the link and read this meddlesome mess of governments trying to manage a currency (speed it along, actually)...right into the ground.
TownCrier
HEADLINE: ECB Says Inflation Effects of Oil, Euro 'Transitory'
http://quote.bloomberg.com/pgcgi.cgi?T=markets_newsfeat99.ht=&ptitle=EMU%20Top%20Stories&touch=1&s=c078b782e4ea5ea5d9a381d984dbd9feA report card from the "Euroland Bank"...comments from the ECB's January monthly report.
TownCrier
Inflation, inflation, everywhere...
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=45de39ce481f637f07ba8ec1e1889e84With the boom in the housing markets, and wages increasing at twice the rate of prices, the Bank of England today raised its benchmark interest rate by a quarter point to 5.75 percent, and is expected to raise it further in February. Some analysts expect the rate to reach 7% by the end of the year. Today's rate hike is the third move upward in five months. The nation's largest banks promptly followed suit and raise their rates on loans to businesses and consumers by 0.25% too.
TownCrier
G-7 Ministers Won't Signal a Move to Slow the Yen's Rise, Official Says
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=b04076f3bcd404367252e761c3507f94Final words for the day on Japan: Looks like they will remain "on their own" on this one. The G-7 offers compassion--but no cooperation--in the Japanese government's efforts to sell the yen down the toilet. And YOU thought GOLD was manipulated...
CoBra(too)
Bill Gates resigns as CEO of MSFT -
The significance of the timing of BG's retreat from the leading role in his FTC embattled company, threatened by breaking up the mostly internally grown company in several pieces - an "honour" of such magnitude only Standard Oil and ATT have experienced - is quite intriguing.
Ironically, this move comes at a time where concentration of big business and mega-mergers are stunning the unsuspecting investors and employees on a daily basis, "crowned" by the AOL takeover of Time Warner, which may well turn out to be catalyst for the unravelling of the internet, known as DOT COM craze as well as the historically greatest mismatch and potential blunder in terms of corporate culture, philosophy and real vs virtual shareholders value.
IMHO, Bill Gates does not strike me as someone abandoning ship at times of growing turbulence in his company. Or does he see the tides changing in a more fundamental way, as so many on this forum also expect in view of the huge and growing imbalances in the world economy, financial, credit and currency markets and is therefor getting ready to
weather the tempest on higher, safer ground. His latest forays into the PM markets (via PAAS) may be only the tip of the iceberg, for all we know.
CB2

PS: It was said before and I agree wholeheartedly, MK's gold forum is probably the most civil and undoubtedly one of the most knowledgeable site on the net. While any (pertinent) discussion is encouraged by our host and noone has to fully agree with any other posters content I for one would deplore if personal vanity would frivously deprive us all of the wisdom so graciously offered by so many to so many, as we have all been drawn to this forum in our quest to recover reality in virtual markets and true value - true money - gold.
TownCrier
"Management." It's what they do; there's no escaping the fact...and they're not very good at it.
http://www.bog.frb.fed.us/BoardDocs/Speeches/2000/20000113.htmRemarks by Fed Governor Edward M. Gramlich before the Charlotte Economics Club, Charlotte, NC, January 13, 2000 on "Inflation Targeting"

"...there is a potential problem with inflation targeting even in good economic times. If forecasting inflation is difficult, even forward-looking inflation-targeting central banks may respond to inflationary shocks too late to ward off inflation. Although there are several ways to forecast inflation, none may be that reliable. On one side, many analysts use econometric models, but these may have intrinsic problems in periods of significant structural shifts. The very nature of such shocks is that they are not easy to predict or model. On the other side, one could imagine constructing leading indicators of inflation, but the experience until now is that not many of these are reliable either. One could also rely on market expectations of inflation, survey evidence, or other forecasts of inflation. But if models are not working well and there are not many reliable leading indicators, it is not clear how much information is contained in these other forecasts. Without models or leading indicators, even forward-looking inflation- targeting strategies may not work as well as advertised."
TownCrier
The GOLDEN VIEW from The Tower
Here in The Tower we have connections to the full spectrum of the gold market, from the Earth to bank. While much of our commentary is naturally weighted heavily toward the financial aspects, we feel its appropriate to monitor this drama in real life that we first reported on Monday, reminding ourselves that gold is not printed into existence and should not be priced as though it were, nor be influenced similarly by derivative markets...

By Hilton Shone, I-Net Bridge
Johannesburg--Jan 13--Rescue teams have yet to free the nine surviving
miners at the African Rainbow Minerals (ARM) mine in Orkney in South
Africa's North West Province, but are expected to break through the rubble
"in the next couple of hours".

"The rescue teams have encountered a severe amount of fractured rock
which, in addition to the geological features just about where the trapped
miners are located, has made for very slow progress," said Andre Wilkens,
chief executive of ARM.
"We expect the teams to break through in the next couple of hours and
by no later than tomorrow."

The nine miners and six others have been trapped more than 2
kilometres underground since around 1300 local time (1100 GMT) on Monday
when an earth tremor measuring 2.9 on the Richter scale blocked their
return to the surface.
Of the other six miners, four are confirmed dead and two were last
reported as seriously injured.

Charmane Russell, a spokesperson for ARM, said that hopes of
recovering the two seriously injured miners alive were very slim as they
were separated from the other survivors and it had not been possible to
get water, food or medical aid to them.

"The nine survivors have clambered their way towards the area where
the rescue teams are expected to break through and are in remarkably good
spirits given their ordeal, but the injured had to remain where they
were," Russell added.

Wilkens said that the morale of the survivors had been further boosted
after rescue teams were able to pass them phosphorus lights through a
broken compressed air pipe. The pipe has also served as the means of
contact with the miners and through which water and food has been sent.
"They can now see after being in total darkness for days when their
headlamps' batteries failed," Wilkens said. He added that small amounts of
solid food were also being passed through the pipe to the exhausted men.
Wilkens confirmed that the Department of Minerals and Energy would
launch a full investigation into the accident and said that ARM would be
co-operating fully with the investigating team.
***
(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.
----
And in late breaking news from Reuters in Johannesburg, a mine spokeperson said rescuers had reached the nine miners. While the survivors were said to be in good condition, the search would continue for the two miners that were seriously injured, and to recover the bodies of four dead miners. No question about it, gold is priced too cheaply.

And originating from London this morning, Reuters quoted a dealer as saying, "Physical demand remains strong and with the US market closing around noon their time Friday and remaining closed Monday for a holiday, we could see some short covering." In addition to the early termination of trading on COMEX markets tomorrow, Friday also marks the expiry in February gold options. Trading will not resume on COMEX until Tuesday following the Martin Luther King holiday.

In NY today, spot gold prices were last quoted at $283.90, up $1.80. February futures were traded $1.40 higher to end at $285.10 in COMEX land. According to a FWN report, traders said tomorrow's expiry of option influenced the gains in the futures, and that "one dealer in particular was buying gold in an attempt to push it close to the $285 strike price," prompting others into short covering ahead of the long weekend.

OIL

Our "Fifth Horseman" remains alive and well...NYMEX crude oil futures for February gained 41� to end at $26.69 per barrelrose on expectations OPEC will likely continue their conservative production agreements beyond the original March 31 expiration.

After meeting in Amsterdam today with Venezuela oil minister Ali Rodriguez, Saudi oil minister Ali Naimi said, "We are looking at (whether) we need to do anything in the year 2000." They both confirmed that a consensus exists to continue the agreement for an additional three months, with the possibility that it may be maintained throughout the year. This sentiment was reaffirmed through Bridge News by Kuwait oil minister Saud Nasser al-Sabah who was visiting Vienna for tomorrow's meeting of the market monitoring committee. He indicated that the 3-month extension was essentially automatic. "We don't need to do anything in March." [TownCrier's note: this is certainly in reference to the OPEC ministerial meeting scheduled for March 27th.] "Beyond March we have to see. Maybe we need to go through the year 2000."

As with the early closing of the U.S. gold market, NYMEX will terminate oil trading at 1300 EST on Friday (along with the Feb. options) and will remain closed through the Martin Luther King, Jr. holiday on Monday.

And that's the view from here...after the close.
Rock
Fed bails out 30 year bond
RockI'm certainly no expert when it comes to this group of geniuses but I guess everyone noticed yesterday the 30 year bond was at a record level that hasn't been seen since mid 1997 pushing a 7% yield and yet today at the close of the market it was back to a 6.65% yield.

Why? Looks like the good old fed bailed out the 30 year bond so that the market wouldnt panic over those inflationary numbers. It makes me sick to see this kind minlipulation going on but I shouldnt be surprised as we have watched what the Fed has been doing to our gold. They can only juggle so many balls at once and its soon going to all come crumbling down. And when the house falls it will be a great fall in deed. So I will agree with the geniuses on this forum and say keep your gold and don't lose heart because those holding the precious yellow metal will be the victors in the end.
Leigh
BH and Others
BH and Hipplebeck: Thank you for your kind words. I love this Forum and all who post here, and it breaks my heart to see feelings get hurt.

PH: My eight-year-old son collects state quarters, too! He is so proud of his collection. He is also getting very interested in gold and silver, and last weekend he earned his first silver Eagle. (He earns 25 cents for each extra math problem he does, $4.00 an hour for extra piano practice, and varied amounts for household chores.) He has to pay me the going price for silver Eagles, and I've told him that he should try to earn as many as he can before the price of silver goes up. He wants a gold coin very badly, but he realizes it's out of his league right now!

Cavan Man: Please come back! The Forum isn't the same without your friendly presence. You're like a ray of sunshine around here.
Ray Patten
More Y2K oil stuff....
http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002Iyk
This is a little long. So only bother with it if you enjoy driving or staying warm.
lamprey_65
Easy Al's Speech
http://www.federalreserve.gov/boarddocs/speeches/2000/200001132.htmRock, I guess it doesn't take a genius to notice the Treasury bailing out the bonds since I noticed it too! Funny, seemed to coincide right with Clinton's speech today - what a surprise, heh?!

From Easy Al's speech tonight:

Alternatively, that 2010 retrospective might well conclude that a good deal of what we are currently experiencing was just one of the many euphoric speculative bubbles that have dotted human history. And, of course, we cannot rule out that we may look back and conclude that elements from both scenarios have been in play in recent years.

Thus, the impetus to spending from the wealth effect by its very nature clearly cannot persist indefinitely. In part, it adds to the demand for goods and services before the corresponding increase in output fully materializes. It is, in effect, increased purchasing from future income, financed currently by greater borrowing or reduced accumulation of assets.

there has to be a limit to how far the pool of available labor can be drawn down without pressing wage levels beyond productivity.
Rock
Correction on the 30 year bond
Sorry knights and ladies of the round table I made a typo on my last post, I meant to say that treasury bonds dipped 6.65% from 6.71% (not 7%) late wednesday. As I said the Fed's once again came to the rescue.
lamprey_65
Nice Find
http://www.fiendbear.com/guestpg4.htm/sr1.gifA very nice summary of our situation (at least some would agree).

Lamprey
sstins
From one lurker to another ...
BH "Well said".
Peter Asher
error
TheStranger
More Greenspan
In quoting from Greenspan's speech, tonight, I think it only fair to confess his remarks are as profoundly ambiguous as always. Nonetheless, I culled one more comment from the text which I think bears repeating here at the Forum:

"Productivity-driven supply growth has, by
raising long-term profit expectations, engendered a huge gain in equity
prices. Through the so-called "wealth effect," these gains have tended to
foster increases in aggregate demand beyond the increases in supply. It is
this imbalance between growth of supply and growth of demand that
contains the potential seeds of rising inflationary and financial pressures that
could undermine the current expansion."

Stranger's Question: Can you believe this is the same world which was dogged by fears of DEflation just twelve short months ago?
TheStranger
Townie and All
Thanks for the Bloomberg British Inflation link which I read with great relish but without mustard. Your efforts are much appreciated. (By the way, this is killing me Townie, so I will just come right out and ask it. Do you know a guy named David Linkley? If you don't answer, I will assume that you do?)

ALL - I loved the UAL news, today. The stock was way down because UAL is now in a margin squeeze due to HIGHER LABOR COSTS as well as higher fuel costs. Did you hear that? HIGHER LABOR COSTS! (This pandemic corporate fear that raising prices will result in loss of market share is something Greenspan also addressed tonight, BTW).

Anyhow, while in exile, I recently posted open advice to a similarly challenged Fed Ex to just go ahead and raise those rates. Others, I said, would soon follow. In short order, of course, they all took my advice and just did it.

So, UAL, if you are reading this (which I am sure you are, since we are now "probably the most civil and undoubtedly one of the most knowledgeable sites on the net"1), JUST DO IT! Others will follow, soon enough. You can depend on it.

(1.) Thanks to CoBra(too) for this quote above. It sounded so good, I thought it bore repeating.
TheStranger
Addendum
I should hasten to add that it will be UAL's 4th rate increase in the past year. By my count they have already raised prices almost 20%. But don't look for that in the CPI tomorrow, because it ain't gonna be there. Neither will you find U.S. import prices in the data. They were reported yesterday (up SEVEN PERCENT for all of 1999). Almost nobody noticed.
Peter Asher
Goldilocks economy indeed
Somebody has sure been eating all the porridgeThere is a major flaw in AG's perception. **---**

>>Thus, the impetus to spending from the wealth effect by its very nature clearly cannot persist
indefinitely. In part, it adds to the demand for goods and services before the corresponding increase in output fully materializes., It is, in effect, **increased purchasing from future income,** financed currently by greater borrowing or reduced accumulation of assets. <<<

In fact, the "Wealth factor" results in people spending what the don't put in the market because of the paper value of what they do have in it, also the stock sellers spend lavishly with their 'easy' unearned money. And so we have an economic boom.

Greenspan's "purchasing from future income" would only exist if the boom was driven by consumer credit. While that is a partial factor as it helps feed the Bull, the main force is the "Perceived savings" phenomena I keep trumpeting about. I haven't had much feedback on that so I assume it is agreed upon or boring. However, I see it as the Keystone that holds the Goldilocks economy in place. At some point the world will see that she has eaten all their porridge and there will be some very ferocious Bears.

If Greenspan really believes what he said there, than he will probably make the wrong moves.

And, yes Lamprey that John R. Hummel article does say it, more than just a summary. It's got everything in it but the final event.

Golden Truth
TO ALL & F.O.A
http://www.aande.comFirst things first, TONIGHT on A&E Investigative Reports: BLOOD MONEY:Switzerland's Nazi Gold airs tonight,Jan13 at 9pmET/6PT. I seen the earlier show and it is excellent!!
I plan to tape the 2nd showing which starts in about an 35min's you should see all the GOLD they show,unbelievable.

This show ties in the SWISS the BIS you name it, and it's 2hr's long if you miss it you can order it from A&E.

Also i've included the link above where you can comment on "How far shoud the Swiss go in admitting its dealings with the Nazis? This Documentary is "The closest you'll get to the truth"

Hello F.O.A just want to let you know i've gone "HOG WILD"
I,am telling everyone i meet and i mean everyone, to buy GOLD. I,am also telling them about you and this USAGOLD.COM site so they can read you. It's amazing how people listen once you start talking about GOLD and how it has been "controlled", expect a larger reading audience real soon.

I,am going to start yelling "buy gold" from my rooftop real soon and that it's time this secret got out to the average public!!!!!!!!!!!!!!!!!!!!
Just thought i'd check with you to make sure you don't mind? It's time to tell "The World"
P.s F.O.A thanks so much for being here. You are awesome!
I enjoy all your posts tremendously! Please continue to guide us all down the "GoldTrail" in this new GOLD market.
Here's to higher GOLD prices YAHOO,YAHOO,YAHOO and EEH HAH!

Hey Stranger Looks like us Germans are no longer alone, in this World, we now have the company of the Swiss!!


Solomon Weaver
concentration of gold by CBs
ORO (1/13/00; 14:54:23MDT - Msg ID:22844)

The proportion of gold held by central banks is now greater than ever. From holding about 56% it has gone up to 70% as gold moved from private Western individuals and banks to the semi official hands of the Oil states. These have contracted for further deliveries into the next 5-8 years.

The main point of this is that the market is restrained from making gold the money of ordinary use by the simple fact of its being in the hands of Central Banks.

-------

ORO (with thoughts of Galearis too)

Reading your words shown above seems to support an idea which I posted here a few nights ago that the ownership of gold will concentrate into vaults (CB and wealthy families) in order to create financial credibility (For CBs to back currencies, for wealthy as collateral for investments)...Also, that as gold is revalued higher it becomes even less affordable to a commoner.

Although I personally doubt that silver will seriously be used a official "coin of the realm" anymore, I do believe that as a form of hard money and liquid asset, that it may come to be quite desired by the little folk....the more important a role gold seems to play for the big boys, the more likely that silver will be viewed as a surrogate gold...I particularly expect to see the use of commemorative silver rise dramatically...

Many on this forum are little guys like me...fortunate to be able to afford to buy gold....by the time the coin owner attitude on this forum is once again a common belief, it will be very expensive to buy gold.

I believe that in understanding global money that silver only plays a marginal role, but as an investment it offers interesting complimentarity to gold ownership....

Poor old Solomon
Peter Asher
Hey Golden Truth
I knew there was an as yet undiscovered factor behind the recent firming up of the POG.

Keep up the good work.

pdeep
AG's Bafflegab
Thanks for the quote:

"Productivity-driven supply growth has, by raising long-term profit expectations, engendered a huge gain in equity prices. Through the so-called "wealth effect," these gains have tended to foster increases in aggregate demand beyond the increases in supply. It is this imbalance between growth of supply and growth of demand that contains the potential seeds of rising inflationary and financial pressures that
could undermine the current expansion."

Deconstructed by a non-economist:

Liquidity driven supply growth, which I have engineered, has resulted in businesses investing in capital goods and overestimating the markets for the resulting products and services. Equity prices have therefore reached valuations not supported by long-term business prospects. Since I have kept the real rate of interest below the natural rate of interest, consumers are not foregoing future consumption. The consumer demand is being met by other countries, which has resulted in large and continuing balance-of-trade deficits. It is this imbalance between growth of money supply and growth of capital requirements at home that has caused much of the liquidity I have pumped into our economy to end up in the equity markets. I have already planted the potential seeds of rising inflationary and financial pressures that will undermine the current expansion, as the expansion has been financed with debt, and not with savings."
Journeyman
Over-estimating the opposition . . . . @Aristotle & Oro

"You are possibly giving the officials of the day too
much credit. With your 20/20 hindsight you are able to
see the events of the day with the benefit of a
perspective they did not share. You do a marvelous job
of making the several important arguments from the
several sides of the issues, but in truth, these guys
were often flying by the seat of their pants, reacting
as necessary to bail enough water to keep the boat
afloat." -Aristotle (1/13/00; 1:17:56MDT - Msg
ID:22810)

I strongly suspect you're quite right here. We tend to
think in terms of conspiracies here at this site, when what
happens is more convergent evolution driven by common forces
and perceptions. We also tend to endow "the opposition"
with powers far beyond the ones they actually possess.

And what happend to the world (and what may apparently
happen to us here in the US) as a result of ditching the
gold standard isn't the fault of anyone still living.
Greenspan I think is attempting to manage the situation he
inherited, as were most "leaders" after the fact of the
Federal Reserve Act and the income tax.

Further, it seems to me, except for the bankers at Jekyl
Island, it is probable even those perpetrators alive at the
time believed what they were doing was good for "the
people."

However, it's clear from the history that the problems which
inevitably began to develop were resolved in favor of the
U.S. and at the expense of others. And in particular, they
were resolved in favor of U.S. bankers, and political
elites, etc.

When someone is part of a process or organization that has
diluted my control of my own life, and injured uncounted
(and uncountable) millions and particularly those yet
unborn, I find myself getting shall we say, a bit testy. If
you were a uniform-wearing Nazi, no matter how reluctant or
how well intentioned, fair or not, you shouldn't be
surprised to find yourself the brunt of anti Nazi sentiment.

Such an attitude, which I cop to, doesn't help objective
interpretation of facts and details, however. So thanx,
Aristotle, for helping me recognize a possible source of
distortion to my thinking -- and improving my perception of
human nature at the same time!

Regards,
Journeyman

ORO
Aristotle, PH in LA, FOA - historical reads
One of the many contibutions FOA and ANOTHER provided, and one which is unique, is their knowledge and understanding of the motivations and situations of the people involved in monetary decisionmaking. I can't come close to this kind of personal experience as I have never hobnobbedwith the right class of people for that to happen, and I am way too young to have lived the particular periods as an adult capable of gaining an understanding of it all, or for that matter, any of it.

The criticism Aristotle leveled at my analysis is very much an item of concern for me. I can't come close to knowing which economists had who's ear at any particular time, unless I go to presidential and government libraries and go through hundreds of boxes of memos. Well, time does not allow for that, and I am no historian, but for very minor research done for the purpose of finding out the most significant items. My argument concerning China being the major consideration for the US remaining at war in Vietnam, for example, came not from reading of historical texts of the period. The period's historians seem intent on ignoring China - US relations when chronicling the US' invovement in Vietnam. Meaning that attention had to be drawn away from the real issues by those feeding information to the historians, if these issues still have significance today. Recent revelations of the truth of the long rumored (and known to me as true) information on China's "rescue" by Israel made it possible for me to understand that considerations of China must have played a major role in the Vietnamese quagmire. It is the lack of talk on the matter which gives a cue for this being a strong possibility. The other possibility, is that the Kissinger foreign policy team was a bunch of kooks. Though, as Aristotle points out, there is much more madness than method in government, I don't believe the K team were headless chickens.

Paul Volcker and Toyoo Gyohten wrote a memoir/commentary - "Changing Fortunes". Which I have found to be a nice read, also reveals what the Central Bankers think publicly among themselves. The careers of the two in Central banking span the period of currency turmoil and the decline in America's capacity to produce cheap oil. They include the disaster of the oil spike and much about what we already know about the gold markets to 1980. From 1981 onwards there is no mention of gold at all. It is very conspicuous by its absence from discussion.

Among the last words spoken of gold was in describing Volcker's first meeting with Reagan, where Reagan made his point that he wants monetary restraint to 1% monetary growth. And, perhaps more important, wanted gold prices to fall. I take the fact of gold's disappearance from the discussion to indicate the rise of a policy that was still curren in 1992, when the book was published, 12 years later. Like the Saudi loan below, it was not an item to discuss in public. Thus, it does not indicate how much less important it became, but how it became so important it could not be mentioned.

Debt traps are not called by their name. Even when Gyohten talks of the Saudi loan to Japan in Aug 74, an ugly period in their view, when they "discovered their vulnerability" to oil and the Ministry of Finance lost lots of face (of course it had many faces and could afford to lose some). They went on to collect dollars in incredible quantities through trade surplusses from that time on. Was this debt trap experience a motivation? Was the fact that it was held in secret for the 5 years of the loan telling?

These CB folks paint a picture of poppularity contests among economists, crazed maneuvering in the face of crisses, and then take the BIS party line for the 21st century: "the US, the EC, and Japan share the role of managing the world economy" and that the US "must also accept its share of the burden of correcting its own excesses"

Well, since the book was published, there was indeed a strong tendency of the US to take out its deficit. Fix the government's accounts etc.. The US sent its first reps to sit on the BIS board in 94. By 97, all major countries in the world economy were members. Then the purchase of US bonds by the CBs of other countries ceased suddenly in late 97. The stable rise in gold derivatives outstanding was stopped at the same time. ANOTHER then started posting, later FOA did too. Something basic and central to the rules of interaction of the CBs had changed.

The thing that matters in this context - what was madness and what was method - shows method in the current situation, allows some idea of motives to the method, though none of the participants say outright what they mean.

By the way, one of the reasons I use PPP data is that the IMF calculations were used by Volcker and his Japanese counterpart in setting the fix rates for each currency against the SDR during the floating gold period.

Turning back to the issue of the period 1960-1980 - what is method and what is madness, I will say that the debt traps were indeed method. The Saudis and their European bankers did this to anyone that the oil trouble made short of dollars. The fact that it was done in this period, 1974, was a sure sign that something was planned. How early was the method developed? I don't know exactly. Could it have been earlier? Say in the time of the original oil-dollar deal? I'll do my best to find out. If anyone knows, say so.

The earliest evidence I have is from a discussion of South American debt from the 1920s in "The House of Morgan", and some vague-ish allusions to such in Mises' Human Action and (assuming I remember right) in his "Theory of money and credit". Also, a biographical "note" details 20's and 30's BOE gov Lord Norman's specialty of constructing debt traps. Lord Norman's outrageous success in the 1930s led to the UK enjoying a free ride at the world's expense in the subsequent decade long debt implosion. The author "credited" him with the creation of the global part of the great depression and for suckering the US' Federal reserve into going along with it. A simillar case can be argued for Alan Greenspan and Paul Volcker.

His elder, Hayek knew well enough to write of them, as we can go back all the way to Thomas Jefferson's and Andrew Jackson's extremely negative writings on banking and the boom bust cycles economies go through when bankers get a hold of the government's monetary operations and the mint or money printing press.

The concepts were very very well understood by anyone in banking at the time. No doubt this was resorted to as a ploy to help the US do what the Brits did before them, and as banks did once the BOE managed to print up and then reabsorb enough money to create internal, and later international debt traps. In fact it could be argued that Central Banks had their raison d'etre in this.
If the US Federal Reserve was not in the know, and did not plan the Volcker shock treatment, then they must have been idiots. Which, though a distinct possibility, does not seem to be the case for Volcker and Greenspan, but could very well have been the case for Arthur Burns. I don't really know much of Burn's prdecessor. But I do know that the high gold price was initially in the US' interest through 1976, since Volcker referred to the gold auctions as a method to absorb dollars from the markets more so than as a method to keep the gold down, it was one of many. Among his dollar absorbant pads were foreign currency bonds. By 1978, however, the US had to be bailed out by the IMF and G7.

Finally, Volcker relates the arrangement with Saudia Arabia orchestrated with Pompidou and advized by David Rockefeller of Chase Manhattan. Pompidou, DeGaulle's successor, was a former Rothchild bank executive. The funds would be lent to Latin American countries and others over long terms at below market rates. The general length of the loans was 5 years, as was that to Japan. Exactly 5 years after the loans were made, the Fed raised interest rates to 5% spreads over 30 year treasuries. The loans were refinanced at the incredible rate of the time, 12-19% spreads over treasuries "and thank your stars we didn't ask for more". Coincidence? I don't think so. Somebody knew in 1968 and then in 1970 and 71, exactly what to do. George Shultz was among the people there in the 1971 Nixon Cabinet and he is a devout follower of Uncle Miltie (Friedman, not the comic Burl).

What about seigniorage? Mundell has alot to say on the subject and he is known to advize the treasuries and CBs of many states. His words on seigniorage as the main driver of government participation in the financial system are very much along my suggestions. DeGaulle made no secret of his recognition of its existence, in fact, he was the loudest critic long before his "Exorbitant Privelege" speech in Summer 1965. Germany "recognized the costs of the American bases in Germany and was willing to stop redeeming gold" which it resumed as the US balance of payments resumed its plunge.

The Keynesians making the arguments for the Kennedy and Johnson Administration were put into tiny offices at the end of seldom visited halls by the mid Seventies. Keynes' keen awareness of the "virtues" (for government's extraction of wealth from their citizens and for the Brits of his day being able to suck the last bit of marrow out of the world's economy in the 1930s) of both debt traps and seigniorage could not have been lost on his followers, particularly Volcker himself, then a treasury undersecretary with very wide circulation. Throughout all negotiations with Europeans from Kennedy's time through 1976 the US was unwilling to let go of the reserve status of the dollar. Volcker writes repeatedly on the "issues of assymetry" without calling them by name. He does refer to the "pressures of adjustment" to the balance of payments falling on the deficit countries and the "US center" and mentions Triffin's dilemma (of how seigniorage is absolutely needed for a dollar reserve system and how it conflicts with fixed rate redeemability with gold}. The "issues" were paying for US military costs. More significantly, since US reserve currency status was a non negotiable, the choice facing Europe was more like - "we do the military and you pay" - or "we do for our selves as we please, and close off our borders to your goods and for financial flows" meaning that the dollars that you hold will not buy anything.

The dollar went from 100% of non-gold CB reserves through 1970 to just over 20% of non-gold reserves in 1980. Since then, it rose to over 40% of non-gold reserves and has since started falling in the G-7 and rising in the EMs.

As for Japan, to put things in perspective, Gyohten relates his repeated distress at international meetings because he was not taken seriously since his country had no gold. His country was not considered a "G" in the G-7, though Japan was a member, and was later to become the world's greatest creditor nation ever. Even so, it was often a "do as you're told" attitude that the Japanese met.

Considering the personages involved, and the political requirements, the arrangements, though made in a rush during crissis, were very much informed decisions. The clueless cabinets of the various presidents made the decisions the bureaucrats told them were "necessary" and only from among the largely identical "options" presented to them. That monerarists were in Nixon's cabinet, and that the people involved were well informed makes more than accidental the fact of their decisions being in favor of the US, neutral for Europe and Saudi, and horrendous for the Developing Nations ("the colonies"), particularly those in South America where the debt crissis was a perpetual problem since the twenties.

That the problems of the dollar reserve system were a ticking time bomb came as no surprise to any of the people involved. Even well before Bretton Woods was signed, one of the main "designers" of the system were talking of this problem. The point of the matter was that the US leadership at the top Bureacracy level - which is the only one that counts - though in much disarray, made informed decisions.

To get some picture of this watch some old episodes of "Up the Greasy Pole" - a Brit comedy about bureacrats. The Bureaucrathan, to pun Hobbes, reaches depths of cannibalistic self interest otherwise not seen outside hollywood soundstages and meetings of Stalin's Politburo. Also read Joseph Heller's "Good as Gold", to get a feel for the political level's complete lunacy and depravity. A dose of Gore Vidal's trilogy of Burr, 1876 and Washington DC. Though I don't agree with his economic politics, he is nothing but honest in his portrayal of US politicos and merchant powers. His essays are sometimes amazingly perceptive. His wit as sharp as anyone's has ever been. For the religiously offedable, I suggest a read of Duluth and his Myra Breckenridge. Hillarious.

Golden Truth
Switzerland's Nazi Gold
http://www.aande.comHey everyone the Swiss link to Nazi Gold is on A&E right now this is a must see i repeat a MUST SEE. The information in this is unreal, again all here must see this 2hr special.
I know F.O.A would be proud of this program for it's rich content. Please all, check this show out, it ties in with everything we talk about here at the forum, other than Oil for GOLD deals, believe it!

Got to go now, back to the show, and this is my 2nd time watching it, one quick note if i was the Swiss government i'd be really pissed about how the World handled and perceived all this, it's like somebody or someone wanted to smear them and good!

G.T
ORO
One more word(s)
As far as I can tell, the policy level economic decisionmakers do make decisions by throwing themselves headlong into a dartboard. The problem of intention is not so much within their circles but in the bureacracy. Bureaucrats care more, and avoid offering the politicos options that stand against their interests. Particularly those that may end up with redundancy, reduced turf, less pay, and a blocked career path.
Golden Truth
no subject
Gold now $284.05 (:-)

G.T
Knallgold
Swiss Gold
I posted this last week on GE (I'm Swiss)'someone asked for a comment.I suspected then the SNB won't sell at LBMA/COMEX because I read their statements more carefully the last half year.

There is some confusion and disinformation on the Swiss Gold sales.Let me try to clarify:

1) Switzerland approved last year a new constitution in a (mandatory) popular vote with peoples majority (around 60% yes) AND a necessary cantons majority (was tighter).The Gold link of the sFr. was replaced with Art.99, 2 "..., a part of this reserves are kept in Gold".The Gold link was said to be "an old hat" in media, no discussion on this thing.This opened the door in the constitution for the Gold sales as the SNB planned.

2) The bill for this Gold sales went last December through both chambers of the parliament.Simple legislation requires only a "fakultatives (optional) referendum", unlike changes in constitution and some special things where the referendum is mandatory.In the fak. referendum, there are 3 months time to collect 50'000 signatures.A peoples vote requires then a simple majority .If none starts a referendum,the law comes into force automatically after 3 months.

Therefore my guess of 90% (certainity of sales), none stated to start a referendum.At the end of January, I will rise the certainity to 99%.This is not speculation, its my experience,time is too short then.

Assuming there will be held a referendum (I will tell you if there are any news), my GUESS is 50-55% no to Gold sales.Forget 75% and all this biased polls .

3) How the proceeds of the sales will be used,is not clear to date (solidarity foundation,reduce deficits'soc.sec. etc.).There will be a popular vote more certain IMHO.

Blocher/SVP (were big winners on the election last October) and Gold: HE started the idea to use the proceeds of the Gold sales for social security.So he is not against the sales.(Unless he is told not to tell his real opinion).Many in the (conservative) SVP think positive about Gold and know of the bad implications of the fiat papers.
But they seem to have capitulated and try to save at least the money out of it (ss).These sales were already decided somewhere else, on very high levels IMHO.



Please stop to dream, Swiss Gold sales can start as early as March.I am pro Gold, but these are the facts.
And dont think it will lead to lower prices, we had so many illogical events in this market.The SNB repeated several time their sales wont hurt markets.Because the Swiss Gold will never see LBMA/COMEX IMHO.

And it is part of the Washington Agreement!




PERMAFROST
ORO, PH in LA, Goldfan...
Dear ORO;

Rhetorical question: if you knew I cheated you before, would you play (fairly) with me again? You would pobably answer, and I'm quoting from your Msg. 22844, "the market is restrained from making gold the money of ordinary use by the simple fact of its being in the hands of the Central Banks." Furthermore, you state that 70% of the gold is "in the semi-official hands of the oil States."
Did you know that--I recently read this in a major Turkish newspaper--an estimated 6000 or 7000 tons of gold are held by the little folks here? that the French are notorious lovers and holders of the yellow metal, to an extant probably not less than the Turks? I'm sure you're aware of recent trends as reported here and elswhere in India and China? Lastly: "official" gold reserves [presuming the stuff's still in Fort Knox] amount to about 35,000 tons. Known above-ground world reserves: 150,000 tons. That doesn't look like "70% of gold being in the semi-official hands of the oil States." Why do you speculate so irresponsibly? Tell me if I'm wrong; but please give me SOME facts as I take the time to do so.
Going back to your first quote; you are tacitly implying that the gold in CB vaults cannot be taken possession of by its REAL owner, the people or the citizen [because they are too weak?]. Again, unwarranted assumption: remember, in the end even the most ruthless mercenary or soldier is somebody's son...therefore, ultimately "one of the people," and NOT a central banker nor a Rockefeller. The defeatist/fatalistic attitude that seeps between the lines of your "paper" does not befit the proud inedependent-spirited legacy of your forefathers. What you're promulgating is analogous to saying I'll let my assailant stab me because HE's got the knife instead of defending yourself and try to wrench the darn thing away from him. I would like to hope you're not doing this on purpose....

About your speculations as to Israel founding (!) China's armed forces. Here's food for thought. Both the Israeli and the Chinese use a version of the AK-47 Kalashnikov assault rifle. The Russian version has a wooden forearm [I think that's the word?] designed to overheat on prolonged automatic use, forcing the Russian soldier to AIM and shoot and not just spray bullets like a madman. The Israeli modified their version, called Galil, so it would not overheat, permitting M-16-like abuse. Also, they use 5.56 mm standard NATO ammo (instead of the bigger and deadlier Russian caliber); designed NOT to kill but inlict terrible wounds as the bullet zig-zags inside the victim's body, purportedly to "disable" more than one enemy soldier [victim + medical serviceman]. The Chinese versions I've seen look like cheap copies of the Russian one. Inductive reasoning: if their fighting philosophies differ at such a basic level of military planning; Israeli involvement at levels you're speaking of seems unreasonable. Especially considering that MOST of their weaponry and tactics, IMHO, are Soviet inspired.

PH in LA, re Msg. 22838

My friend; you make a string of positive assertions without, again, a single factual backing and then YOU tell me I have a chip on my shoulder...
Regardless of the circuitous semantics employed to just "beat around the bush" one more time; once a lie [fiat money] is exposed it doesn't just disappear--One simply becomes aware that "it" simply wasn't there to begin with. And even madmen do not seek again what they know doesn't exist (namely, a fiat money that works). This last bit was inspired by one of the tenets of one of the greatest human achievements ever as far as I'm concerned--Indian philosophy.

Lastly, sir Goldfan re Msg. 22832

"You can't have a zoo without the animals!"
Well, I guess I should be happy I'm not in a circus? I might have had to jump through circles set on fire and God knows what else...

Forgive me for using Your name in vain.
Number Six
Tie Miller - implosion...
http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=002JRfJust saw this on TB2K.

Seems to bear out what FOA and MK and SteveH have been saying - obviously about a gold melt-up but also a timelone following the "elections".

BTW SteveH - read your latest piece - excellent - again, I tend to agree with you about serious action ***after*** the "elections" [ever read "Votescam"?] - unless of course TPTB lose the Genie...

It's a shortish thread, worth a read.

Does anyone have any information on this characters' track record?

[snip]

According to Tie, when the bubble bursts the banks will go with it. Everything will be wiped out. His forecasts have been very accurate in the past. He predicted the stock market boom and now says we are now in a new era. The excesses and debts will have to be wiped out. There is no choice and no turning back. The gold market is within several months of a complete melt up and central banks have sold off the gold to expand money supply for the current boom we are in. Inflation is written in stone and deflation will return only this time it will gobble up everyone. Cash will be king and gold will be a safe haven.

-- Jeff (jeff@aol.com), January 13, 2000

[end snip]
Hermit Club
Stranger
On the Fed Ex subject... I work for Purolator the biggest courier company in Canada. They are raising their rates as they always do around this time of year. But this year they are adding a FUEL TAX on top of regular charges.
Just a little bit of info, thought you may be interested. Fed Ex is doing the same but I believe their fuel tax will be hidden in their prices.
RossL
Number Six
Who is Tie Miller?
TheStranger
Hermit Club, Knallgold, Mundell
Knallgold - it is great to have you here. Your insider's view of events in Switzerland is very helpful. Thanks.

Hermit Club - Thanks. I predict the increase created by your fuel surcharge will become permanent.

On Mundell - Last night, in London, Robert Mundell gave a lecture in which he repeated his prediction of $600 gold by 2010.
ORO
PERMAFROST - comments
PERMAFROST (1/14/00; 4:01:47MDT - Msg ID:22875)
--->Rhetorical question: if you knew I cheated you before, would you play (fairly) with me again? You would pobably answer, and I'm quoting from your Msg. 22844, "the market is restrained from making gold the money of ordinary use by the simple fact of its being in the hands of the Central Banks." Furthermore, you state that 70% of the gold is "in the semi-official hands of the oil States."

Actually it is 70% of the MONETARY GOLD in the combined hands of official and semi-official hands. The large chunk remaining in private hands is in non-standard forms in jewelry and local monetary forms. It would take a whole different order of magnitude of pricing and quite some time to make that gold surface. So the liquid gold available to the markets is just not there.

--->Why do you speculate so irresponsibly? Tell me if I'm wrong; but please give me SOME facts as I take the time to do so.

Digging up facts is how I spend most of my time. You, however, should read more carefully.

--->Going back to your first quote; you are tacitly implying that the gold in CB vaults cannot be taken possession of by its REAL owner, the people or the citizen [because they are too weak?]. Again, unwarranted assumption: ..... The defeatist/fatalistic attitude that seeps between the lines of your "paper" does not befit the proud inedependent-spirited legacy of your forefathers. What you're promulgating is analogous to saying I'll let my assailant stab me because HE's got the knife instead of defending yourself and try to wrench the darn thing away from him. I would like to hope you're not doing this on purpose....

--->Point well taken, the gold "should" be freed. Given a sufficient equivalent semi-gold, people tend not to mount barricades. I don't expect to have sufficient allies in seeking the freedom of my likewise independent minded gold from the CBs.

--->About your speculations as to Israel founding (!) China's armed forces. Here's food for thought. Both the Israeli and the Chinese use a version of the AK-47 Kalashnikov assault rifle. The Russian version has a wooden forearm [I think that's the word?] designed to overheat on prolonged automatic use, forcing the Russian soldier to AIM and shoot and not just spray bullets like a madman. The Israeli modified their version, called Galil, so it would not overheat, permitting M-16-like abuse. Also, they use 5.56 mm standard NATO ammo (instead of the bigger and deadlier Russian caliber); designed NOT to kill but inlict terrible wounds as the bullet zig-zags inside the victim's body, purportedly to "disable" more than one enemy soldier [victim + medical serviceman]. The Chinese versions I've seen look like cheap copies of the Russian one. Inductive reasoning: if their fighting philosophies differ at such a basic level of military planning; Israeli involvement at levels you're speaking of seems unreasonable. Especially considering that MOST of their weaponry and tactics, IMHO, are Soviet inspired.

Again the language you attribute to me is not what I said. Israel did not "found" these forces. Before the break with the Soviets, the Chinese were their allies and the Chinese military was armed with Soviet equipment.

After the break, which is related to the Soviet activity in Vietnam, they lost their supplier and were missing the necessary parts for everything from AK 47s to 138 mm Howitzers, aircraft, and tanks. Furthermore, as part of the Cultural revolution they purged their military of Soviet trained officers. That left nobody with any idea of what they are doing to manage, train and lead China's factionalized military forces. The various regional warlords that joined the long march remained in control of large chunks of the military going into the late 60s.

What Israel supplied were, among other things, replacement parts for tanks and heavy artilery from the enormous stockpiles from the spoils of the 1967 war and the Yom Kippur war, in the 80s it was from the Lebanon war. The Soviets had sitting in Syria, Lebanon, and Egypt their greatest stores of arms outside of East Germany and Rumania. The quantities of materiel shipped back home for storage by Israel in these wars would have made a Roman general proud. In addition, a visit to Jane's large books cataloguing the arms of the world will tell you that the Israel military industry was well versed in producing Soviet heavy artillery, and light arms. And yes, the Kalachnikov and the Galil have the same "father". The Israelis were beeing fawned on by the military of the Soviets till 1960, and had European support till 1967, particularly from the French. The Russian Jewish immigration of the mid to late 50s included many people from the Soviet military. Only since 1960 has Israel received support from the US, and till 1967 this support was rather minor.

---->Your reply to PH in LA, re Msg. 22838

My friend; you make a string of positive assertions without, again, a single factual backing and then YOU tell me I have a chip on my shoulder...
Regardless of the circuitous semantics employed to just "beat around the bush" one more time; once a lie [fiat money] is exposed it doesn't just disappear--One simply becomes aware that "it" simply wasn't there to begin with. And even madmen do not seek again what they know doesn't exist (namely, a fiat money that works). This last bit was inspired by one of the tenets of one of the greatest human achievements ever as far as I'm concerned--Indian philosophy.
-----------

I am at one with your observation of the "exposed lie does not get told twice". And I do hope to see people prefering the gold to the Euro. Judging by the early experience with Bretton Woods, which came after many such lies had been exposed, the preference was for the interest bearing dollar reserves rather than for gold, till just before the Kennedy elections. US gold reserves rose till just before 1960. Only later did the Federal bureaucracy, changed by Kennedy and then Johnson's administrations, manage to put in the far away corners the leftover classical economists at the Fed and Treasury. Once this hapenned the US policy people were very much Keynesians, though not as rabid as the English and Japanese. This made for the overly expansionist policies that killed Bretton Woods and the "Big Lie".


Finally, a general comment, your Philosophical training must have done you some damage in being able to read what is meant rather than trying to find the straw man you can easilly tear down and burn.
Aristotle
TheStranger's news item on Nobel laureate Robert Mundell--
"On Mundell - Last night, in London, Robert Mundell gave a lecture in which he repeated his prediction of $600 gold by 2010."

True. Unfortunately, most people failed to grasp that his reference was military time.

Gold. The clock is ticking. ---Aristotle
ss of nep
A History of the Canadian Dollar
http://www.bank-banque-canada.ca/english/dollar_book/full_text-e.htm
The C$ went on & off the gold standard several times,

Gold & Silver coinage from anywhere was legal tender

once upon a time



USAGOLD
Today's Gold Report
Market Report (1/14/00): Gold was down in the early going today after
short-covering came into the market yesterday about mid-session boosting
the yellow to the $285 level. Reuters reports option related buying in
Europe overnight. The gold market will be closed Monday for the Martin
Luther King holiday. Helen McCaffrey the treasury analyst at NM
Rothschild/London says "Prices look set to retest the $285.00 level
today, however, post option expiry gold may well head back down towards
$282.00 with market participants reluctant to push prices too high ahead
of the fourth Bank of England gold auction." The auction is scheduled
for Jan 25. Gold continues to get good news on the fundamentals.
Yesterday, Gold Fields Director Hester Le Roux revealed in Capetown,
South Africa that global production was likely to increase by only .4%.
In talking with one of our associates yesterday (who does business in
Asia) about the Chinese legalization of gold bullion reported here
yesterday, it came to light that gold coin ownership has been legal in
China for about the past seven years, so the news yesterday is not as
compelling as we originally thought. The change in China is that
"bullion" ownership has been restored in addition to the previous
privilege of "coin" ownership. My apologies for the confusion. I will
try to find out more today and report back here Monday. The Bank of
England raised interest rates yesterday by a quarter point -- the first
major central bank to hike rates in the new year. British markets took
the hike as relatively benign. FTSE stocks were sideways with the
financial sector declining more than the overall market. BOE interest
rate moves quite often foreshadow Federal Reserve policy.

That's it for today, my fellow goldmeisters. See you here next week.
TownCrier
ECB's Noyer raises "euroisation" concerns
http://biz.yahoo.com/rf/000113/btl.htmlIn speaking of the growing use of the euro in Eastern Europe and French Africa, European Central Bank Vice President Christian Noyer indirectly gave the United States a peek into a grim looking potential future.

Mr. Noyer said, "We are faced with the same sort of problem that you are faced with in the United States," in describing the situation where countries have either adopted or linked to the currency (euro or dollar) through currency boards...Panama, Argentina, and Ecuador being some examples with regard to "dollarization."

The potential problem rests in the event that the various countries may one day endeavor to reintroduce a local (or another) currency, thus leaving the anchor currency without purpose except to buy goods and services.

This is an important warning from Mr. Noyer. The problem is not so large for the euro, but should be taken as a real eye-opener for those building their wealth on a dollar foundation. All that is required to see the potential problem is a small extension in thinking toward Mr. Noyer's example. This phenomenon goes well-beyond the few countries that have "dollarized." It can be extended to the vast number that hold dollars as their predominant reserve asset. Should these nation's ever endeavor to alter their reseves, replacing these dollars with something else, such as gold or another currency, the dollars would have nothing left to do but compete for goods and services. Got inflation? [Meaning 'inflation' in both senses: higher prices, and larger currency supply...no longer lying dormant in CB reserves.)

This concept is nothing new to the Round Table, but we thought you might like to know that it is openly being discussed in the physical world, too. Mr. Noyer was speaking to a group of business executives at the Federal Reserve Bank of Atlanta on Thursday.
ORO
ss of nep - Canada's Legal Tender and the Pund Sovereign no more
The change in legal tender stature of gold and silver coin is an interesting point regarding the intentions of fiat money systems. During the bimetallic period up to the turn of the last century the gold and silver were circulated internationally. They allowed the international banker and international business to keep a single set of books for all countries, easilly translatable into any currency at any time. Also capable of extinguishing any debt in any country.

This is key. The initiation of purely fiat money had the result of lowering the efficiency of corporate and international merchant operations by killing this exchangeability. The gold that could extinguish a debt in any country, could now only be used for this purpose by its exchange into the currency that was legal tender in the country where the debt was due. This had the effect of gold bidding for the currency, supporting currency values and making international settlements difficult. The effect was also that of lowering the size of the international liquidity pool available to extinguish debt in any one country. While the gold was still usable in exchange, it was no longer usable in direct transfer. This was a tax on international business transactions. This was also a new source of fee based business for the banks. These transaction fees raised the cost of doing international business. The costs of doing business across borders also increased with the added currency risk. While in the past any company could make an estimate of the likelyhood of a currency devaluing against gold according to available reserves, the new system allowed many countries to change exchange rates to suit the political need of the moment. No reasonable person could know which way any currency would go.

Additionally, exchange risk and exchange costs into myrriad currencies had an exclusionary effect on smaller businesses relative to large ones. The large corporation could use individual currencies kept in separate accounts at seperate countries, and avoid transaction costs between gold and individual currencies. Small business did not have the luxury of keeping many separate accounts in many separate countries.

The motives for the move to going off the gold redeemability standard in the 1931-33 period were well beyond simple issue of easing liquidity concerns within local bank systems by allowing a "flexible" money. Indeed, it would seem that the desired effect was to either: (1) prevent international liquidity from solving the credit crunch that was then a problem in most of the world; (2) The thought may have been that by raising the cost of capital exiting a country into another, a country could raise or maintain local liquidity while reducing liquidity in other countries. Considering that Britain's sterling was sharing with gold the role of the unit of contract for international settlement as late as 1930, closing the Sterling exchange window would have had the effect of supporting the Pound's value by creating a credit squeeze on the international markets that were indebted in Sterling, so that gold would be traded for Pounds Sterling. This would make exporting LESS attractive for the pound based business, and would make exporting to Britain more attractive for non-Brit businesses that were indebted in Sterling. What gold was left in the markets would have to flow into the English banking system and its center, the BOE. The gold flow into british coffers would reduce global liquidity even further, as it did in reality. This would have concluded the Lord Norman debt trap.

The world as a whole was then in need of more sterling to pay off debts as well as more gold to exchange into other currencies for trade and to settle gold debt that was not convertible into currency. The result was that Britain grew its economy 22% over the decade of the 30s, issuing Sterling notes ad nauseum, while the rest of the world was competing in consecutive devaluations to capture the English markets.

Does this story seem familliar?
TheStranger
Ari
Gosh, I hope you are right. Thanks for a good laugh. I needed it!
TownCrier
Fed's reserve-maintenence activity defies prediction
http://biz.yahoo.com/rf/000114/oa.htmlClick the link to see how analysts have been baffled.

While they saw a small add need and predicted a small repo operation, the Fed instead offered a small drain of bank reserves using 4-day matched sale-purchase agreements totaling $1.75 billion.
SteveH
While the bull rises
so does oil. Now over $28.00/bbl
ORO
SteveH - Oil
Oddly enough, the oil stock index is down today, my quote says -1.1%.

Though the bond is quite disappointing, considering the lighter than life inflation numbers. Trying to get out of its downward trend, the bond is just unable to respond to the "good" news.
SHIFTY
kitco gold graph
pog looks like they stoped trading. Its flat. Whats up with that?
ORO
Aristotle - Request for Comments
Aristotle - thanks for pointing out the possible errors in the comments I made to FOA. I fear that what I have collected to date is insufficient to confirm without doubt some of the arguments on motivation I made regarding the options standing before the decision-makers at the time. Some of the information is still missing from the memoirs and informed books of the more current situation. Some of the details of the 2 years around the gold window's closure are yet to be disclosed.

Having said that, I would like to solicit your opinion as to some of the thinking I presented on the interpretation of the events and sources I discussed in my last two posts yesterday.

I very much appreciate your criticism. It is exactly what I post here for.

beesting
Large Block Stock Trading of Gold Mining Companies.
http://multex.multexinvestor.com/Home.aspFrom Nepti at Kitco Jan 13,2000 20:37:
Prudential(Securities-A Brokerage Firm) selling large blocks of Gold stocks while recommending their purchase.
In their weekly metals report dated Jan 3,2000, Prudential indicates they expect Gold prices to average $300-$325 in 2000-2001 and they recommend Newmont(NYSE-NEM),Placer(NYSE-PDG), and Homestake(NYSE-HM) for trading opportunities, the report also notes that Prudential Securities also acts as a "SPECIALIST"(Sir Gandalf,my friend, are you out there?) for Newmont, and has managed public offerings for Placer. The past couple of days, they have been Broker crossing all the large blocks on the 3 recommendations.The report can be obtained through Multex.---Above URL.

Jan.7 Block Trade- Placer Dome 1,412,300 at 10.--Dollar amount:$14,123,000.

Jan.12 Block Trade- Newmont Mining 824,000 at 22--Dollar amount: $18,128,000.

Jan.13 Block Trade-Newmont Mining 1,493,000 at 21 3/8--Dollar amount:$31,912,875.

Jan.13 Block Trade-Homestake Mining 513,000 at 7 1/8--Dollar amount:$3,655,125.

Jan.14 Block Trade-Newmont Mining 201,000 at 21 3/8--Dollar amount:$4,296,375.

First comment:It has to be institutional buying in these amounts! Good news for Gold holders!! If the managers of the institutions were real smart, with these millions of dollars at their disposal, they would buy physical in quantity also, to force the street price or "spot" higher insuring a higher stock price.

Second Comment:
This re-affirms my theory;See beesting # 22779 1/12/2000 12:45 MDT post, third statement.

Now, as the good Sir Peter Asher has been pointing out for many months, there is a huge general public misconception concerning the value of stocks. Here is another example why:
THE STOCKS ISSUED BY COMPANIES ARE HELD ON CONSIGNMENT BY BROKERAGE FIRMS,until a buyer is found!!!

Lets give an example of consignment:
We go to a new car dealer who has many,many new cars on display.Did the dealer buy these new cars from the factory to resell? Answer, NO!
The factory has an agreement with the car dealer to try to sell as many new cars as he can, the car dealer takes orders for new cars, and orders direct from the factory new purchase orders when buyers are found.The new cars displayed are on consignment,they can be sold.They have NO VALUE until sold.
Suggested price is determined by cost of manufacture, plus profit.
Think about this, if no-one bought the car what is it worth? Answer- NOTHING! Relate this concept with all stocks!

Back to stocks; The free market system gives a value to stocks,"in circulation only" because someone has already paid a price for them, and supply and demand are supposed to regulate the price.
The large number of stocks(billions of shares)held on consignment by brokerage firms have no real value until sold. However, the Brokerage firms assign a theoretical value on unsold stock, and uses these mythical stock valuations for in house collaterel based on street value of "shares in circulation".In My Humble Opinion, that "COLLATEREL" has destroyed the free market system, by overwhelming(in the futures markets) the "real price" set by supply and demand on not only Gold but almost every base product, foodstuff included.

IF NO-ONE WILL BUY A SHARE OF STOCK IT HAS NO VALUE!!!

Knowing this the stock exchanges have a buyer and seller called a "Specialist" that CREATES and regulates a value in the stocks he/she is assigned to supervise on an on-going "real time" basis.

We watch unfolding events together.
Thank You for reading.....beesting.
RossL
Shifty

The New York market closed early for the 3-day holiday weekend.
SHIFTY
ross l
Oh , I thought it looked odd.Thanks
SHIFTY
Ross L
Do you know if the rest of the world is trading?
goldfan
TownCrier (1/14/00; 9:46:38MDT - Msg ID:22884)
Sir TownCrier

concerning the amount of US$ in the world, locked up in CB reserves or circulating...I think ORO and maybe others have often alluded to to the possiblity that if these locked up dollars were released from their cages they would overwhelm the USW economy, cause hyperinflation , a run on the dollar leading to its reduction to near zero in purchasing power.

My question, What is the evidence for this, how many US$ are there in the world relative to the size of the US economy, and how do we know that is too many?

I try to use this argument (excess suppply of dollars) urging my friends to buy insurance by buying gold, and they ask , what is the evidence? Can you help?

thanks
Goldfan
Canuck Gold
SHIFTY (1/14/00; 12:54:21MDT - Msg ID:22895)
The Canadian stock markets will be open on Monday.
TownCrier
Sir Goldfan
http://www.imf.org/external/index.htmSir ORO is the master of statistics. I'm certain he could point you to a good web source of summary information of the various reserve holdings of the nations of the world. In the meantime, you can root around in the IMF site (link above) which provides links to the member CBs' websites where in a pinch you could look at their reserve positions individually (a giant pain...I'd hold my breath for ORO supplying a link to a convenient point of one-stop-shopping.)

Back in November I posted the percentage of physical US dollars held abroad versus those held in the states. Accurate memory fails me, but I seem to recall about 2/3rds of Federal Reserve Notes were held abroad. Glancing at a Tresury bulletin which is laying close at hand (Sept '98,) the amount of physical U.S. currency in circulation is less than $500 billion (about $460 B.)

Of more interest would be the larger figure of bank money held abroad that is held in dollars. (Bank money would be the account entries that aren't represented physically other than as a ledger entry...just like we have here in the states where this number overwhelms the paper number.) But of even greater interest, would be the U.S. Government securities (Treasury bonds, bills, notes) which is the form of U.S. "cash" that you'd see held in foreign reserves...because they yield a return. Actually, I just now solved our original quest for one-stop shopping on this data----go to the US Treasury website and look up the U.S. total liabilities to foreigners.

Keep in mind that if the bonds are not held to maturity, but are sold prematurely on the open market, the price drops, the effective yield (interest rate to the new holder) rises, they cycle feeds itself, and the "strong dollar" becomes a wisp of its former self.
SteveH
Protecting gold (and other things)
If you are wondering what this has to do with gold, just think about confiscation of property and that being gold:

WYOMING SHERIFFS PUT FEDERAL OFFICERS ON CHOKE CHAINS

County sheriffs in Wyoming are insisting that all federal law
enforcement officers and personnel from federal regulatory agencies must
clear all their activities in a Wyoming county with the Sheriff's Office.
Speaking at a press conference following the recent US District Court
decision (case No 2:96-cv-099-J) Bighorn County Sheriff Dave Mattis stated
that all federal officials are forbidden to enter his county without his
prior approval.

"If a sheriff doesn't want the Feds in his county he has the
constitutional power and right to keep them out or ask them to leave or
retain them in custody."

The court decision came about after Mattis & other members of the
Wyoming Sheriffs' Association brought a suit against both the BATF and the
IRS in the Wyoming federal court district seeking restoration of the
protections enshrined in the United States Constitution and the Wyoming
Constitution. The District Court ruled in favor of the sheriffs, stating
that,

"Wyoming is a sovereign state and the duly elected sheriff of a county is
the highest law enforcement official within a county and has law
enforcement powers exceeding that of any other state or federal official."

The Wyoming sheriffs are demanding access to all BATF files to verify that
the agency is not violating provisions of Wyoming law that prohibit the
registration of firearms or the keeping of a registry of firearm owners.
The sheriffs are also demanding that federal agencies immediately cease
the seizure of private property and the impoundment of private bank
accounts without regard to due process in state courts. Sheriff Mattis
stated,

"I am reacting to the actions of federal employees who have attempted to
deprive citizens of my county of their privacy, their liberty, and their
property without regard to constitutional safeguards. I hope that more
sheriffs all across America will join us in protecting their citizens from
the illegal activities of the IRS, EPA, BATF, FBI, or any other federal
agency that is operating outside the confines of constitutional law.
Employees of the IRS and the EPA are no longer welcome in Bighorn County
unless they intend to operate in conformance to constitutional law."

This case is evidence that the Tenth Amendment is not yet dead in the
United States. It may also be interpreted to mean that political
subdivisions of a State are included within the meaning of the amendment,
or that the powers exercised by a sheriff are an extension of those common
law powers which the Tenth Amendment explicitly reserves to the People, if
they are not granted to the federal government and specifically prohibited
to the States.

Case Notes:

Case: Castaneda v. USA

Filed: 10th May 1996

Closed: 29th April 1997

Case No: 2:1996cv00099 Wyoming District Court, Casper

Nature of Suit: Civil Rights
Solomon Weaver
dollars : use them or lose them
Sir Goldfan

I can certainly understand that many of your friends cannot imagine a collapse in the dollar...many people overseas hold dollars because they have seen losses in the value of their currency. Ask your friends which other country do they trust enough to hold a currency in...perhaps they will see the value of gold as a currency ersatz...the ultimate money where every fiat currency falls back to in times of trouble.

Sir TownCrier

Thank you for your thoughts regarding the amount of foreign dollars..and the danger of inflation or hyper inflation caused by having these return.

I would like to point out an aspect of the problem, which I hope one of our esteemed economic experts might take to a deeper level than I can.

The point is that when most people think of "inflation" they mean across the board price rises...for example, recent price rises in oil are causing prices in many other things to rise. As I understand it, the prices are determined by a combination of both MONEY SUPPLY and VELOCITY.

Much of the dollar held overseas is held in the form of RESERVES. This implies that the money is sitting and waiting. I also understand that overseas investors and governments will hold dollar denominated investments (from Treasuries to Stocks, etc.)

If there were to be a period of erosion in the US Markets and Economy, and foreigners started to cash out of their investments it is possible that the dollar proceeds they get will not be held in dollars. (Unlike an American investor who is willing to keep a cash reserve in dollars to provide liquidity). In a serious crisis based on loss of confidence in the dollar, many overseas dollars that are in reserve status may start to move (VELOCITY). It will seek to trade for other currencies or goods...in trade with someone who will accept dollars.

Could it not be that the VELOCITY increase far outweighs the impact of actual supply issues?

Poor old Solomon
ORO
Reserve data, non-gold
For straight up viewing online, PDF format
http://www.oecd.org/dac/debt/pdf/jointtab.pdf

For all Non OECD countries, spreadsheet
http://www.oecd.org/dac/debt/xls/jointtab.exe

By Country
http://www.oecd.org/dac/debt/htm/data_index.htm

Reserve data in row N

nickel62
Goldfan The Annual Trade Deficit of $300 billion +
Gives you some idea of the size of the potential problem with the dollar. The past trade deficits which have been very large all had to be invested in some form of US assets most likely US stocks and primarily US bonds. Today with interest rates making many of those past US bond purchases loosers and the rising interest rates and falling dollar adding to the pain, there is a real possiblity that there will be less interest in buying US financial assets going forward. That leaves only our booming stock market to attract enough money to offset the $300 billion we are sending over seas every year to keep the dollar from collapsing. As was mentioned above this is a number that is over 60% of total currency in circulation world wide.Large!
ORO
Reserve data, non-gold - Regional
http://www.imf.org/external/pubs/ft/weo/1999/02/1099ch7.pdf

Page 66

Table 33
Regional aggregate reserves and flow of funds

Rest of tables immediately following give you debt positions imports etc...


ORO
IMF statistical appendix - note
http://www.imf.org/external/pubs/ft/weo/1999/02/1099ch7.pdf
It is relatively new. Nov 99

Data are the best you will find aggregated at any site


Much of the data is available for download as spreadsheets at

http://www.imf.org/external/pubs/ft/weo/1999/02/data/index.htm

Good mining to you all...
nickel62
Beasting my friend your heart is in the right place but easy on the analysis
Brokers who position stocks generally take them into inventory when forced to. They don't want the risk. Large blocks of stock are the nature of large amounts of funds to manage. If you are managing a mutual fund that has 10 Billion in assets and you decide to buy into the large cap gold stocks in a meaningfull way you by nature are going to buy multiple hundred of thousands of shares at a time just to make a significant percentage impact on your portfolio. And while brokers do take stock into inventory it is usually only for their own short run advantage,to amass a bolck and deliver it to a customer at a slight mark-up to facilitate the institutional money manager's desire to only buy in a size that would be significant to his portfolio. As to whether or not a stock has any value if there are no buyers you are of course correct. No bid means no price.Not an impossible thought by the way.
TownCrier
Sir Solomon...higher prices, non-dormant currency, and whatnot
You offered a variety of good thoughts, asking if perhaps "one of our esteemed economic experts might take to a deeper level than I can."

If you take a look at TownCrier (1/14/00; 9:46) you'd see that we are fully in agreement on your many ideas. Offered in this post was "Should these nation's ever endeavor to alter their reseves, replacing these dollars with something else, such as gold or another currency, the dollars would have nothing left to do but compete for goods and services. Got inflation? [Meaning 'inflation' in both senses: higher prices, and larger currency supply...no longer lying dormant in CB reserves.)"

It should be well-understood that use of the term "dollars" in the context of foreign reserves most naturally means dollars, as reaffirmed in my most recent post to Sir Goldfan. In the culmination of your assessment , you stated, "Could it not be that the VELOCITY increase far outweighs the impact of actual supply issues?"

Absolutely. Although the notion of the supply overhang would be a fine catalyst to get these dollars moving...or "competing" (to use the term I chose earlier) for goods and services. It is my understanding that the hyperinflation in Germany circa 1920 was precipitated by precisely that--velocity.

As far as looking for additional expert analysis...heck, Solomon, I'm content with our minority consensus on the matter.
:-)
JLV
Oil/Gold
Ratio now 10 to 1

When is the last time THAT happened?

TownCrier
Sir TheStranger...
I like that. Perhaps we should all add "The" to our posting names...and then move to The Netherlands where we would be right at home.

In a post yesterday you wrote:
"Thanks for the Bloomberg British Inflation link which I read with great relish but without mustard. Your efforts are much appreciated. (By the way, this is killing me Townie, so I will just come right out and ask it. Do you know a guy named David Linkley? If you don't answer, I will assume that you do?)"

The name sounded at once familiar, then I realized I was thinking of David Brinkley. Then...I remembered that we have someone here that posts with that name, but I can't recall seeing D.L. in these parts since early Summer. I don't know the fellow...why did you make an association? And how bad is the wound? Shall we send for the meat wagon?
TownCrier
JLV...Ummmmm, that would be TODAY?
Or were you looking for the PREVIOUS time that happened?
;-)
JLV
OK
A time that is NOT today.

Sorry.
The Scot
Steve H # 22899
Steve,
I read with great interest this Wyoming case you posted.
I, like you, hold very dear the rights of states and it's citizens that are being trod upon by Federal agencies. Being a Texan, I am very angry with Texas law officials, especially the Texas Rangers who stood back and allowed a tradagdy like Waco to occur. Lets us all encourage our state lawmen to take a stand. Please tell me, if you can, where this article came from so I can use it within this state. I admire all of your postings very much; however, this is the first time I have taken the time to tell you. Good work, keep it up.
Sincerely, The Scot
TheStranger
SIR TOWNCRIER
Rats! Wrong again. Up until the first week of March, last year, we had a great poster named David Linkley (your memory serves you well). His style was to post a useful link and a brief comment. The day after his final post, you appeared with your first. Your posts are usually bigger undertakings than his were, but your frequent "link and a comment" style remind me of his. So, all this time, I have thought Linkley and Crier to be one in the same.

Please forgive me for wasting your (and the forum's) time on this, but such mysteries are sometimes the hobgoblin of a small mind.

Bonedaddy
Thanks, Steve H
"Wyoming IS what America WAS!" Sometimes people ask me why I live in Wyoming. I usually say it's because I have some very annoying habits and it's the only place I could find that is governed by people with the same annoying habits.
TheStranger
Oil, Gold, Intel, beesting's Block Trades
I want to second SteveH's heralding of $28 oil. Perhaps we should also point out that the CRB is threatening an upside breakout from it's recent trading range, and gold has closed up on most sessions of the new year. Meanwhile, bond yields made another new high yesterday. Amazingly, a lot of people still don't get it. This month, Merrill Lynch exits the commodity trading business (honest), and Morgan Stanley closes down it's precious metals mutual fund.

Last night, AG attempted to explain to an incredulous Wall Street why he is so concerned about inflation. In his post presentation question and answer session, Greenspan said he hardly looks at the CPI anymore. I paraphrase, "The CPI is not a particular index which tells us the most we need to know about inflation because it's based on consumer surveys...furthermore, it tends to leave out areas of the economy where productivity gains are difficult to achieve." Thank you AG. I, for one, am getting awfully tired of trying to explain that one. Maybe you have helped. Meanwhile, if anybody wants to know the real inflation rate, just take the long bond yield and subtract 3. Right now, that gives you 3.7 and rising, which is pretty close.

Don't tell me about Intel's earnings... up 15%, and that with some clever accounting. 15% growth? And revs were up what? 10%? That's the new economy. That's what sent the stock up 12 points today (up 51% over this time last year), and led the Nasdaq to another triple digit gain? No wonder every broker I know is starting to hate his job. THIS IS NOT INVESTING, ANYMORE.

beesting - I hope you are right about those block trades, but, from what I saw, every one of them was done on a downtick. Ugh!
TownCrier
The GOLDEN VIEW from The Tower
http://dailynews.yahoo.com/h/nm/20000114/wl/safrica_mine_14.html"Is it Thursday?" asked a voice, strained by exhaustion.
A fair enough question. Trapped in complete darkness, with 104 degree heat more than a mile beneath the Earth's surface, one loses track of these things. It's interesting, though...the things one wants to know upon the realization that his days have not in fact reached an untimely end.
"I told him it was Thursday evening."

Click the link to read the final chapter in this human interest story...all for the love and lure of gold.

In an abbrieveated U.S. session, with closure all day Monday, gold held on to most of yesterday's gains that came in New York trading. COMEX February futures edged down just 20� to end the day at$284.90, while spot prices were last quoted at $283.40 per ounce.
Reporting from London earlier in the day, physical demand was said to be strong. Rhona O'Connell, metals analyst for T Hoare Canacord, told Reuters "Sustained physical support is underpinning the market although it is not rampant," adding that Singapore is tight for material owing to the Moslem Eid-al-Fitr holiday.

In New York, LFG Bullion Services' chief bullion dealer Leonard Kaplan said that precious metals were currently taking a back seat to equities. On the bright side, traders noted that gold experienced little downward response to the release of the U.S. consumer price index figure for December which showed the core inflation rate to have reached its lowest level in 34 years. I also believe the Titanic will sail again. (...steam...whatever.)

OIL

In annother abbreviated pre-holiday session, NYMEX traders took oil futures to new heights not seen in nine years. Crude futured gained 5% to breach the $28 level, ending the day $1.33 higher at $28.02 per barrel.

The surge came as OPEC's market monitoring committee met in Vienna and agreed to strongly recommend that the conservative production agreement be extended beyond its scheduled March 31st expiration. When asked about the length of the extension, Iranian Oil Minister Bijan Namdar Zanganeh said the conservative supply should be maintained until September, saying also that "We believe that is necessary because of the non-stabilization in the markets." A Kuwaiti official said the extention was "a given," and didn't reject that they could be in place throughout the year 2000.

The decision about the length of the extension will be made just prior to OPEC's full ministerial meeting March 27th. OPEC's own estimate for compliance in December were about 80%, and the committee urged members to increase their adherence to supply agreements.

One broker told Bridge News, "Just call this market the Rocketeer. There's guys talking about $30.00." Bridge indicated that "after the recent high was breached, there are few technical resistance targets other than psychological levels such as $29.00 and $30.00." Another broker said, "For right now OPEC's got control, the longs got the ball."

And all eyes in the equities markets focus on the "core" inflation numbers...which conveniently exclude the vital food and energy sectors. At least the bond traders seem a little more cognizant. The 30-year bond climbed to 6.688% as the price fell 12/32nds.

And that's the view from here...after the close.
Bonedaddy
Stranger, keep up the great posts. You may enjoy this one.
Lifted from the web site of J. Orlin GrabbeA Fool and His Money

Pyramid Schemes Lure Online Investors

(That .com is a sure thing. Sure it is.)

Pyramid schemes have been given a new lease on life by the explosion of online investment activity in
the US and Europe.

Whoofnet.com, an internet service provider (ISP) with operations in the UK and Germany, has been
taking advantage of internet stock fever to lure UK investors into a pyramid scheme by offering
shares which it falsely claims to be listed on the Nasdaq stock market and "free shares" to
successful recruiters and ISP subscribers.

To join the scheme , members make a �400 ($660) payment to Whoofnet, which they are encouraged
to earn back by recruiting "friends and family members". Members move up the pyramid and get
higher rewards as their recruitment lists grow. They are also promised commissions from the
companies planned online lottery, gambling and retail operations, and are encouraged to trade their
earnings for share options at a cost of $15 a share.

The shares offered by Whoofnet are in International Digital Holdings (IDH), a Florida-based holding
company. IDH was delisted from the Over The Counter Bulletin Board in December because it failed
to "submit its financial records to the appropriate regulatory authorities," according to Wayne Lee of
the National Association of Securities Dealers.

IDH, which has never been listed on the Nasdaq stock market, is quoted in the Pink Sheets, a US
quotation service with no minimum financial standards. Shares were last quoted at about $2.
Companies quoted in the Pink Sheets should not claim to be Nasdaq- listed, said Cromwell Coulson,
chairman of the National Quotation Bureau. "Regulators do not look kindly on companies that make
false and misleading statements."

Whoofnet's aggressive sales pitch is targeted at the aged and unemployed. A promoter at a recent
revivalist style recruitment meeting in London described the pyramid scheme as the "kiss of life" for
those made redundant on the "wrong side of 40" and promised the audience a chance to turn their
lives around.

Whoofnet has made several misleading claims about its business partners and corporate history in an
attempt to bestow legitimacy on its operations.

Potential investors are given a glowing review of past business deals, worth an alleged $700m, with
the likes of Direct Line Insurance, a subsidiary of the Royal Bank of Scotland, Bishopgate Insurance,
a UK insurance company, and Independent Energy, a UK gas and electricity provider. The companies
concerned deny the claims.

Whoofnet said its marketing may have been misleading and added it was reorganising its strategy to
avoid legal difficulties.

International Digital Holdings acquired Whoofnet.com and its parent company Castleridge
Management Services in October 1999 for $600m in preferred shares in IDH, with a claw-back
agreement if the target companies did not achieve a minimum of $300m in revenues and $40m in net
earnings before taxes during a 12-month period over the next two years.

IDH press releases describe Castleridge as a 24-year-old firm with a large customer base and
impressive resources. However, public records do not support IDH claims, showing that Castleridge
Management Services was formed in June 1998 with share capital totalling only �1,000 ($1,640).

Carl Battie, the sole director of Whoofnet.com, was previously director of Bishopgate Marketing UK,
which was dissolved in 1998 by the UK Registrar of Companies due to lack of business activity.

The US Securities Exchange Commission has already taken action against several US companies
after a wave of "free stock" offerings made through the internet resulted in a flood of customer
complaints. The companies were prosecuted for failing to register securities transactions and making
false claims about investor returns.

Meanwhile, the SEC said it was pursuing an arrest warrant for Peter Roor, a Dutch national living in
Amsterdam, who it alleges promoted online pyramid schemes and promised investors risk-free
returns. The SEC alleges "the pyramid schemes were a complete sham based on a slew of empty
promises."

Richard Walker , SEC director of enforcement, said, "the Commission will continue to bring
maximum resources to bear in cleaning up the microcap market. The market is too vital to our
nation's small businesses to allow it to be spoiled by a corrupt few."

"The US has borne the brunt of early internet fraud," said Dan Deganutti, head of Andersen
Consulting's European security and technology team, "but as Europe moves further along the take-up
curve for online services fraud is going to increase apace."

The Financial Times, Jan. 14, 2000
nickel62
Solomon Weaver thank you for your peice on money supply.
One of the concepts that has never really sunk into my often times dense head is velocity. I wonder if you (or anyone for that matter)would be so kind to illustrate this concept so that I might finally feel like I understand what they are talking about when people use it to describe the impact increases have in the money supply. I know it is supposed to be how fast the money circulates through the economy but that never graphically made any sense to me. Any help would be appreciated. Thank you.
Sam Adams
Inflation
It always amazes me to observe all the different theories of what constitutes inflation at this site and others.

The first paper money originated from the receipts that were issued by gold dealers to people who had gold on deposit with the gold dealer.

For convenience, people started trading the receipts issued for the gold in exchange for goods and services. Eventually, the convenience of trading gold IOUs established these issuers of gold recipts as the first bankers.

Money is an IOU. Despite all the propaganda otherwise nothing will ever change this. A dollar bill was originally a receipt for a gold deposit held by the government. It even says so on the older US currency.

As time goes by, greedy banksters and their criminally culpable political henchmen shift the emphasis of value from the valuable item the receipt represents (gold or silver) to the IOU itself.

The margin of safety for a bank is about 16:1. I.E. No more than 16 1 ounce receipts of gold should be issued for every ounce of gold physically held on deposit in the bank.

When these issued receipts (dollars) are in ratio of thousands of dollars in circulation for a single dollar's worth of valuable goods/services/gold/whatever, inflation not only exists but has gotten so far out of hand that the banksters and their government accomplices must re-define inflation in such a way that the relationship between valuable commodities and IOU's is hidden.

When we talk about an entire economy, we are comparing the GDP (Gross Domestic Product) to the number of receipts in circulation. When this ratio exceeds 16:1 the economy is in real danger.

We are well past the point of no return. At this point the efforts to suppress the INDICATORS of inflation require massive intervention in the markets, armies of writers pumping out false propaganda, legions of talking heads spewing perverted economic drivel, a concerted and centrally planned effort to pervert factual economic education and billions of dollars in daily injections just to keep the pitiful beast alive.

Gold is simply one of many key manipulated indicators. Once this insanity begins, what is to stop a country from subsidizing key economic commodities to keep the prices low so that industry can continue to function?

There is nothing mystical or new in what Another and FOA have been saying. If you want verification of this, look into the purpose of G-20 meetings and how exchange rates are watched and managed every second of every day by member countries.

These exchange agreements are nothing more than agreements to inflate at the same rate. If one currency gets stronger it indicates inflation so the stronger currency will buy the weaker ones.

Without a uncompromised standard with which to compare it to, these currencies maintain an apparent stability but this is a complete joke.

One might then argue how can we have deflation if this true? Deflation occurs when too many people try to redeem the receipts. This sets up a cascading default in which massive amounts of wealth are destroyed.

This time around it will be far worse since there is nothing of value backing these receipts. Once they are wiped out it will lead to massive cognizance by the huddled masses that they have been conned. The only thing keeping the system afloat right now is confidence. Once that confidence is shaken it all comes down.

I do however disagree with FOA's fairytale ending to this story. The only escape I can see is for governments to find a menace so great that economic destruction is merely a footnote. People's attention will be focused elsewhere. That elsewhere greatly concerns me.

There is no other escape for these people. They will convince themselves that horrendous crimes are unavoidable on the basis that maintaining control, power and stability within a larger sphere justifies human sacrifice.

These are the thought processes of all madmen. Hope I live through it to see how it plays out.
TownCrier
Test...noticed in an old post the euro symbol overlaps the first number.
$8,000 ... $ 8,000
�8,000 ... � 8,000
�8,000 ... � 8,000
�8,000 ... � 8,000
T�?
Au
TownCrier
Mental note to self...
type a blank space between "� " and the following value.
TownCrier
Welcome to the group, Sam Adams...stay awhile.
The watch is yours. The smell of something cooking has wafted to the rooftop from somewhere below, and my growling stomach begs me to investigate. If lucky, I might meet one of your tiny 12 oz. brothers in the process.
Solomon Weaver
The Smart Money Index
http://www.fiendbear.com/guestpg3.htmAn interesting link...with a taste of what's in it.

These stories are shown in the NASDAQ bubble that is spurting
asymptotically. It now has a price/earnings ratio close to 200. That is
something else, that no one can explain based upon any historical example.
And the public investor obviously loves it. The bullish sentiment as
registered by American Association of Individual Investors just soared to
75%, with only 13% bearish. This is so far above the normal high water mark
of 60-62% that it is mind-boggling. The beginning year optimism is boiling.

The Smart
Money Index that I mentioned in Wednesday's comments continues to tell us
something about this nature of this bull market. That index subtracts the
action of the first 30 minutes of every day, and adds the performance gains
made in the last one hour. Signals are given by massive non-confirmations
between its chart and the Dow Industrials, et. al. The logic of the index
is that its author believes that emotional buying occurs by those uninformed
that get hyped up by morning news or comments, and the calm professional
buying occurs later in the day taking advantage of those uninformed buyers.
So it subtracts the emotional buying, adds the smart buying and keeps a
cumulative total. This index gave tremendous warning in 1987, 1990, and
1998. Today it is crashing once again, in direct non-confirmation to the
action of the large-cap dominated indices.
Wally Hert, who brought this Smart Money Index to my attention notes that
the 1998 plunge began 81 days prior to the July NYSE top. In this year's
signal, the plunge in the SMI began on October 27, 1999. If the January 3,
2000 period was the top in the NASDAQ the days lapsed would be 68. The
exact equivalent to that 1998 example would bring a top on January 17, 2000.
Even though these past examples give some clue, they almost never exactly
duplicate previous time scales. But the bottom line is that as all the news
is PERFECT, and investor sentiment is soaring, it is very difficult to be
negative.
It can't get much better than this. That is what tops are made of.

THE VERY SAD THING IS THAT THE SMART MONEY IS LEAVING AND IT IS YOUR NEIGHBORS WHO ARE GOING TO GET FLEECED....

Poor old Solomon
nickel62
ORO and Pdeep Thanks for the wonderful posts yesterday(I'm a little behind)
Oro your presentation yesterday was fantastic. I am glad to say you and I share many of the same books and I am especially happy that you have even gotten around to reading them. After you fine recomendation so will I. Thanks.

PDEEP-Your post should be on the front page of the Wall Street Journal instead of the blather that normally appears there hailing the apotheosis of Allan Greenspan the seer.It is one thing to be an incompetent beurocrat but to have to listen to the media claim this guy is a genius is just too much.
beesting
Sir nickel62 # 22905.
Thanks for responding to my post earlier today, concerning stocks.
My quest continues for two reasons;
First, I'm trying to determine if dollars are being poured into circulation in other ways besides fractional bank lending.
Second, a Golden gem by Mr. Gresham #22729," It is the Love of learning that keeps one young".

I think companies, along with brokerage houses as fiduciaries, with the U.S. Gvt's. approval,are also flooding the world with dollars.How? Selling stock with little real value behind it and padding the books.

Here's an example of padding the books.
Lets look at a typical annual report concerning company stock. The report has 2 listings.
First listing is, stock authorized.(a large number)
Second listing is'stock outstanding.(a smaller number than authorized).
Now, stock outstanding means stock some-one already purchased. If we subtract the outstanding number of shares from the authorized number of share----We get a number of shares that have not been valued by a purchase price yet.(If anyone is confused right now, you have to add this information to my post of earlier today).
At this point we have 3 possible scenarios concerning the unsold shares;

First scenario-As Sir ORO pointed out with his in depth study of Micro-Soft, some or all(??) of these unsold shares would be set aside for employees who have stock option plans.

Second scenario-Unsold shares are in brokerage house accounts, listed under micro-soft.

Third scenario-Unsold shares are held in a bank?

I am suggesting since large brokerage houses also operate their own "investment bank" two and three may be the same firm. So the question, is who carries these unsold shares in their books?(all of the above???)

My understanding of ORO's Microsoft research, showed Microsoft added unsold(and in reality unvalued) stock into their overall assets, giving a false real value of the company.

Prudential Securities sold another(since my last post) 1,066,400 shares of Newmont today, bringing the total in the last 3 days to 3,584,400 shares, which makes me believe, the brokerage houses hold all unsold shares(from authorized but unsold pool) of companies.
They may also add a street value to unsold shares in their books, thereby giving a double value to unsold shares that in reality have no value.(issuing company's value plus brokerage firms value).

IMHO this created paper dollar value is used as assets or collateral by brokerage firms when conducting normal financial business.(placing dollars into existance that really don't exist)Example:In the case of a margin account it would give more purchasing power.

Sir Stranger, do you have time to comment on this post? Sorry, I kind of rambled a little too much.
Thanks in Advance.....beesting.



TownCrier
Another quick note to Sam Adams
You said, "Money is an IOU. Despite all the propaganda otherwise nothing will ever change this."

Behold the power of The Tower! I will change this in a blink of an eye.

Modern currency is an IOU. Money, when it is gold, is payment in full. To make yet another example, if money were cattle, same deal...payment in full.

Be careful what you call "money." A tricky language, this one. I'm still learning it myself. Several posters at the forum have wisely taken to calling any reference to the modern medium of exchange (dollars, Federal Reserve Notes, what have you) as "currency," leaving gold alone to wear the distinct title of "money."
Solomon Weaver
what little I know about velocity
nickel62 (1/14/00; 19:26:40MDT - Msg ID:22917)
TownCrier (1/14/00; 16:38:44MDT - Msg ID:22906)
Solomon Weaver (1/14/00; 15:01:31MDT - Msg ID:22900)
dollars : use them or lose them

Thank you TownCrier and nickel62 for adding in on the banter around VELOCITY. I truely admit, I do not really understand the details of it...more like I have a gut level feeling.

I really appreciated seeing Sam Adams join in...welcome and glad to hear you ideas...particularly the one that currency hedging is a kind of transcendental inflation agreement...I tend to believe that central bankers are not savy enough to really pull that off all the time...but I will agree that it always seem that the citizens of all nations seem to lose out slowly.

nickle62, I will offer some statistics about money supply and monetary velocity which are ballpark...I'm sure ORO has the current numbers...but for a napkin calculation...The United States GDP is approximately $6 trillion per year...the M1 M2 and M3 add up to about $7 trillion...so as a very rough approximation each total dollar on deposit changes hands an average of once per year. This may seem funny until you think of all the insurance companies and retired folks with CDs that have set aside money for a longer term use. Someone can correct me, but I do not believe that interest payments or capital gains are considered as contributing to the GDP...brokers commissions are of course.

Now let us say that we entered a period where the prices of goods and services began to rise rapidly and be sustained long enough that people on fixed incomes (like CD stashes) began to consider that they were better off spending now. Imagine that they started to dip in to savings...even so much that the savings rate goes negative...money is suddenly moved out of an account where it sat, and is now spent into an economy where it will only be saved by the 3rd, 4th, or 5th person who gets it...i.e. The velocity on those dollars is now much higher.

I remember reading a study back in the late 70's which studied the economic habits of ethnic neighborhoods in New York City. The question they asked was, for every dollar that comes in to a community, how many times was it spent in that community before it leaves again. The highest value was Jewish at 45 and the lowest was black at 0.6. When a Jewish guy sold a newspaper to a Stock Broker, he then went to a Jewish barber, who used the money to pay rent to his Jewish landlord, and so on...when a black person got their pay check, they had almost no options to buy from another black (meaning business owners)....needless to say, a single dollar went a lot farther in creating wealth inside the Jewish community than it did in the black community...this idea of a single dollar doing more transactions is about the best I can come to a gut level sense for velocity.

Poor old Solomon
Solomon Weaver
more on velocity
beesting (1/14/00; 20:17:11MDT - Msg ID:22924)
Sir nickel62 # 22905.
Thanks for responding to my post earlier today, concerning stocks.
My quest continues for two reasons;
First, I'm trying to determine if dollars are being poured into circulation in other ways besides fractional bank lending.

------

Beesting...as I understand it, the number of alloted shares which a company holds it there to use as they wish...for example they may issue new shares to raise money or to make an acquisition...or they may buy back shares. Of course, in many cases, the tricks the accountants play make it seem like a real scam at times. In the example of Newmont, if these block shares are new issues, then Newmont should get most of the proceeds as cash in order to fund operating expenses..it does not seem as if new money is created.

On the other hand let's play a little neighborhood game....you live in a town with 10,000 homes, mostly built in the last 10 years (new development) and the average home is about $160,000. Then, because a nearby industrial business park with lots of NASDAQ type startups has been hiring in a lot of high paid types, and they have identified your little town as a place with a nice lifestyle, they come in and start bidding up the homes. Now, let us say that in the last year, 1,000 homes have changed hands and the average price is now $240,000...this means that the average realestate value of the homes in your town has gone from $1.6 to $2.4 billion or an increase of $800 million. This is a "perceived value increase" as determined by the market price x number of homes...same calculation for number of shares of Microsoft x share price. But still, the only new money which was created was that which the banks created to let those NASDAQ ESOP holders borrow 95% of their home value.

Let us also be clever and suppose that a nice local guy had started up a little business selling home equity lines of credit...as the value of the homes in the area increased, he was able to talk a large number of folks into taking out loans....which they used for vacations, SUVs or stock purchases....all feel wealthier....and the banks have printed a massive amount of new money (oops TC I mean currency).

The problem here is that for all that new currency, there is an equal amount of new debt...

My sense is that inflation may drive the gold market higher, but that it is this debt trap which will destroy markets...unfortunately, this also means the gold market...at least the paper market.

Poor old Solomon
Solomon Weaver
one more off topic thought about velocity
I can always tell when it is getting late because I can post two or three things...

Well this is a little ditty for those who still have some evening hours...perhaps to stimulate a dream...

Does anyone know what the fastest velocity is?? Well, you don't even need to be Einstein...light of course..

Now let us suppose that you have one little gram of gold. Which fills a small cube. Now you let that gram of gold double (compound growth) with some rate (for example, doubling every year). We are talking about physical doubling (not value increase). And year after year, the block grows.

Can you not all see that at some point in the future, the size of the gold block will one day be the size of the earth..as it never diminishes and always doubles?

Can the farsighted amongst you not see that in a much later future, the block will grow to be the size of the solar system?

Could I convince the patient and visionary in the crowd that one must only wait long enough and the block of gold would be as big as our galaxy? And remember, our galaxy is only a speck of dust in the vast reaches of empty intergalactic space.

Let's change the shape of our galactic sized golden cube to that of a sphere so that we may more poetically call it an ORB.

Now, year to year the golden ORB grows, filling space with a massive ever increasing velocity...at some point, in some very distant year, the velocity of the orb will reach that of the speed of light.

Poor old Solomon
lamprey_65
Beesting and Stranger - Ref: Block Trades
I had also noticed those block trades and looked into them tonight. Beesting - the Jan 14th trade you have listed for 201,000 shares is Solomon Smith Barney according to Yahoo News...it was a "buy". There were two more trades you didn't mention - another on NEM today (the 14th) by Prudential - 1,066,400 shares, and 513,000 shares of HM on the 13th. All trades were noted as "crossed" accept for the Solomon trade above.

This is highly unusual activity. I went back to October and can't find a single block trade on any of the major gold companies. From what I gather, COMEX options expired today...could get very interesting next week.

Also, Stranger - I checked http://www.thomsoninvest.net/iwatch for the buy or sell intentions on NEM yesterday -- nothing but large buy orders.

Lamprey
CM
Beesting -- Authorized but unissued shares of stock

Here is my understanding of corporate stock, but please don't quote me on this. A corporation is authorized, by the appropriate government agency, to issue a certain number of shares of stock of a certain type (common, preferred, etc.). The corporation probably pays an annual corporate license fee that is based in part on how much stock they are authorized to issue.

Stock that is authorized but unissued isn't "held" by anybody, it exists only as a legal right at this point. This unissued stock is disclosed on the corporate financial statements, but it does not increase the stockholders' equity.

When corporate stock is issued, it normally is "sold" to an underwriter, such as a big brokerage house. The corporation receives this issue price, but has to pay a big fee to the underwriter. Thereafter the stock is sold to institutional investors and the public, usually at a higher price than the issue price. However the issuing corporation gets none of this "profit."
Goldsun
Viewing Velocity
nickel62
Picture an attractive woman wearing a blue dress and carrying a yellow umbrella. She walks into our host's establishment in Denver and trades crisp paper currency for a shiny 1 oz Philharmonic. MK uses that currency to take his family for a hot air balloon ride one crystal clear morning in the Rockies. The balloon owner uses the currency MK gave him to have his truck repainted, matching his red, green and pink balloon. The painter pedals his metallic orange mountain bike to MK's shop and trades the currency for a Maple Leaf (the painter grew up on a wheat farm in Saskatchewan).
Imagine these transactions occuring at one day intervals.
Now change the intervals to one year.
Congratulations, you understand the velocity of money.
Velocity applies to paper gold as well as paper paper. Bullion bank A can sell a particular piece of paper gold to bullion bank B. Bullion bank B can sell the same piece of paper gold back to bank A, and on and on. I like to think of this as Bullion Bank Badminton. Each transaction influences the market as a sale. I hasten to point out that this game is the product of my imagination rather than insider knowledge. However, a slightly more sophisticated version involving, say, bullion banks A B C D and E seems feasible on an exchange with few participants. Like the LBMA. It explains falling prices in the absence of increased supply (new leases).
Goldsun
nickel62
Goldsum thank you for your excellent example.
Just so I get this. The round trip of the paper currency through the economy is the velocity. Which means when the money supply is increased this increase will be magnified by how fast the currency is moving from one market participant to another.So if we live in a backward economy when the beautiful woman, blue dress etc. buys the gold coin and MK takes the crisp paper currency and stuffs it in his Y2k hoard the velocity slows down. And the money supply increase is muted. Or if the money supply is in the process of being contracted this action of low velocity causes more contraction.

Curreny racing through the system can stimulate price bidding because the buying power of the currency is multiplied (lots of workers using their pay to buy something made by other workers and service providors) where the hoarded currency only increases the percieved wealth and therefore buying pattern of the hoarder.So the lower the velocity the less stimulative an increase in money supply will be ,conversely the higher the velocity the more impact will be felt from a change?
nickel62
CM I want to add a little to your post if that is okay.
As you said the authorized stock is not part of the outstanding stock until it is issued. The board of directors has to approve how much stock is Authorized and as you said in the US these shares would have to be registered I believe with the SEC and the appropriate exchange upon which it trades.
It is only the issued shares that are figured in the capital structure as outstanding stock (some of which might be held in the company's own account as "treasury shares" )The process of moving authorized shares to issued shares generally involves the services of an investment banking firm to underwrite the sale of the shares to investors that they will find to buy the newly issued stock. For this underwriting or guarantee that the issue of new additional stock is sold at the agreed price to the investment banking "syndicate"(a group of brokerage firms and investment banks that ban together to distribute large share issues to all their collective clients.)which then resells the stock to their clients at whatever they think they can get,these firms also divide a fee which is generally a certain portion of the issue price.So the customer who buys the stock on the IPO is given the issue price but in a very hot market for common stock like today sometimes the investment banking syndicate is able to goose the deal a little higher and get a slightly better price for that portion of the deal that they purchased themselves. The origional customers who committed to buy the offering before the issue are given an allotment (number of shares of the deal)at the issue price without additional commission (other than that which is imbedded in the issue price)and then the trading starts in the after market which can drive the price up or down depending on the suppley and demand for that particular deal. This type of transaction is called a "secondary offering" in that it is not the first issue of stock by this company to the public, but a later offering of authorized but unisssued shares generally to rasie equity capital for some corporate purpose. If it was the intitial raising of money for a corporation that was going from being a private company to a public company it would be called an "initial public offering" or the famous IPO.
Number Six
Silver to rise shortly!
Hopefully... this from tb2k

I'll begin this thread with this disclaimer! You Decide For Yourself if this makes any sense! If it does then follow it! If not then thats OK too. I say this because of what I feel has been unwarranted bashing of posters to this Excellent forum, ( Which I hope lives on for many years) by y2k bashers, etc. With that said I'll present my facts on the Silver market for the last Four years, which we're related to me by a very knowledgeable Commodites broker who I deal with on a regular basis. In Dec 1995 Silvers low was $5.05, but by Feb 1996 it traded at a high of $5.89 In Dec 1996 Silvers low was $4.64, but by Feb 1997 it traded at a high of $5.34 In Dec 1997 Silvers low was $5.15, but by Feb 1998 it traded at a high of $7.50 ( Partially due to Buffets Silver purchases.) In Dec 1998 Silvers low was $4.56, but by Feb 1999 it traded at a high of $5.81
Which works out to a UNCOMPOUNDED RETURN of 24.5% which beats many of the annual stock market Indices, and all within a 90 day period of time!

The logic behind all this is something Pollys and Doomers should be able to agree on and that is that Silver is an industrial metal used for film, batteries, Etc. According to my Broker Fortune 500 Companies buy their annual supplies during the first quarter of the year hence the annual runnup!

============================================================

I'm not sure how the Chinese sell-off, if indeed there is one, will affect things...

I would expect oil to keep on rising, dragging along gold and silver...
nickel62
Excellent article on the success of the Euro in grabbing the lead position as #1 bond market worldwide.
http://www.goldensextant.com/commentary7.html#anchor4705What is clear, however, is that in its first year the euro had great success as a vehicle for international finance. Figures from Capital Data
Ltd. reported this week in The Wall Street Journal ("Euro Secures Big Role in International Finance," Jan. 4, 2000, p. A17) are quite
instructive. In 1999 euro-denominated bonds were issued in the amount of $602.2 billion on international markets, compared to $572.5
billion of bonds denominated in U.S.dollars and $174.2 billion in other currencies, including sterling, Swiss francs and yen. In percentage
terms, the euro took 45% of the market, the dollar 42% and other currencies 13%. In 1998, 48% of all bonds sold on international
markets were denominated in dollars, and only 22% were denominated in European currency units or the currencies of the 11 EMU
countries.
nickel62
Block trades may be significant or not.
The Perma bear on gold Goldman Sachs has just issued their first recommendation on the major gold shares. Calling for a 50% move over the next year with gold going to $325/ounce.This could explain the block trades as the quasi-indexes and the large managers would tend to go back to market neutral on their gold mining weightings. Big money would need 1-2 million shares to make a dent. Still it shows interest in the sector and that is very good.
nickel62
Block trades may be significant or not.
The Perma bear on gold Goldman Sachs has just issued their first recommendation on the major gold shares. Calling for a 50% move over the next year with gold going to $325/ounce.This could explain the block trades as the quasi-indexes and the large managers would tend to go back to market neutral on their gold mining weightings. Big money would need 1-2 million shares to make a dent. Still it shows interest in the sector and that is very good.
nickel62
Swiss Franc short
I agree with your assessment of the likely outcome of the selling of the Swiss gold. But realistically I think this is what the Swiss want a lower currency to address their export competitive disadvantage caused by a perpetually highly valued curency. Why else would they be willing to sell? The question is do the people realize that this will mean significantly higher interest rates?Get ready for the unwinding of another "carry trade",as the players who have been using low swiss rates to raise funds and then speculate abroad get their capital gain as the swiss franc swoons (I couldn't resist)and they collect their 10% capital gain from their having borrowed the francs at a high rate and can now pay them off at the lower exchange rate. Once the fanc has dropped and the cost of borrowing rises these boys will move on to the next free lunch. Isn't modern monetary policy fun?
nickel62
farfel about you Swiss Franc short suggestion from two days ago.
I agree with your assessment of the likely outcome of the selling of the Swiss gold. But realistically I think this is what the Swiss want a lower currency to address their export competitive disadvantage caused by a perpetually highly valued curency. Why else would they be willing to sell? The question is do the people realize that this will mean significantly higher interest rates?Get ready for the unwinding of another "carry trade",as the players who have been using low swiss rates to raise funds and then speculate abroad get their capital gain as the swiss franc swoons (I couldn't resist)and they collect their 10% capital gain from their having borrowed the francs at a high rate and can now pay them off at the lower exchange rate. Once the fanc has dropped and the cost of borrowing rises these boys will move on to the next free lunch. Isn't modern monetary policy fun?
nickel62
I think sometimes we forget that rising gold price really means falling debt burden .
for those lucky enough to have some of the stuff. How many of the clueless friends we all have would not understand the importance of gold if they realized that in Ecuador the only people now able to pay off their home mortgages and take advantage of their politicians screwing up are the gold holders. For them this is a huge windfall.When those internet dot com stock hit the no bid zero balances and the margin debt used to buy them is still looming large many of our erstwhile millionaires who are so prevalent recently are going to wish they had a little of that golden debt medicine.



SteveH
The Scott
The Wyoming post was a repost, not mine. I usually put -- repost -- but in this instance I thought it would be obvious as it was a news release of some such I in a mail list I subscribe to. I can't tell you who wrote it or from whence it came. I found it interesting and worthy of a good read.

Bonedaddy
Velocity and the "Looney Tunes Corolary"
I found the imagery in Goldsuns's velocity post most enjoyable. For me, the written word will always bring more satisfaction than pictures. As a result of my experience with "things that go fast", I've long held an image of trajectory being associated with velocity. Appling this image of velocity to the current economy, I arrive at a point that I will call, "The Looney Tunes Corolary". This corolary, based upon empirical evidence from social interactions between the Coyote (carniverous exuberantus) and the Road Runner (elusivious wealthius) shows clearly that, in a "Looney Tunes" world, there is a time delay between the loss of velocity and the effects of trajectory. How many times has the Coyote run off of the cliff, only to hang harmlessly in the air, until the realization becomes clear that absolutely nothing is supporting his position? Then, and only then, does gravity take over and rapidly erode the Coyotes paper market gains. The result is, of course, the inevitable whistling fall punctuated by a dusty "poof" on the desert floor below. For those who elect to persue the speedy bird of elusive wealth, there are a few things to remember.

1) Don't EVER look down!

2) When velocity carries you off the cliff, flapping arms with fists full of paper won't have much effect.

3) When you grow weary of chasing elusivius wealthius and going "poof in the dust", you can get your ACME GOLD COINS from MK at USA Gold!
Peter Asher
Well, it was only paper money!

Internet entreprenuer can't give money away

United Press International - January 14, 2000 22:27

By JOE FASBINDER UPI Business Writer LOS ANGELES, Jan. 14
(UPI) -- Internet marketer Mike Enlow
recently performed a bizarre experiment to prove how hard it really is to make money on the Internet.

"I've always said that if you don't do everything exactly right in your online sales campaign, you can't even sell hundred dollar bills,let alone a normal product," Enlow said. "People don't seem to believe me'so I decided to put it to the test."

Enlow tested his theory by putting up a web page offering free hundred dollar bills for several months to anyone who would pay the postage to have it mailed to
them -- without a single taker.

Enlow, based in Magnolia, Miss., says he's not surprised, saying he's tired of all the hype surrounding the Internet. The Internet, he says, is causing unsuspecting entrepreneurs to spend their money on a mistaken "pipedream," instead of
using the classic, proven marketing methods that can lead to success.

Enlow says he is now on a mission to correct the false beliefs that exist about the Internet as a marketing medium.

But the days of free hundred-dollar bills are over.

"Unfortunately the plain truth is it's hard to sell anything on the Internet," Enlow said. "And if you don't mind my being blunt, I'm going to tell you the mainreason
people aren't buying from you: They don't believe one darned word you say.

"Literally. They're sick of being lied to and misled. Tired of outrageous offers, unsolicited E-mail spam, products that don't work as advertised and people who hide behind fake names and fake E-mail addresses."

Of course, there's a reason Enlow has been trying to give hundred dollar bills away. He's selling a service -- the Masters of Marketing Inner Circle, which helps entrepreneurs make money on the Internet -- without having to give money away.

Full details on this strange experiment can be found on his Web site at http://www.enlowcircle.com/go/fullstory, as well as a free report on howto maximize your profits online immediately


SteveH
a letter to a Congressperson
Note: I wrote this letter to my Congressperson. I called up his office and talked with Nancy and asked why I only received canned responses to my emails that I sent to all US and State legislatures. She told me the overwhelming volume of email and how, even though they tried, they can not keep up with it. I told her that it was obvious to me that they didn't really read nor respond to any email that I have ever sent, except once and the topic of the response wasn't related to the topic of my email. She suggested that if I wanted to get through to the Congressperson that I print out the email and mail it. I pointed out to hear, "I hope you see the irony of that, you want me to print out my email and mail it?"

Here is my email that I elected not to mail. I will have to follow through with her to make sure she gets it and forwards it to the Congress person.

Nancy,

I told you I would write the Congressperson via regular mail. I decided that
it would be better I write here. As you know we both had a laugh when
you suggested I print my email out and mail it to your attention.
Instead, I have chosen to email it to your attention. For what is the
point of receiving email if it does not receive the same attention and
importance as regular mail. The electronic signature on this email is
the equivalent as to my real signature. It is a technique of
technology and encryption that says this letter is from me, Steve
H, a constituent of the Congressperson. That said, here is my viewpoint
on the Second Amendment that I would respectfully request you print
out (or better yet, point out to the Congressperson as deserving of a good
read, and electronically forward it to his personal email) for him. I appreciate your taking the time to ensure that he reads it. I have a few other thoughts not related to the Second Amendment that I
hope to pass along in the future. But, for now, I will limit my discussion to the below.

To preface my thoughts, I will tell you that I did not have a desire
to carry a concealed weapon until after Columbine. I believe that the
media and some of our more outspoken leaders have it wrong regarding
the Second Amendment. Just because students are killed is not an
excuse to infringe the Second Amendment. If anything, it is a reason
to make sure that law-abiding responsible citizens can carry weapons
to counter these events before they become out of hand as Columbine
most certainly did. Here is why I say this.

Last winter I was travelling southbound on XXX with my wife in our
Porsche 911 (1983). It was snowing and whiteout conditions caused a
dump truck to turn sideways just north of Main Street. When we came
upon it at 50mph, all I could see were eight vehicles stopped in front
of me giving me no place to avoid them. Luckily I was in the right
lane. I turned my wheel hard right and headed up the steep embankment.
Because of the low profile of the Porsche it didn't turn over on the
hill. Seconds after we stopped, a white car came within a foot of my
left-rear bumper. We heard multiple pops of crunching metal as those
cars behind us dealt with the blockage each according to their place
on the highway. In all thirteen cars suffered damage. Yet, the whole
affair blocked the highway from the North. As we were travelling south
the accident was within one hundred yards of the Main Street exit to
XXX.

I am an Amateur Radio operator so I called the accident in on my
radio. I told the emergency dispatcher to have any response come down
the wrong way of the XXX Main Street exit, as we were only yards away
from there and they would avoid all traffic backed up until down town.
Since the road was completely blocked that would be the wisest. They
didn't pass that along. Instead the police and ambulence and fire
trucks decided to come up the entire length of XXX from downtown. That
decision cost one and one-half hours of response time.

During that 1.5 hours, about 10 men assessed injured, cleaned the road
surface of debris, pushed cars off to the side of one lane, freed up
people trapped by cars and got traffic moving again before any
emergency vehicles arrived. I let people use my cell phone, I called
relatives with my Ham Radio for victims. When the ambulence and fire
truck finally arrived, traffic was moving and names were already
passed around of damaged vehicles.

I walked over to the ambulence as it pulled up and opened the door. I
said, "You have three injured people. One child who was not strapped
in, one whiplash victim, and one possible head injury viction who
wasn't wearing a seat-belt."

The ambulence driver said, "Who are you?"

I said, "Just an Amateur Radio operator trying to help out."

"Please get in your car, sir," he said.

I was dumbfounded. Instead of listening me, the ambulance person lost
valuable time finding the victims. We had been there for 1.5 hours and
had to deal with this whole situation and to be blown off by the
ambulence person was a slap to my intelligence and to what I had just
been through.

The message I took home that winter day was that our police, fire, and
emergency personnel can never replace the citizen who is first upon a
life-treatening event who acts responsibly. Here, for example, ten
people chipped in to keep people comfortable, get traffic moving, and
to help each other. The officials merely came along to clean up after
the event.

When I heard of the Columbine teacher who was allowed to blead to
death with the Police and ambulences right outside, I saw myself as
that teacher who bled to death and those frightened students unable to
protect myself totally dependent on the same officials who didn't
listen to my advice to take a short cut and who blew me off after
spending 1.5 hours in a traumatic life-threatening event. In other
words, America is dependent on first-responding average citizens to
react responsibly in life-threatening events. The public safety folks
at best would be there when it happens but on the average will always
be there to clean up or to finish up.

In every well-publicized shooting event in the last few years, average
unarmed citizens were made victims by a crazed armed killer. The
Police are never there when it occurs and only clean up afterwards. It
is bad enough that news media chooses to print 10 negative stories on
guns for every positive one. But what is worst of all is that I as a
State citizen can not receive a concealed weapon permit from my
own gun board but the State of Florida will issue me a permit. You
see, after Columbine, I believe that each US citizen has a right to
carry a concealed weapon. I believe we should be trained how to safely
use and when to properly engage such a weapon, but I believe that --
based on the two personal experiences above -- only first-responding
responsible citizens can have any hope of stopping a masacre the likes
of Columbine, the Xerox shooting in Hawaii, etc. That means that a
law-abiding citizen, who has always had a right to bear arms, should
be able to get a permit for a concealed weapon for the reason of
self-defense just for the asking. This is not so in this State and this county. It is so in 31 other states though.

I applied four times to the County Concealed Weapons License
Board for an unrestricted permit. I filled out the paperwork, got my
township Supervisor to sign it, had my fingerprints sent in for $39,
and waited for two months. I got a letter from the board that said we
only approve permits for extreme good causes. (why does the process
take two months then?) I stood before the board (after having written
the same reasons in two letters). I told them I wanted the permit for
self defense. I listed eight good reasons, including self defense,
carry gold and diamonds, carry expensive camera, computer, work in bad
sections of town late at night...basically reasons I thought
they wanted to hear.

So, here I sit, almost six months since the
initial application. I have one verbal rejection, two written
rejections because as they say, my reasons aren't good enough. Yet,
the State of Florida will issue me an unrestricted permit good for
five years. My brother who lives in Washington State has had an
unrestricted permit for 15 years (he works as a Networking person at
Boeing). My brother-in-law in Indiana has one. A friend in Indiana I know has one. But the my County board won't
give me one because my eight reasons aren 't good enough.

Something is wrong with this picture. What is more, how do I appeal
this? The board appears to be a State Board. The board is made up of
law-enforcement people. DO I appeal to another law-enforcment person,
the State AG? Do I use the courts? I got a quote from an Attorney they
wanted $30K on retainer to fight this case. Thirty-thousand dollars!

Instead, I can only appeal this decision in a manner that suits my
skills -- I can write a letter. I am writing this letter to you to
appeal their decision. Because they have rejected my application for
what appears to me to be absolutely no good reason other than they do
NOT want any person except retired police officers and security
persons in Kent County to carry concealed weapons. I am asking you as
a legislature to find it in your heart to keep boards like the Kent
County board from using their office to bar my and other peoples
Second Amendment rights (what makes matters worse is that the State
Constitution of MI says a person has a right to protect himself and
the State). How the legislature could have passed a law that allows a
board to use the color of law to deny me the natural and individual
right to bear arms escapes me? How they can deny my request for a
concealed permit becasue my reason of self-protection is less than of
those they do grant permits to escapes me? And how a board uses the
color of law to only allow certain classes of persons a permit over
those of a whatever class they place me in, escapes me as well?

As a result of the boards decision, I have taken the time to read
every case, every law, every decision, every article on the Second
Amendment. Did I do this because I have nothing better to do? No, I
did it because I know in my heart that based on the two experiences
above that each American has a right to carry a concealed weapon. Yes,
we need to be responsible and trained, but we have the right. I know
that now and I know why. I spent a few minutes writing my take on the
Second Amendment. I have shared that below. Please take the time to
read it. It is short but it is a summary of my research into what I
have come to understand about our most valuable of rights that seems
to embarrass people. I have learned, there is nothing to be
embarrassed about. The Second Amendment is there to protect the
remainder of our rights. If the treatment of the Second is an example
of how the other rights are soon to be treated then it truly is a sad
day.

Here is my take on the Second Amendment:

The Second Amendment, a Constitutionally guaranteed right (and a
natural right), an equivalent to the right to vote, to the right to
freedom of speech, to the right to freedom of religion -- the right
that guarantees these rights -- does have a social cost in lives,
however unfortunate. That is not to say that Society can find
non-infringing means to help reduce injury or death related to arms.
It does say that the Right to Keep and Bear Arms (RKBA) is a right
that is worthy of upholding with the same vigor and passion as the
other rights above. The manifestation of that is the following,
anything less is a compromise made that harms all rights, not just
RKBA:

No restrictions for law-abiding citizens on concealed carry, including
no need for a license, except for required reasonable training on the
proper use of deadly force and firearm safety. This includes no
restriction of places of carry with the possible exception of public
aircraft.
No restriction of age of carry except to those not of voting age when
not in presence of supervising adult.
No restriction of class of citizen except those proven guilty of
violent crime.
No variance from State to State on the meaning and justification in
the use of deadly force, including the inclusion of the Castle
principle as applied in Florida.
No gun registration of any kind on hand guns or common rifles or shot
guns or knives or bows and arrows, etc.
No involuntary restrictions for law-abiding citizens on open carry.
No involuntary safety locks or gun safes nor penalties for same.
No laws that cause the proper use or possession or bearing of arms to
be any factor in the detainment, arrest, harassment, or conviction of
a citizen (law-abiding or otherwise).
No variance in standards in the above from town to town, county to
county, or state to state.
No penalties on adults for child misuse of handguns. (encouragement of
proper and safe storage and training of children the proper respect
and proper use of weapons is encouraged)
No other restrictions not specifically mentioned or covered by the
above.

The above is the manner in which the Second Amendment SHOULD BE
respected if it were being given equal treatment as to the other
Rights. That it is NOT being given equal treatment is a manifestation
as to how irresponsible and lax our legislative and enforcement and
judicial bodies have been in protecting the Second Amendment. That our
leaders have allowed this to happen shows an unacceptable deviation of
standards, high for all other rights (except for seizure of property
in alleged drug crimes), that left unabated will have the ultimate
affect of compromise of even the most highly popular rights. Even
though the Second Amendment is currently an embarrassing right does
NOT give our leaders the nod to treat it with disdain, repugnance, nor
give any credence to a lack of vigorous vigilance that it is their
DUTY to hold over our rights, even the Second Amendment.

That said, it is time for all Americans to defend the Second Amendment
as they do all the other Rights, embarrassing or not. Any lesser
treatment is a compromise of all rights. For the Second Amendment is
the right of rights, the right that ultimately stands in protection of
all rights in the Bill of Rights. This doesn't mean that voluntary
programs of safety and education can not be implemented to reduce
firearm deaths and injury. Just because there is a cost in lives to
the exercising of the Second Amendment, however, should never have
been nor should never be an excuse to make even one infringement to
the Second Amendment in any law, enforcement of any law, or
interpretation of law. Simply, the Second Amendment is an equal to
other rights in the Bill of Rights. Our rights, even the Second, can
NOT be compromised - that is a slippery slope of damage to all rights.
With so many restrictions and laws on the books surrounding weapons
since the 1930's shows the distance down the slippery slope we have
come. It is not too late to put on the brakes and review how we got to
where we are. The Second Amendment is not an embarrassment. It is but
a realization of our Founders that the RKBA is equally (not more; not
less) important to all rights that they so choose to protect it by
listing it SECOND in the Bill of Rights, just under the right to
freedom of speech.
TheStranger
beesting and Lamprey
beesting - My take on authorized stock is that it is only potential stock for which permission to issue has already been granted by the stockholders. Like a bank credit line, it can represent a ready source of capital but does not figure into the balance sheet unless it is used. Activation is normally accomplished either by public offering, private placement or a stock split. I only share this with you because you asked. I am not an accountant and am probably missing something here.

It has been my experience, BTW, that the more one knows about an investment, the more his hopes have been frustrated by that investment. This notion may not enhance our collective self-esteem here at the forum, but we all tend to run to the books when something isn't working, do we not? For this reason, I look forward to the day when I need know as little about money/gold as some of my neighbors have lately needed to know about their tech stock holdings. For them, it has been sufficient just to stand back and look on in awe.

Lamprey - Whoever you are, I am certainly glad you are here. I also hope your source is right about those block trades. The poor price action in those stocks (while gold was rallying, yet) still makes me wonder.
TheStranger
SteveH
I hope you find these tips on how to communicate with your congressman to be helpful:

1. Yes. Mail a hard copy. A hard copy must be opened, guaranteeing that at least the first couple of sentences will be read by somebody.

2. Either make your message VERY short or put a very short summary of what you are about to say at the top of the page. After all, they can spend twenty minutes reading your lengthy remarks, or they can spend them reading messages from ten others who got to the point faster.

3.Call on the phone and explain that you are preparing an article for publication (at USAGOLD, if nowhere else). Tell them you need to talk personally with the congressman to get a quote. It may take a few days, but if you are persistent enough, you will succeed.
USAGOLD
USAGOLD Business...
A WORD ABOUT NEWS & VIEWS:

We get a large number of questions and inquiries about our newsletter, and I thought this might be a good time to post some of our policies and make an appeal or two of our own.

We have a large mailing list for News & Views (in the 8000-9000 area) and it could be larger if we didn't trim it occasionally. News & Views is sent out free of charge. Instead of trimming, we hoped to continue sending all of our potential clients with e-mail addresses News & Views via the internet instead of the US Postal route. We have been experimenting with this for the January issue. Well.......Many got the letter but many didn't as well. Judging from the number of Bounces we received, there are still many of you wondering what that activity was in your e-mail box. A large proportion of our problems came from e-mail addresses at AOL which converted the document from a pdf file to some other document, and hence it couldn't be opened. We think we have remedied the problem and will try the new method next month -- simply e-mailing a link with password. Sorry for the inconveniences. Generally our attempts met with a positive response and the process went well. We apologize to those who had problems. We'll try to circumvent them next time.

TO OUR INTERNATIONALLY BASED POSTERS AND LURKERS:

By using the internet to send News & Views, we are now able to serve our friends in distant places. We cannot send you a hard copy yet, but we will do our best to get News & Views to you via the internet. We are working on cracking the intricasies of doing international gold business but it is not as easy as it might seem on the surface. The greatest obstacle is finding insurance for international shipments. If anyone knows of a carrier willing to pick up this risk, or interested in talking about it, please let us know by e-mail.

*********I would very much like to encourage our lurkers in the international arena to sign up for News & Views and we will get it to you by e-mail. You are welcome here and we, both the firm and members of this table, consider you an important part of USAGOLD family. We especially like it when when our international lurkers become international posters. Most of us here are eager to get the news and views from faraway places. We have had a stack of requests in the past for News & Views from lurkers all over the world. Now its available. Just go to the Order Forum by clicking "Want an Info Packet" at the top of the Discussion board, fill out the form, and you're on the list.***************

TO OUR CLIENTELE:

If you have purchased metal from Centennial Precious Metals/USAGOLD, you automatically go on our permanent hard copy list and will receive the newsletter for the foreseeable future. Even if you are a small client (dollarwise) we feel it worth the investment to keep you informed of what's going on in the gold market. There was some confusion about this when the e-mail version went out last week. Some clients thought they might not be receiving their hard copy. If you've purchased metal from us, do not fear -- your News & Views is on its way if not already in your hands.

TO THOSE OF YOU NOT RECEIVING NEWS & VIEWS NOW:

You may have been pushed off the list by new potential clients coming on. We use a first on, first off system on a date basis. If you don't buy metal from us, at some point you will go off the list. You are the individuals (along with our internationals) we hope to accomodate through e-mailing the newsletter. If you think we may have missed you in setting up the News & Views e-mail, contact us by e-mail with your address and we'll try sending it.

TO ALL:

I would like to take this opportunity to thank all our posters for the high level of discussion that continues on a daily basis here at USAGOLD. You would not believe the number of phone calls and e-mails of appreciation we receive on the Forum. The one thing that concerns me that I would like to surface is the number of people who call or write and say that they are too intimidated to take a seat at this table next to these goodly knights and ladies. Some are held in awe by our lurkers. I have found the posters here to be extraordinarily gracious -- a credit to themselves and this table. I think anyone thinking of posting should jump in. (I would also ask that our posters post a word of encouragement to all those trying to gather the courage to make that first post. It could make the difference.) You'll find the camaraderie something to cherish and the discussion its own reward. By the knowledge of one, we all advance a little. Please do not be afraid to share it.
Journeyman
BIG FLOAT the American Damoclese: overseas dollar danger @Goldfan Oro Townie

"concerning the amount of US$ in the world ... alluded to to
the possiblity that if these locked up dollars were released
from their cages they would overwhelm the USW economy, cause
hyperinflation, a run on the dollar leading to its reduction
to near zero in purchasing power. ...I try to use this
argument (excess suppply of dollars) urging my friends to
buy insurance by buying gold, and they ask , what is the
evidence? Can you help?" -goldfan (1/14/00; 13:03:17MDT -
Msg ID:22896)

Goldfan, I don't have very current figures as to how big the
overseas dollar glut is, but I do have a couple of clips
that give an approximation (first two clips below) and give
an interesting perspective to those "overseas" dollars as
well. Bet Oro or Townie can do better (Ah, I see they
already have) in this regard. I seem to remember that Gary
North gave the URL of a sight that tracks the U.S. money
supply as well.

However, I have several quotes from Alan Greenspan
explaining the problem in qualitative terms. If your friends
respect AG as a source, this should convince them the
"overseas" dollar problem is real. Please note: The "current
account deficit" is generally regarded as a larger and more
comprehensive "trade deficit."

"The amount of U.S. currency going into domestic
circulation each year has not varied much over the past
two decades, while the amount of currency going abroad
has risen strongly, particularly in the 1990's;
...these same broad conclusions emerge regardless of
which measurement technique or set of source data was
used; and all measurement techniques identified the
same periods of major accelerations and decelerations
in net outflows of currency." -Christopher L. Bach,
_U.S. International Transactions, Revised Estimates for
1974-'96_, From the July 1997 SURVEY OF CURRENT
BUSINESS

According to the Federal Reserve, 60 percent of all the
American currency in circulation --- $365 billion, at
last count --- is held somewhere outside the United
States. Other experts think the number could be as high
as 80 percent. "It's a huge system of parallel
currency, mostly held in less-developed countries where
people do not trust the stability of their own
currencies." says William Poole of Brown University.
..."Insofar as the money remains abroad and is not used
to purchase goods or services from the country that
printed it, it serves as an interest-free loan from
poor countries to the rich," Sprenkle adds. ... "Big
demand for dollars," a clerk in Paris explained. "We
take all we can get." That's true in more respects than
one. Last year, the Secert Service seized three times
as much counterfeit American money overseas as it did
in the United States. -B.J. Phillips, _The dollar is at
home abroad_, Philadelphia Inquirer, Friday, March 4,
1994

And the Greenspan quotes:

"I'm not one of those who subscribes to the issue that
the whole question of trade relates to jobs; I think
that's a mistaken view. Where there is a problem is
somewhere else and that is in the _broader_ notion of
trade, namely our current account deficit." -Federal
Reserve Chairman Alan Greenspan Humphrey-Hawkins
testimony to the Senate Banking Committee, 25 Feb 1998
[2]

"We've had a very substantial current account deficit
for a very protracted period of time which effectively
has moved us from a very large net creditor [nation] to
a very large net debtor. And we have a significant
amount of net interest payments that we pay on that
debt which are added to our trade imbalance and creates
still larger current account balances and still larger
net debt." -Alan Greenspan, Humphrey-Hawkins to the
Senate Banking Committee, 25 Feb 1998

"We're seeing a major increase of dollar holdings by
non-Americans, which is obviously the other side of the
trade deficit." -Federal Reserve Chairman Alan Greenspan
Humphrey Hawkins testimony to Senate Banking Committee, 23
Feb 1999

That is, while non-Americans have shipped us lots of goods,
trade deficits also mean that in return, we've shipped
_them_ lots of dollars. -J.

"It's just that the [current accounts deficit]
arithmetic over the very longer run creates a big
question mark as to whether that is sustainable
indefinitely in the future. And I must say to you that
that is one of the issues that the Federal Reserve has
been spending in recent years a considerable amount of
time thinking our way through to make certain that if
we spot any material erosion that suggests that this
stability is subject to unwinding, that we will have
some significant advance notice on it." -Alan
Greenspan, to the Senate Banking Committee, 25
February, 1998

"The problem that we run into unfortunately, is that as
our net foreign debt rises, that the amount of interest
we must pay and indeed dividends as well, continues to
rise, and that process itself creates a type of
situation that if at some point foreigners stop wanting
to continue to accumulate dollars, it creates a major
reverberation back on the American economy ...And the
question is, what does that mean, where is the end of
that rise, and the question we have addressed ourselves
to in some considerable detail. We have not yet been
able to answer it effectively." ...The continued
increase in our net external debt and its growing
servicing costs clearly are not sustainable
indefinitely." -Alan Greenspan to House Ways and Means
Committee, 20 January, 1999

NOTE: There is no real "overseas" -- in an era where only
about 8% of the money supply is actual paper bills and the
other 92% is megabyte in nature (Gary North,) megabyte
dollars in Tokyo, Brisbane, or Kuala Lumpur are only a
fraction of a second away. -J.

"As I testified before this committee in the midst of
the Mexican financial crisis in early 1995, major
advances in technology have engendered a highly
efficient and increasingly sophisticated international
financial system. ...But that same efficient financial
system, as I also pointed out in that earlier
testimony, has the capability to rapidly transmit the
consequences of errors of judgement in private
investments and public policies to all corners of the
world at historically unprecedented speeds." -Alan
Greenspan to House Banking Committee, 16 September,
1998

- The dollar at its low was down 11 yen, at 120.3 yen
per dollar from 132 yen per dollar yesterday. This is
better than an 8% drop in the dollar, the bulk of this
happening in about three minutes in the middle of the
night. This is an "astounding drop" in the world's
largest currency. -MSNBC etc., 7 October, 1998 -"This
is the biggest one day dollar drop in 25 years." -Kathy
Jones, Prudential Securities, 7 October, 1998

Regards,
Journeyman

P.S. Goldfan, your (1/13/00; 11:21:46MDT - Msg ID:22837) was
an excellent synopsis IMO, and kudos as usual to ORO on his
(1/12/00; 1:31:21MDT - Msg ID:22753) upon which your
comments were based.
Journeyman
Who's right, Kudlow or Greenspan?

A chance to apply what you've learned here @ USA GOLD U.

CNBC's "Chief Commentator" Lawrence Kudlow, in a discussion
with "Chief Economist" Bill Wollman yesterday (Fri. January
14, 2000), faulted Alan Greenspan for what he considerd a
glaring omission from Greenspan's speech to the Econonic
Club of New York the previous evening. Kudlow began by
pointing out that "inflation" is completely a monetary
phenomenon, that is, "too much money chasing too few goods."
He's on solid ground there:

"There is perhaps no empirical regularity among
economic phenomena that is based on so much evidence
for so wide a range of circumstances as the connection
between substantial changes in the quantity of money
and in the level of prices." ... "It follows ... that
_inflation is always and everwhere a monetary
phenomenon_ in the sense that it is and can be produced
only by a more rapid increase in the quantity of money
than in output." -quoted in Judy Shelton, _Money
Meltdown_ (New York: The Free Press 1994), p. 176 & 177

Kudlow went on to point out the "glaring omission:" Despite
the fact that the speech was mostly about "inflation,"
Greenspan never mentioned "money supply" even once. Pointing
to stats showing the U.S. money supply to be stable, Kudlow
stated that Greenspan and the FED shouldn't aim monetary
policy against an intact economic expansion by raising
interest rates to qwell a non existent "inflation."

This isn't the first time Prof. Kudlow has presented this
argument against FED tightening and critical of the FED's
stance as being pre-emptive on an inflation which doesn't
exist. Did Greenspan miss the boat by not connecting
currency depreciation ("inflation") with "money supply" in
his talk?

Who's right? Greenspan or Kudlow? Why?

HINT: Is there any reason Alan Greenspan might not want to
talk about money supply in relation to dollar depreciation
("inflation",) or is it just an oversight on his part?

Regards,
Journeyman

Twice Discipled
e-mailed New & Views
www.winzip.comAOL downloaded the file as JanuaryN.mim. Winzip (a shareware program) can be downloaded at the above addresss and it will extract the .pdf file from the dowloaded .mim file which has the News & Views.
FOA
Comment
ALL:
A few quick words then I'll post a reply to ORO with my next overview (perhaps an hour?).

Ha! Ha!, light sweet crude over $28! Now there is a fact one can chew on, right Permafrost! Tell me , everyone, what good were the "facts" from the beginning of 98 -1999, when they were used to point people to COMING $5.00 OIL! Not much, right?
Speaking of facts; In Barrons today they did an article on the Euro. I think they said "the Euro is the next biggest thing to impact us on a level equal to the internet" (or something like that). The major thrust of the write-up was to point out how the Euro had overtaken the dollar in international bond issuance. What a "blow out" in the first year of existence!
Can anyone remember all the negative "facts" being promoted regarding the Euro in 1998 and the beginning of 1999. All kinds of official statistics were used to indicate how it would never be born, never be used at any level equal to the dollar. In "FACT" every possible shred of evidence
was paraded about to show how the Euro would die, soon after it's beginning.
People, the point I'm making here (and to Permafrost) is that facts don't tell us what's going to happen, they tell you "What Happened"! Further, it's the motivations and political intentions of international leaders that shape the real world we live in. When these "minds with power" decide on a direction, the reactions in the marketplace then create the facts we all need to see. After the policy changes were made!
On this forum, you often read what is being promoted, what is being thought and what direction this may take in the real world. We look for "Events" to produce the "Facts" that pertain to these posts. Many of our loudest critic proclaim that our Thoughts are "dishonest" because no "facts" are available to collaborate out projections. Well, if their understandings, perceptions and connections to and about how leaders make "private policy" limits their (the critics) ability to look forward??? Truly, this is a curable disease, that's best defeated by reading USAGOLD FORUM 2nd and asking for Michael's News and Views 1st. (smile)
Finally, I add, we walk this trail looking forward "first". Before the left, right and back is observed.

Thanks all,,,,,,,,,,more in a little bit FOA


FOA
(No Subject)
007: All right Cavan Man, what is your price? Everyone has one.

How much do I have to "pay up" before you post here again?

I have this sack full of gold coins, is that enough? Or is it something that will break my Swiss bank, like an official apology? (smile)

Have payment, waiting contact. 007
beesting
Authorized shares of stock.
I sincerely want to thank all the posters that responded to my post on stocks, I learned a lot!
Solomon Weaver,good points all read twice!
Lamprey_65, I like the others here hope the large block trades of Gold mining shares, do signal the long awaited start of the coming bull market in Gold.
CM # 22930 Good post Sir,I'm always eager to expand my education.
Nickel62,From your knowledge-able postings I'd take it you are a stockbroker or close-ly related to that field, thank you.
The Stranger 22945, it's a pleasure to share the same forum with the new you, sir.

Now, this is a sidenote to what I've learned from your posts; The working apparatus of the U.S. stock markets install more confidence and integrity in the public perception, than Government itself. Another reason people are investing with wild and uncontrolled abandon. What I'm worried about is when the real stock correction starts in earnest(and it will) who will the people blame? Not themselves!

Steve H, it looks like your being forced to make a choice on carry-ing a concealed weapon legally or illegally. The choice is; Do I carry illegally and risk being cought, and a chance to argue my stand in court, with all past correspondence, or do I leave my weapon at home and take a chance on fate that I'd never have to use a weapon, in my life-time. Tuff choice!!Good Luck Steve!!!...beesting.
tedw
What part of infringed dont you understand?
http://usagold.com
If Steve H ever decides to run for office, he has my vote.

As he so eloquently writes, the right to keep and bear arms has been infringed in various locations. Years ago, when I lived in Los Angeles I sent my wife to get a permit. They told her they didnt issue them and the right to keep and bear arms meant the National Guard. We asked them to put that in writing but they refused.The right to keep and bear arms really depends on your local political climate, although it shouldnt. I live in Oregon now and they hand out permits to almost anyone that wants them. The right has been infringed as has the right to honest money.

When I drove a taxicab in LA, there was a rash of killings of Cab drivers. I started carry a .357 in my lunch box. Although I had no local permit, I did have a Federal Permit:The United States Constitution.

No Jury is going to convict an honest citizen who has armed himself to protect his family or himself. If you have gone thru all the proper channels to receive a permit and been denied for no good reason, then the sensible thing to do is to arm yourself quietly. Its not wrong and its not even illegal (those that deny the right are the true criminals).
Hopefully, you will never have to use your right in self-defense, but if you do you can explain to 12 of your peers
your legal and moral right to do so.

As the police are wont to say "Better tried by 12 than hung by one"
tedw
What part of infringed dont you understand?
http://usagold.com
If Steve H ever decides to run for office, he has my vote.

As he so eloquently writes, the right to keep and bear arms has been infringed in various locations. Years ago, when I lived in Los Angeles I sent my wife to get a permit. They told her they didnt issue them and the right to keep and bear arms meant the National Guard. We asked them to put that in writing but they refused.The right to keep and bear arms really depends on your local political climate, although it shouldnt. I live in Oregon now and they hand out permits to almost anyone that wants them. The right has been infringed as has the right to honest money.

When I drove a taxicab in LA, there was a rash of killings of Cab drivers. I started carry a .357 in my lunch box. Although I had no local permit, I did have a Federal Permit:The United States Constitution.

No Jury is going to convict an honest citizen who has armed himself to protect his family or himself. If you have gone thru all the proper channels to receive a permit and been denied for no good reason, then the sensible thing to do is to arm yourself quietly. Its not wrong and its not even illegal (those that deny the right are the true criminals).
Hopefully, you will never have to use your right in self-defense, but if you do you can explain to 12 of your peers
your legal and moral right to do so.

As the police are wont to say "Better tried by 12 than hung by one"
Al Fulchino
SteveH
I would vote for you too, Steve. Looking for a campaign manager?
Al Fulchino
@Journeymen
I have a great amount of respect for L. Kudlow. Not only for his monetary views as a whole but his service in the Reagan Administration. My question to you is: How can L.Kudlow say there is no increase in the amount of dollars chasing goods and services? I, like many others have just watched over a years worth of increased credit/money chase stocks like they were the last chairs left in a long forgotten children's game.
Golden Truth
Oil Options and of Course F.O.A
http://www.aande.comI just thought i'd let everyone here know how extremely happy "i am" with OIL closing at $28.02/barrel. Why you ask? Well i remember "ANOTHER" kept saying watch the price of oil! So at around the $23-$24/barrel range i bought two, Dec 2000 $30 call options. Guess what? looks like i'll be excercising them real soon, probally in Feb? unless oil keeps rising, last week it was up 16% its highest in 9 years even higher than it was during the Gulf War! If a panic was to break out it could hit $40-$50/barrel overnight! It might not stay at that level to long, but since each of my contracts leverages 1000 barrels of oil and for every dollar over my $30 strike price, i would make $1000.

Say if Oil only goes to $40/barrel, i would make $10,000/contract times 2= $20,000 dollars. Since i live in Canada i'd be flying down to pick up the money. Converted to Canadian Pesos thats close to $30,000 dollars. P.S i only paid a little over $220/contract.

For anyone hear that can remember, i bought 5 Dec$390 Gold calls and when GOLD spiked $80/oz the highest spike in GOLD the World has ever seen. I made 16 times my intial contract purchase price. I bought at $30/contract and sold at $500.

So on a $150 investment i made $2500 U.S which i immediately used to buy 1oz GOLD Maple Leafs.Thank you F.O.A for removing the scales from my eyes. You are a very wise and incredibly intelligent person, and you don't miss a beat or a post it seems. I have learned so much from you it's unbelievable and i just don't mean about GOLD.

Also i laughed pretty hard, on the way you explained your lament to Cavan Man about an official apology breaking your Swiss Bank(Big Smile) Tied in perfectly with "Switerland's Nazi Gold" that aired on A&E Thursday(Jan13) all day.
Anyone that has not seen this 2 hr special is missing out.
Go to A&E web site for more details. The thing i loved most was that everyone in the show kept saying they wanted their money back, meaning their GOLD, never did they say once "I want my Commodity back" So much for the lie that GOLD is dead and not real money,i dare anyone to say that to someone who had their GOLD taken away. They still want it back 50
years later. What a Fairy Tale Story the Governments want you to believe.

Also Cavan Man come back we miss you, F.O.A also has a sack full of GOLD coins for you, you savy 007 you! If F.O.A even offered me 1 GOLD Maple Leaf i'd be back in a flash dash. Don't be stubborn now, you know it's a Sin? I know you do, come back out and play, come on! How can you resist the charm of all us good guys !

Anyways as soon as my 2 oil options are in the Money i,am converting everything into 1oz GOLD coins, because this elevator is going to the top!
I'd also like to thank Richard640 over at www.gold-eagle.com for explaining to everyone how options work and the best place to buy them!
I can hardly wait until i can give M.K here at Centennial
Precious metals a call for some "Golden Eagles" since i have none of these to go with my Gold Maple Leafs etc.
Hold onto your hats folks the next 3-4 months should be good ones!

G.T

P.S Hi to everyone in Canada and at Canadian Tire! You know who you are :-) Miss D.V.D
beesting
I guess not everyone loves American dollars.
http://abc.net.au:80/news/newslink/nat/newsnat-15jan2000-65.htmCurrent News Brief!!

The authorities in Ecuador have ordered the deployment of more than 30,000 police and troops across the country, ahead of a large anti-Government protests planned for tonight.
Criticism of the President has intensified since he announced a plan earlier this week to replace the national currency with the American dollar......beesting.
Golden Truth
OIL @ $30/barrel next week. (REALLY BIG SMILE) EH F.O.A ?
Hey everyone you must read Gold.com's article over at the Gold-Eagle forum. See what they are predicting for OIL prices next week $30/barrel. Time for his post 16:17hr's

This is from an "Offical think Tank" in Calgary,Alberta,Canada. I live in the city of Calgary by the way. Last night while out for supper with my sister and her husband, he was telling me that his Boss who belongs to the Oilmans Club here in Calgary are already talking about $32/barrel oil as a reality. That means $4000u.s already for me. THANKS "ANOTHER" for putting the bug in my ear! I've been listening, go EURO and go GOLD!!!!!!!!!!!!!!!!!
FOA
REPLY
Some discussion for ORO beginning with:

ORO (1/12/00; 10:01:35MDT - Msg ID:22773)
FOA - some comments - Part I

You write:------------------------I am trying to put the two issues in perspective, (1) the break in the gold backing and (2) the need to price oil at a higher dollar price for the dual purposes of (2a)"strategic", locally controlled oil, and for the simple (2b) prosperity of the American oil patch and its highly connected people.
---------------------------------------

foa: ORO, the oil patch was hated in New York and Washington. Two different cultures, you know. The Government just wanted them to produce oil and shut up. If they needed to make money in the process, so be it. The "oil windfall profits tax" later proved the point that oil was more seen as a "public utility" for "monetary policy". Not something that was privately owned.

Your words:-----------------------
Which do you see as having been more significant? Or was it a monetary decision based on a new concept in commodity money? Or, what I consider more probable, that it killed so many birds in one stone that it was just too attractive to let go without one good try? The additional seignorage
from this concept would also have made it attractive.

Besides, considering that the US was then so far outsude of any possible internal remedy to its gold receipt (dollar) printing problem, it was just a matter of a few months till it would all have broken apart in 1968 - the Fed and the government then facing the hard choice between having a banking system or a currency. I can see that the system was saved in 69, when the London gold market moved to gold pricing in dollars and the OPEC countries stopped taking currencies other than dollars. The US managed to even stretch that arrangement past the breaking point. ----------------
-------------

foa: ORO, my friend, they were not using this concept as a real "commodity money play" in the "gold standard perception". At that time we were buying local oil with "fiat dollars" (made so by the 1933 internal gold confiscation) and foreign oil with "gold dollars". But, as you pointed out, dollar production was so far past it's "gold backing" that it was obvious they (USA) were pegging dollar printing to oil prosperity. Still, with London gold and oil mostly settled in dollars, the foreign dollar
oil deals fully well expected to cash in unneeded dollars for gold. As we can see, reality and present day events of that time were as "mismatched" as today!
All of the dollars success was ultimately made possible because oil could (and was) priced so far below it's "economic worth" to the world. At that time, even our Middle East friends had no idea just how useful oil would (and had) become to maintaining the world economic base. As we will
see in a minute.

Your Thoughts: as I break them apart and comment

-----------------------
Yes, among the true drivers of the US economic boom was the cheap domestic oil it enjoyed till the mid 60s. Economic freedom in the US was limited since Roosevelt took away our few remaining economic freedoms and the cash. The timing of the break in US oil production belies the truth of your analysis of the thinking behind this ingenious way of solving a stupid and costly problem. The steep drop of US oil production, as if off a cliff was impressive. But there were many alternatives to the solution chosen; oil could be imported and stored, and that would have set the price for internal production.-----------------------

foa: No, they were already shipping so many dollars out and any more would further aggravate the "possible gold drain perception". This was everyone's problem then as the industrialized world wanted to still get gold if needed, but they also liked the "non inflationary" (relative to that time) expansion of the dollar base as it expressed the new oil economy and it's real goods produced wealth. The US wanted new oil reserves to be "Local" (the Americas), because it could be paid in "fiat 33" cash, not the more golden "foreign cash". Both our neighbours to the north and south ever asked for much gold. In this light they acted like the local oil companies that received post 1933
dollars for oil (as mentioned above). Yet, to get these new reserves for fiat 33, they had to prevent the very cheap Middle East oil from supplying it all (if dollar prices were higher).

---------------
Oil imports could have been taxed to provide local and "most favoured" neighbours with better prices. ------------------------------

foa, they could have, but they didn't?? A lot of conflicting international political agendas with that one.

-----------------
The reason the US went off of gold did have to do with oil offering backing for the dollar, on an "as needed" basis, but there was a reason that was necessary. The reason was the meteoric rise of government expenditure in that era. The US was throwing fiscal and balance of payments caution to
the winds till the last day before going off the gold standard. That day marked the end of the government expansion relative to the economy.
The 14% of GDP level seen in 1969-1971 was never seen again. In reality, we are back below 1959 levels at 11%, while the Federal government has shrunk to some 3.5% of GDP from the former peak of near 7% in 1970. ------------------------

foa, Again, I pointed out above, the new found prosperity from cheap dollar oil was being used to justify mountains of dollar debt. As long as a barrel of oil could be used to produce more relative real wealth than the dollars used to buy it represented, dollar inflation worked in the only political measurement that counted. "An increase in the standard of living"! Don't get me wrong, I didn't say,
"an increase in the value of savings", that's something else in the minds of "Western Thinkers". Further: GDP measurements and SOL (standard of living) are clearly not relevant to each other then or today. All through the 70s the American worker groaned under a financial / currency
system gone bad. Yet, compared to the SOL of even Japan, we were always way ahead!

------------------------The question that comes at this point, is why were the Arab oil suppliers willing to do this? Was it because their oil would continue to be priced in gold, and this whole thing with the dollar just did not matter? Why did Europe go along with this scheme?

I think it was the "strategic" element of the time, a malevolent and reluctant Soviet system and China in complete chaos in the "cultural revolution", led by psycopathic crackpots, that played a part in convincing Europe and Oil to back the scheme. There was a need to continue support for the US so that it could retain/gain superiority over the Soviets. The "exorbitant privelege" had to be maintained for both the sake of the US and of Europe. For Arab oil, pricing was fine so long as they got their "fair" amount of gold per barrel. The Europeans would pay for the US military sevice by taking US dollars. Do you see this as the "whole" of the strategic significance of the deal?
--------------------------------------

foa: ORO, First and foremost, everyone was caught flatfooted as the dollar broke from gold. Like I said above, the industrial world loved the dollar expansion in the oil context presented. Caught between what appeared as a good system based on cheap oil and the loss of gold delivery, they let it drift too far. Even as we left gold behind (71) and oil went up (78), the system still worked because oil was perhaps delivering $100.00 worth of value and being brought for $30. Yes, this new price did create a financial panic, but more so because everyone was leveraged for the status quo, not a rising price. Like a company business slowing down because they expected 100% profits and invested in equipment for it, yet only got 50%.
The producers never expected the cartel to get such a high price from their political embargo. They also wanted more dollars to compensate for the gold loss, yes. But the runup they got demonstrated to them just how good their product was. They thought a barrel was worth so much
gold (pre 69-71), yet after the fact (71-79), it was worth much more gold than they were ever getting. It was a real education.
As far as going along with the deal, they didn't! Hence the gold runup. But, I tell you that little gold run was nothing compared to what could have happened if they pressed for it. Later they experimented with circulating dollars as a stop gap measure until another system could come along.

MORE:

ORO (1/12/00; 10:03:24MDT - Msg ID:22774)
FOA - some comments - Part II

Your words: ---------------------The problem of oil as money is in two ways, it is wealth when it is in the ground, but it is a medium of exchange when it is taken out, shipped and used. It must retain a wealth money to back it up. The wealth money was to be found in the gold exchange of oil
to gold, as I take your view. Or, as ANOTHER put it, gold and oil must travel in opposite directions. ---------------------

foa: ORO, once oil is "used" it reverts back into it's wealth (and real money) in the form of the real goods produced. This "spent" oil wealth / money can be retrieved by buying some of these real things with dollars. Still, the portion of real value regained is very small compared to the oil wealth / money spent. This loss of value is partially viewed as payment for your " "strategic" element" "
mentioned further above. But, this is a gross amount to pay for this protection. Much more than regular financial thinkers understand. As such, this loss is made up by receiving a "kicker" in the form of cheap gold provided from a "paper contract marketplace". A market that reduces the
amount of real gold world investors hold by replacing it with "dollar derivative gold contracts" based on the price movements of gold. This concept has lured "hard money" players into an illusion and allowed the flow of real gold to move opposite of oil. It is this simple. (smile)

Your thoughts---------------------
The next issue, that of the US government floating currency in proportion to oil production through the 60s, in effect assuming that the oil, rather than gold is what actually backs the dollar, I can see that thinking in much of the theory written in the decade before, namely by Friedman and the Chicago School, but the problem I had then, and have now, is that the currency itself does not in reality allow for any value whatsoever so long as there is no direct arbitrage between the currency and its backing. In the US there was no arbitrage into oil. It was only by the tight control of oil supplies in one tiny block, and the happinstance of gold just being controlled on the other side of the trade that made this work, and as badly as it had.--------------------

foa: ORO, fiat currency today is little more than a future contract (I posted on this before) of human production. Yet, our SOL (standard of living) could not exist without it. Presently we are in a transition between "wealth money concept" and "digital money concept". History has proven over and over that fiat money can never be a valuable as "real wealth". Through out time, everything real we own has represented both out wealth and a spend able (tradable) money, gold included. Early on, paper money had no other purpose than to represent real things in contract form. Today, even with all it's government manipulations, that paper settles high speed trade better than real wealth
contracts (dollars backed by gold?) because it can match the efficiency advancements with a growing money supply. And do so without revalueing the currency upward (deflation) in the way hard money requires. It's a hard perception to stay with, I know, but people have proven that they want their currency to stay even with economic function, not move up in value against it. Modern humans (not necessarily western) would rather hold their wealth in part in real things (gold) and settle trade in digital currency.
There is a precedent to this even in the history of our world gold supply. As a pure hard wealth money, it does increase in amounts (ounces mined) over time. During the old world growth rates this could have worked, but gold supply cannot match modern advancements without rising in value
far higher than even I project. Truly, digital currencies can work for a modern world, if only they are not backed to gold in contract (fixed gold standard) form. Most of this latter days currency problems have been in trying to keep a "hard digital money concept". It has not worked.
Yes, the percent system has blown itself completely away from official inflation. Inflation far beyond any future human production. Still, had we witnessed a true "free trading" "physical bullion only" market place for gold and allowed it to function in a goods buying settlement,,,,,,,it would have marked to the market the over production of currencies. OK, now that we understand this:


You now state many of our modern money problems in
Your thoughts:--------------
The economic expansion of the 50s and 60s in Europe and Japan was no less than that of Asia in the 80s and 90s, astounding. Similar to that growth that the US had under a tight gold standard from the end of the Civil War to the first World War.

The reality of deflation in a commodity money economy is fine if the banking system is either a "free banking" system (government is not involved but for prosecution of fraud), or the banks are regulated to disallow them the fractional reserve system completely, so that the fiction of having
bank debt balances being presented as money is removed. Thus the bank issues bonds or depository receipts (only for vault reserves) but can not stretch the meaning of customer balances to mean "cash". Thus banks are forced to either live up to their fiction in free banking, or prohibited
from the fiction altogether. The interest rates of the period before the Fed then were tremendously low. There was such a thing as a perpetual bond. Innovation was tremendous. Though this period was punctuated by bank runs galore, the system - as a whole - worked. This despite banks being
allowed their fiction and their being supported by many legal priveleges. There is no economic reason for fiat currencies at all.

The only reason is political. To allow government seigniorage and to allow its sometime friends in banking the assymetry of risk that raises their profitability and assures the great banking famillies of retaining control of their franchise at public expense. It also ended up costing them "ultimate" control in that their banks are now edifices of contracts that are all backed by the government
printing press and thus in constant danger of political expediency changing against them.

The expansion of currency in relation to the growth of the economy is simply another way for government to tax its people. In the case of the US, it was a way for the US government, in its true Roman idiom, to tax the world as a whole. That it was necessary is arguable. I would venture to
say that by 1959 it was not necessary at all. Europe had grown to the point of being able to support itself militarilly. The US was fearful of an armed Europe going communist, not needing the US and its military. Not paying tribute/protection money.

No, FOA, there was never a danger of deflationary spirals forming if the US had not insisted on socializing banking costs as the cost of the political bargain for subjugating the whole of the country's wealth to direct Federal government control. Did the war/wars both cold and hot make
this the only politically acceptable way? I think that was not the only way, even when going into a prolonged "cold" war. What it was for is obviously to "disappear" the cost to both Americans and Europeans. The decision to back the dollar with oil was based on any new concept, it was simply a new way for the US government to retain control of its economy through currency control. I could venture a guess as to Hayek being an intellectual backer of the compromise plan (compromise between reality and the wish of the Johnson and Nixon era bureaucracy to retain hegemony), since he understood well how oil is important economically, and how a currency works. .---------------
--------------------
foa: above you say:
"The decision to back the dollar with oil was based on any new concept, it was simply a new way for the US government to retain control of its economy through currency control."

ORO, I could not agree more. This was not a new concept, rather "A" concept that became "the official unwritten policy" that few understood outside Washington. It also evolved into a way for "others" to keep the dollar game going until a replacement was found. Indeed, our Officials now see the threat clearly.


More of you:---------------
Second point on deflation is that it is healthy for the debt system. It removes assets from the weak and moves them to the strong. Businesses often fail, but rarely do the assets of the business disappear.It is only those businesses built on complete folly or on speculation that routinely fail
leaving behind no assets. It is this environment that spawns 1% short/2% long interest rates, at which the rate for gold remains to this day.--------------------

foa: Deflation under the old system deflation (rising value of cash gold) worked because it brought the dept in line with the rate of growth. A rate (growth) that was much lower then. Let's face it, during the last 30 years economic production and it's real debt rates of growth (not the
gross manipulated debt rates of present) were off the scale of anything ever seen from the beginning of time! Given the choice of borrowing "PHYSICAL" gold from a true physical market at 2% for trade settlement against borrowing "physical dollars" at %10, the dollar would have been
pushed from "actual market forces" to slow it's inflation to match real modern world growth. Match this against trying to keep a government treasury from issuing "too many" fake dollar gold contracts and it's no contest. It never worked.

ORO again:-------------------------
Regarding oil as money, my second point is that oil has a couple of problems as money backing -one is its low value density, it is too expensive to move around for trade. The second is its susceptibility to political disruption. Both as wealth when it is in the ground and as delivery contract
relying on retention of smooth transport conditions (as exchange money), the black gold is not as safe as the actual stuff, and hoarding it is very costly. The only ways to trade it are in the form of obligations ("oil debt") or as title to oil reserves.--------------------

foa: I covered this far above. No one was ever trying to actually use physical oil as money. Rather they (USA) were using the disparity of real oil worth to cover the inflation of the dollar.


ORO:-----------------
While dwelling on this, there is still another set of details to this issue. The electronic settlement demands on currency make no difference as to its backing. It can be gold certificates, it does not have to be fiat paper (a promise as empty as the vault). Even as broadly usable a commodity as oil, its marginal utility is lower when available at greater quantity - its price relative to other goods falls. A money must have a steady marginal utility. As the world grew to make better use of oil out of necessity, due to an artificially inflated cost and an artificial scarcity, the world lost much to the new oil backed dollar. It had to deal with an oil cost based on the cost of producing oil in the "strategically" preffered but economically absurd location. The capital cost, the wasted engineering talent, and the years of discomfort in cramped cars and public transport (particularly in Europe) are
but the tip of the enormous ice-berg this piece of idiocy cost.

There is no benefit whatsoever derived from the oil being local but for its strategic significance for military and political reasons. No amount of theory can find a benefit from the waste of resources on a problem we did not face (at least not for another 30-50 years at the time) and from the
uneconomic consumption of the intermediate range reserves. Now we have broken the natural cost structure of the oil industry and put in a big hole between the low cost oil and the high cost oil. In the meantime, we have destroyed the coal mining industry with a boom and bust cycle, we drove
natural gas exploration too early and wasted it, We broke down the economies of many nations. This folly did not allow the growth of the world economy to proceed unempeded by the restraints of gold, it slowed down the world's growth and diverted its energies.------------
---------------
foa: Yes, to all except one." " " There is no benefit whatsoever derived from the oil being local but for its strategic significance for military and political reasons. " " "

As time went by (80s on), Europe encouraged this arrangement because backing dollar creation with foreign oil allowed a self destruct function.
Under the old gold standards, it was up the individual nation to pay out gold against it's money. A process especially usefull to others if said money was inflated. Still, modern power structures proved that this did not work. A large nation would just not pay out gold if it didn't want too. The US did this locally (1933) and internationally (1971). So what good does it do to back a currency with gold it that gold reserve is in the same nation? Obviously, none!
By allowing the US to back it's economic viability (and therefore it's currency over time) with further oil settlement, it allowed the removal of said settlement (backing) at a later date. Especially if another, closer to home and more appealing reserve currency came about. Unlike gold reserves, that resided in the US, playing the present oil deficit against the US economic need of this oil is
proving much better. Oil is a real commodity need, that must be paid for. A local (USA) oil reserve deficit can bust the dollar value if foreign oil rises in price. Much more so if oil is pegged in Euros while "parity" is in range!


More ORO--------------
I suggest two things regarding the ill-conceived ideas of the decision makers of the time. (1) Their motive was not to secure "strategic" oil supplies alone, but to make sure the whole world pays the price of this strategic decision, whether they want to or not. (2) In the way a large debtor can destroy his creditors, the US and the global banking system built around its rag of a currency did not want to lose control of their banking and commercial empires through the process of bankruptcy, and resorted to threatening their creditors with it. The resulting rollover of US debt resulted in perpetuation of the problem for the next generation, and allowed the continuation of American debt accumulation.

The US, in banging o
lamprey_65
Does this make sense?
On the oil/gold price ratio.

Ok, pretend you're a Saudi Prince. You just tooking delivery of your payment in dollars for the 1,000,000 barrels of oil you recently sold at $28 a barrel. So, you just received $28,000,000. Of that amount you retain 10% after costs for longer term investment. (Just making this part up...no idea what the margins are). So, $2,800,000 is what you decide to use to buy gold at $280 an ounce -- 10,000 ounces of gold. Now, my question...do you really want to see gold go to $300 an ounce with oil at $28? Instead of 10,000 ounces of gold, you would only have bought just over 9,300 ounces.

Now, this is very simplistic, no? Who's to say you will actually be able to take delivery of that much physical gold at such a low price...and what if you already have large holdings of the metal and want to see the price appreciate. I guess it all depends on what you want, my Prince!

Lamprey
Journeyman
L. Kudlow @ Al Fulchino
Ah, well, I think Prof. Kudlow was looking at the core rate of inflation reported Fri. as the lowest in 37 years, assuming it was accurate, and therefore that the money supply must be stable (else how could there be such low "inflation?") In addition, I guess he must not see any connection between the stockmarket balloon and the FED pumping out all that liquidity. I know it's hard to imagine him being that far off, but can you explain it any other way? Of course, it's alway possible he's right and we're wrong!

Regards, J.
Journeyman
Oil: A couple things
First thing: The US has the largest deposits of tar/oil sands in the world, dwarfing known world liquid oil reserves. Oxidental oil pioneered a viable extraction technique, which was crushed by Jimmy Carter's Energy Dept. subsidies to it's competitors. However the technology obviously exists in some dusty depository somewhere. It occurs to me oil was twice as expensive to extract from the tar/oil sands as from wells, but that was in the early 80's. At any rate, at some relatively close price, US "local" oil from oil sands will become competitive. Start-up delays come into play of course.

Second thing: Oil disappears (is consumed) unlike gold. Off the top of my head, this seems significant, though I'm not sure why.

Regards,
Journeyman
JLV
FOA
Your last post was incomplete. Part of the message was lost.
Cavan Man
Dear FOA
Thank you for your kindness and consideration. No apology from you was ever necessary.

Your words and thoughts are knowledge and knowledge is indeed power. On this trail that we walk, you are point; all the other dusty travellers follow your lead. You and your friend, having undertaken this particular journey, must remain on this trail and lead us to its logical conclusion. I am happy to know that such a fine individual, as demonstrated by your many posts, has agreed to assume such an important responsibility.

I am far in the rear; choking on all the dusty thoughts which pass underfoot clouding my vision and impairing (confusing really) my own thought processes. Please understand that I and many others like me are on this trail with you until we reach the end.

I still wonder though, how such a sea change in the economic, monetary and financial organization of the world can come about peacefully. I would appreciate your thought on this matter.

"I repeat....that all power is a trust; that we are accountable for its exercise; that from the people and for the people all springs, and all must exist."

Benjamin Disraeli (Earl of Beaconsfield)

Thank you FOA. Je suis votre ami.

PS: Thank you Stranger, PH in LA and Leigh for your kindness also.

PPS: With all this talk today of the Second Amendment and Gold I just could not stay away.

Kind regards to all....Cavan Man


TheStranger
From Barrons' Roundtable
This is an excerpt from Barrons' annual roundtable:

Q: What do you make of the fact that 1999 marked the first time in 15
or 20 years that every commodity index, including the Goldman Sachs
Commodity Index, finished higher?


[Abbey Joseph]Cohen: The last 15-20 years has been an unusual period in that we've had
significant disinflation. The commodity indexes, including Goldman's, which
was one of the more rambunctious last year in terms of performance, are
driven in large part by energy.


Q: But even minerals finished
higher. There has been a subtle
shift here that hasn't gotten a lot
of attention. How do you factor
that into your forecast?


Cohen: In several ways. We believe
this broad period of disinflation in the
U.S. is over. Inflation here troughed
in the fall of 1998. We're seeing an
updrift in core inflation, but we have
to be very careful about interpreting
the rise in commodity prices too
widely, because it started from
disequilibrium prices that were too low.

Stranger's Note: Perhaps this helps account for Goldman Sachs' shift to a bullish posture on gold prices. By the way, the 1998 disinflation "trough" ABJ speaks of corresponds very nicely with the secular low which occurred at that time in bond yields and the bottom in the XAU. It simply amazes me how many people still have yet to appreciate this historical shift. Every day, Wall Street experts tell us bonds are down because of the perceived threat of Fed rate increases. Soon everybody will come to understand that it is just the other way around. It should be obvious to everyone that the extension of the great tech rally the last two years was about liquidity, not earnings. Look for that liquidity to be showing up soon at a gold market near you.

By the way, the annual Barrons Roundtable is a read I would recommend to anybody who can get a hold of a copy.
canamami
"Sector Rotation" and Possible Implications
I was exposed to the following theory this weekend. The ludicrous high multiple stocks/companies like AOL really have no or little earnings, and now recognize that they have no real possibility of ever making up the "earnings gap", so to speak. Such companies do have one asset: money and the capacity to raise money due to their inflated share value (presumably through new share offerings or share swaps/exchanges). Thus, to get earnings, they will use this asset to acquire companies with something like a 35 multiple which do have earnings(as opposed to the tech sector's 150-250 multiples with no earnings). The net effect could be an evening out of the market at something like a 70 or 80 multiple (still ludicrous).

One question: At what point will this liquidity-created asset inflation shift itself to the gold sector, both the metal and (Forum sacrilege!) gold mining shares?

One reason the tech stocks have such high valuations is that they are valued by different "investors" than the more mainstream market - i.e., the self-directed, discount brokerage amateur investor "democracy" (of which I form part). Thus, it appears to me that inept investors thus confer the owners/managers of the tech companies with economic power disproportionate to their objective performance or (arguably) ability. Will the more mainstream corporate America thus be taken over by inept managers utilizing the market power conferred upon them by the inept investors? Will mainstream corporate America thus be taken over by arguably less "deserving" managers?
Chris Powell
Armstrong gets locked up before he talks
http://www.egroups.com/group/gata/338.html?Let's hope he doesn't get killed in jail first.
Aggie
Another????
Interesting post from Timebomb 2000 This new gold market will be never as before. This will happen only once in ones life. Time now is precious, for this new gold market will be for all the world to see. The time is almost midnight for she is ready.

-- ANOTHER (another@geneva.com), January 14, 2000.
TheStranger
canamami
Bon soir, mon ami!

You have touched upon the very reason why AOL is falling. In making his bid for Time Warner, Steve Case tacitly confessed that his stock is so overpriced it compells him to exchange much of it for cheaper assets. Since everybody who has a revenue growth rate anything like AOL's is just as overpriced as it is, he had no option but to buy something on a much slower trajectory.

But AOL stockholders were already threatened by an inevitable slowing in the rate of subscriber growth and by price competition. This week, by virtue of this merger, those stockholders woke up to discover that growth will be even a lot slower than they bargained for. (Proving you can run, but even Steve Case cannot hide).

As for your scenario of hotshot kids taking over corporate America, cananami, it assumes that these insane valuations will be around awhile. I could be very wrong of course, but I am not worried about that happening.

By the way, here are some reasons why we might expect the aforementioned liquidity to pressure gold upward in the weeks and months ahead:

1.Oil and gold both survived the selling prompted by the failure of the Y2k doomsday scenario. Both in fact, spent the second week of the year rallying.

2.The CRB is about to confound a whole lot of people by breaking 210 on the upside. It traded above 208 all day long on Friday.

3.Most of the major central banks, including the Fed, have now revealed their hands vis a vis gold. This greatly diminishes the risk of unforeseen gold sales.

4.Inflation, which was widely thought impossible a year ago, is now nearly everbody's concern. Wait 'til oil goes over $30. This kettle will be boiling over soon, or monkeys are going to fly out of my butt.

5.Finalement, l'or s'�l�vera parce qu'il a d�j� bottomed. Even Abbey Joseph Cohen appears to recognize that.

R Powell
Lamprey,beesting and stranger Re Block trades of mining shares
Suppose you found yourself owing large amounts of gold and silver from previous hedging (short selling) or borrowing in the gold carry trade and you thought the real supply/demand fundamentals would soon increase (perhaps greatly) the paper currency price of both metals and you knew that repayment could not be postponed much longer. Wouldn't you try to somehow offset your coming loss. How? Perhaps the very event that's creating the problem ( the nearby currency increase price of precious metals) might be your salvation. You purchase large amounts of mining company shares ( preferably unhedged companies) so that the price increase in metals - reflected in stock appreciation- might offset the losses in your short position. Might this explain the large amount of Newmont shares sold by Prudential yesterday as reported by Mr beesting (MSG ID 22924) and Mr lamprey (MSG ID 22929).??
The Scot
Steve H is OK
Steve,
I knew there was something I really liked about you. Your feelings about freedom and the 2nd amendment are certainly dear to my heart. Having carried a firearm in my car for over 45 years I finally broke down this past year and became licensed to carry concealed. I seldom carry on my person as I hate to wear coats, (too hot in Texas) but I do continue to carry in my vehicle (to guard my large bags of Gold, Ha! Ha!) Thankfully in 45 years I have never been tempted to put the weapon in use but would not hesitate to do so, if the proper situation occured. But, I finally realized what I really like about you, it's your Porsche. Having owned approximately 15 Porsches over the years I know your inner feelings. The true feeling of FREEDOM can come upon you through the seat of the pants. You know what I mean. Keep up your good posts and your effort to be heard.
Sincerely, The Scot e-mail scot@wans.net
TheStranger
R Powell
Sure, providing they really were block purchases and not block sales. Each of the big Newmont trades that I checked out was done on a downtick, so go figure.
Al Fulchino
@Journeyman and @ Golden Truth
Journeyman, Thanks for your reply. I am truly puzzled by Kudlow. I am very much an optimist and I believe him to be one also. As you say, maybe he IS right. Time will tell, indeed. I would rather he be right, because we are all better served in an inflationless economy.

Golden Truth, I too, regard Richard 640 highly. Can you tell me where he posted where to buy from? Either here or email at fulchinos@prodigy.com will do. Thanks in advance.
Number Six
@Cavan Man and FOA and Golden Truth... Oil Call Options...
CM and FOA, Welcome back both of you!

To Golden Truth, first, congratulations! I hope this plays out for both of us!

I too remembered FOA's words "watch oil" - and, together with my own y2k research, I went out and blew about $12,000 or so on Oil and Gas call options.

Unfortunately I got the timing wrong! The first 50 [feb]expired worthless this week - the embedded chip problem just didn't kick in as I expected it would. However I tried to cover this and have a bunch more $35 calls for March and April - the cutoff day for the April calls is March 16th. So I have 8 weeks to see oil make a $7+ move to see me in the Moola!

Is it possible? I think so. With the OPEC agreement, a new found solidarity amongst the producers, together with a generally anti-American bias now from the Saudis (I'm ***SURE*** this is tied to the Euro), rampant inflation, the fact that all commodities are depressed below their true worth, the fact that Oil has been just as manipulated as the Gold and Silver markets... and now, it DOES seem that the embedded chip problem is surfacing slowly but surely. Still early days but evidence [circumstantial] is leaking out...

This is an interesting perspective from a person I have corresponded with...

============================================================

I heard about possible big bull move in oil way back in the spring of 1999. Heard more this past fall. It would be a real suprise as the investing public and the investment dealers appear to be clueless.

I hope this trader fellow is right. When you have to buy, you don't make notice of your predicament. When you have many many parties in the same predicament, the results are quick and stunning.

This too goes back to the notion that commodities have been underpriced for some time now. If you believe that the gold market is manipulated, it would follow that other commodities have been played with to keep the appearance of low inflation. Palladium and copper are two obvious examples. The contrarian traders were looking for a sell-off in oil based on mathematical models and the percieved excessive bullishness of the commodity trading crowd. Betting against the crowd at an extreme works in a normal unmanipulated market 95% of the time. The remaining 5% is mostly attributable to an "act of god" - an unforseen event.

In a manipulated market, the supply-demand equation becomes faulty and the underlying market becomes unstable. In the process of manipulation the commodity is misspriced and imbalances build. These imbalances change the trading odds at what would normally be considered to be price extremes measured by these mathematical or sentiment indicators. The 95% odds against a continuation move in a free market might shift to 10% due to extreme hidden imbalances. These hidden imbalances cause the commodity in question to move through old support/resistance levels set against the corner in a very vicious manner. Sentiment indicators are thus rendered useless.

If crude has a big move up, it will because of a combination of an "act of god"/y2k, politics and these extreme imbalances that have been building for years due to manipulation. Gold and other commodities have also been kept under wraps for political reasons. They too are about to have their day. The last thing the mainstream is expecting is a monster bull move in the commodity complex. For what it is worth, I think we could have the CRB soar to 230 in very quick order (i.e. 2-4 weeks) and a monster bull for the rest of 2000. The new bull will last for years. Gold should have its day along with all the other misspriced essential commodities.

REMEMBER!!!
"A commodity in hand is infinitely more valuable than a promise to deliver" - Y2K mantra


goldfan
Thanks for the help!!!
Sir Journeyman for your major efforts in research and posting on my behalf and your acknowledgement, Sirs ORO, NIckle62, TownCrier for your data and encouragement in my quest. As a result of your efforts, I have a lot of cooking to do. Undoubtedly, I will serve a tidbit or two here when I am done.

as the Buddha would say, Nothing is good as gold....

Goldfan
RAP
profits and consumer spending
I would like to offer my thoughts on why Intel had it's best
quarter ever. Every computer in the world that was not Y2K compliant was repaced with a new one last quarter( at least for those that could afford it). I would guess they were all bought on 2 or 3 yr contracts. What is going to happen to computer sales and Intel chips for the next year or so? I suspect a lot of the consumer spending last quarter can also be attributed to Y2K, and this also will drop off significantly. I think this next quarters numbers will not be so pretty, IMHO.
Number Six
Let's all e-mail Matt Drudge with our views on Gold [and Silver] Manipulation

This is the full text of Chris Powell's message -

On GE a Mr. Khan is exhorting folks to get this information out to Matt Drudge...

DrudgeReport
(Khan) Jan 15, 22:13

I just wrote a letter to the Drudge Report http://www.drudgereport.com/
and sent a copy of the info from GATA on Armstrong. I hope Drudge will pick up on the story if he ever does it will be all over for the manipulators in the PM markets. I am in need of some help from you guys if you have a couple of extra minutes to send Drudge an Email it may help to get him to look into this. By the way Bill Murphy has also contacted Drudge and he has not done a thing yet. You may be the one to convince him - give it your best shot.

mailto:drudge@drudgereport.com

khan3@home.com

Thanks for any help you can give..

============================================================

If everyone on this Froum also wrote to Drudge and it got picked up by him, this manipulation outrage would in turn be picked up by other media worldwide that monitor Drudge every day.

Let's all e-mail matt Drudge with our vies on this matter, if enough of us do it Matt may follow up on this story.

This is the link

mailto:drudge@drudgereport.com






8:15p EST Saturday, January 15, 2000

Dear Friend of GATA and Gold:

Here's a special dispatch from GATA Chairman Bill
Murphy about our recent contact with the international
financial adviser, Martin Armstrong.

Please post it as seems useful.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Conversations With Marty Armstrong
Before He Was Thrown In Jail

By Bill "Midas" Murphy
January 15, 2000

A week ago today I had a two-hour conversation over the
phone with investment guru Martin Armstrong which was,
in many ways, quite remarkable. It was only a couple of
months ago we were almost at each other's throats about
GATA.

For those of you new to this story, Armstrong presided
over Princeton Economics International, a renowned
investment research firm that was noted for its
Japanese fixed-income clients.

Armstrong was invited all over the world as a guest
speaker to comment about his views of the markets. To
give you some idea of the scope of his firm's worldwide
presence, I took the following off the
www.princetoneconomics.com web site:

"PEI seminars are held around the world in Tokyo,
Osaka, Hong Kong, London, Munich, Los Angeles,
Princeton, Vancouver and Edinburgh, with normally
annual events held in Beijing, Sydney and selected
cities in Southeast Asia.

"All seminars are recorded and transcripts are normally
available. Selected seminars are also available on
video tape in NTSC or PAL. Audio tapes are available,
as well, normally in English but also in Japanese for
those held in Japan."

Before I get into the matter, here is the latest to
bring you up-to-date about Martin Armstrong:

* * *

Armstrong jailed over allegedly missing assets

By Tony Hagen
Trenton (N.J.) Times
Saturday, January 15, 2000

NEW YORK -- Commodities guru Martin Armstrong was
jailed last night after a federal judge ruled he
willfully disobeyed a court order to turn over
corporate records and millions in gold and antiquities.

Armstrong, who faces criminal securities fraud charges,
was accused of concealing items belonging to Princeton
Economics International and Princeton Economics
Institute of Carnegie Center in West Windsor, N.J.

Armstrong, the head of the two companies, has pleaded
innocent to charges he bilked Japanese investors out of
$1 billion, and spent $16 million of their money to
acquire gold, rare coins, and art work.

U.S. Magistrate Richard Owen ordered Armstrong held for
18 months or until he divulges the location of the
missing assets. Armstrong was taken from the court to
New York Metropolitan Correction Center.

Prosecutors said yesterday that Armstrong turned over a
portion of the assets but destroyed corporate records
they had demanded.

"In my opinion there is a substantial number of coins
missing, approximately $1.3 million," said Richard
Cohen, court-appointed receiver. Cohen has taken
control of Armstrong's companies and is following the
money trail.

Cohen said $1 million in gold bullion was still
missing, and Armstrong sabotaged four company computers
Wednesday, shortly before he was to turn them over to
investigators.

"We're still about $15 million short," said Martin
Glenn, a counsel for the receiver.

Armstrong, 50, contended many of the assets were either
turned over to the receiver or were already in the
receiver's possession. He said 500 missing gold
Krugerrands were given to staff as pay or bonuses and
102 missing gold bars were used to buy out a Japanese
partner. He said many of the 200 missing Greek and
Roman coins were given to his Japanese investors as
greeting gifts.

"So far, everything I have found I have turned over,"
Armstrong testified, explaining that this week he
rented a car and drove assets daily to the receiver's
New York office. He complained the receiver wouldn't
give him an armored car.

"I've been making deliveries to the receiver every day.
It's an ongoing process. I'm not finished yet,"
Armstrong told Owen.

But Owen, in his decision to have Armstrong arrested,
cited 591 computer files that Armstrong erased this
week plus the four damaged computers, which were at
Armstrong's beach house in Loveladies, N.J.

"The story about the computers is a rather
disheartening one about the state of mind of someone
who was really going to do the receiver in. It's one
thing to hit the delete button, it's another thing to
write X's over everything in 591 files," Owen said.

Owen notes that the 591 files, which were detected by a
computer forensics expert, were deleted Wednesday night
after Armstrong had been ordered to turn the computers
over.

"I did not intentionally delete the files," Armstrong
said, adding they only contained personal information,
not corporate records.

Armstrong was arrested Sept. 13 and charged with
massive securities fraud by the U.S. Attorney's Office,
the Securities and Exchange Commission and the
Commodity Futures Trading Commission. Regulators are
attempting to recover the trader's corporate assets so
Japanese investors who bought his Princeton Note Bonds
can be partly reimbursed.

Investigators have alleged Armstrong lost up to $400
million of his investors money in fruitless currency
and commodities trades. They said he faked account
statements to hide the losses and diverted corporate
funds to buy luxuries for himself and his family.

Armstrong has denied the charges, saying he's being
made a scapegoat for the actions of others.

Also yesterday, prosecutors alleged that hours before
his Sept. 13 arrest, Armstrong attempted to "clean out"
his corporate accounts to deposit money for his defense
in lawyers' accounts. They said the trader succeeded in
transferring about $750,000 but much of the remaining
money was blocked by an asset freeze that was also
imposed on Sept. 13.

Armstrong testified yesterday that he had made a good-
faith effort to return everything investigators asked
for. Strange details emerged of how he claimed to have
exchanged gold coins for Japanese gifts of tea and
decorative cups, kept 102 missing gold bars stuffed in
a couch at his Maple Shade, N.J., home for four months,
and kept a $750,000 bust of Julius Caesar hidden in a
shed in his back yard.

Armstrong also described exchanging $7 million in
missing coins to take control of a precious metals fund
from an Australian business associate, Nigel Kerwin. He
also said he handed over the missing gold bars while in
a parking lot near his home to a Japanese associate,
Akira Setagawa, who is under indictment in Japan in a
related securities case.

Cohen disputed Armstrong's excuses for the missing
funds and art, calling them a smokescreen. Cohen said
he regretted that he didn't ask Owen to assign federal
marshals to accompany Armstrong last week when he was
ordered to round up company documents and assets.

"I think Mr. Armstrong did his best, but his best to
evade the court order and his best to destroy the hard
drives," he said.

* * *

My conversation last Saturday with Armstrong followed a
long, startling email correspondence from him. It was
sent to me in confidence and will not be revealed here
until he gives the OK. Just for the record and self-
protection purposes, it should be known that all
correspondence between Armstrong, GATA
Treasurer/Secretary Chris Powell, and I has been
forwarded to GATA's attorneys.

My phone conversation with Armstrong touched on many
subjects. I mostly just listened -- my mouth wide open
most of the time, as the conversation centered around
such subjects as Armstrong's receiving death threats
from the Japanese, the billionaire's club that
manipulates the metals markets, incriminating Republic
Bank tapes, bribes paid in Thailand, the Japanese and
Republic Bank, the persecution of his family, including
his 81-year-old mother, and the efforts of the U.S
Attorney's office efforts to deprive him of his First
and Fifth Amendment rights.

The scariest part of the conversation was about Edmond
Safra, the recently murdered Republic Bank founder.
Marty knew which phone lines that Safra spoke on
directly to the Republic traders. According to
Armstrong, "All the conversations about every
manipulation you ever wanted to hear are there." He
said that the problem was that 10 days after he told
the feds that he was after sensitive information that
would expose the manipulations, Safra died mysteriously
in Monaco.

This is not kid's stuff we are talking about here.

Ironically, Armstrong did not know as much about GATA
as I thought he did. For example, he thought GATA was
about going back to a gold standard. I told him that
all we wanted was a fair, free gold market that was not
manipulated. He thought we were just focused on the
central banks of the world that we believed to be
conspiring to hold down the gold price. I told him that
we felt that the collusion involved certain New York
bullion dealers with the help of the New York Federal
Reserve Bank and the U.S. Treasury Department.

We were planning to get together to determine some sort
of relationship. He told us that he could provide
evidence (tapes and documents) that the metals markets
in New York have been manipulated. Naturally, smoking-
gun information of that nature is of great interest to
us.

To give you some idea of how close we were to getting
together, the following is the text of correspondence
between GATA's Chris Powell and Armstrong over the past
days:

* * *

Dear Chris:

Still alive so far. I will speak to my lawyer to see if
early next week is OK for a meeting. One of our clients
has sued Republic and we are unofficially cooperating
together to try to get additional discovery.

U.S. government has rushed in to try to stay our
discovery. We are about to make a fight next week to
try to force Republic to comply with our subpoenas. The
bastards are hiding behind the U.S. government big-
time.

I am not sure what is going on. I have been told that
the receiver is now going to try a contempt charge for
my not handing in my keys despite the fact that the
locks and security codes have been changed.

They just don't want me out and about. They made me get
seven people to co-sign a $5 million bond for bail. I
had 12 people to came forward. That pissed off the
government and they lost the bail issue. So they are
trying everything they can under the civil case for
contempt of anything. It appears that a contempt-of-
court can land you in jail for about one year. After
that, higher courts deem it to be cruel and unusual
punishment.

So if you tell a judge to get off and exercise your 1st
Amendment in a protest against the government, you go
to jail, since while in court you are not allowed to
defame the government. I always thought that was the
very point of the First Amendment: to ensure one's
ability to speak out against corrupt governments.

These buggers have twisted everything around
unbelievably.

Will be in touch.

All the best.

* * *

Dear Chris:

If the judge puts me away on Friday, and he is trying
his best to find the slightest reason, I will be unable
to attend our meeting. But perhaps you can visit me in
the can.

A client is trying to organize a defense fund in case
the judge strips all my attorneys of everything they
have already spent retroactively. This seems to be an
attempt to ensure that no lawyer will take the case.

Brian Code, the U.S. attorney, appears to have slipped
up and told the staff in Princeton that this case will
never go to trial. When Jim Smith asked how that can
happen, he changed his tune and then said it will not
come to trial for at least a year.

Boy, this game is so rigged, it is beyond belief.

All the best.

* * *

As I said before, GATA has no clue about the guilt or
innocence of Marty Armstrong. That is not our point.
The man is entitled to defend himself and it would
appear he is getting a raw deal. The way I see it, "The
enemy of my enemy is my friend." Republic Bank would
not let us open a money market account there when GATA
was first formed. At that time, I told Chris Powell
that Republic, a bullion dealer, would be hearing from
us in the future. The future is now, in a sense.

You might ask: Why embrace someone who has scorned us?
Well, let me explain it to the naysayers as best I can.
This gold game is a WAR that will be fought to the
bitter end -- I am loathe to use the word "death" as a
banker friend does. The FBI embraced "Sammy the Bull"
to nail John Gotti, John Dean was called on by the
Nixon chasers, and Monica Lewinsky was wooed by those
out to prove President Clinton was lying. Should GATA
use any less a tactic than used by our own FBI and the
Democratic and Republican parties in the United States?

-END-
JLV
Drudge E-Mail
drudge@drudgereport.comThe correct link is:

drudge@drudgereport.com


(If the 'mailto' is included, it'll bounce)

goldfan
lamprey_65 (1/15/00; 15:40:14MDT - Msg ID:22962)
Sir Lamprey 65 you asked
Does this make sense?
On the oil/gold price ratio.
So, $2,800,000 is what you decide to use to buy gold at $280 an ounce -- 10,000 ounces of gold. Now, my question...do you really want to see gold go to $300 an ounce with oil at $28? Instead of 10,000 ounces of gold, you would only have bought just over 9,300 ounces.

--- I say the question is what will be the purchasing power of $28M in ten years? vs the purchasing power of Au, whether it be 10 oz. at $280 or 1000 oz. at $2800? If Au is going to $6000 then even 1000 oz of Au is worth $6M, twice the investment of 2.8M!!

The physical Au is bought as purchasing power insurance, so... always buy some physical, as much as you can get delivery of, and keep it. Spend the remaining $ as quick as possible on goods and services you need right now. Same advice whether you're a Saudi prince or a garbage collector. Also if Au goes up enough in purchasing power, maybe your stash will mean you don't need to pump any more oil for cash, just for political favours and power. Wow!!

FWIW

Goldfan
schippi
Gold Sectors Chart
http://www.SelectSectors.com/agpm120.gif Fidelity Select Gold Sector trend remains Up.
Solomon Weaver
FOA, a question on Japan
Dear FOA

I enjoyed reading your reply posting to ORO tonight...you put a concrete name on an insight I had that all that cruddy oil in the ground in Saudia Arabia was worth little without the post WWII Industrial/Technological expansion which was spearheaded by the USA (and the hegemony of the USA was extended in time due to Cold War politics). Thus, it took the USA (G7) to show them what their oil was worth.

One thing which has been on my mind is that the country which has done the best in that period is Japan (if we exclude the last 10 years recovering from their bubble bursting). When the Occupation Forces went to Japan in the late 40's they came to a country of extremely poor people, who had lost major infrastructural assets. Only 40 years later, with no domestic oil, and starting with a currency that was almost unknown in the world (with almost no gold), Japan had succeeded in generating a massive amount of new wealth and a massive amount of net asset Yen to invest overseas. I lived in Japan for about a year, and I know that the average working man lives in a small apartment and sits for hours on a train...(dramatically lower material quality of life).

I also remember that we were told that the reason for Japan's success was that they did not spend 5-8% of GDP on military. I see it a little differently. I see that the Japanese have developed a cultural ability to bring immense value-added through the use of organisational processes which combine a motivated workforce with ever more modern technologies. They have almost no social system (like welfare) but money is distributed almost as equally as in a socialist society...and the velocity of money and space asset use is impressive.

The entire social fabric in Japan is based on a formalized type of trust...you never really tell the truth, but you never do anything to lose face...default is tantamount to ritual suicide...millions of mutually interlocking obligations. Inside of such a society, the collateral value of gold is less than the name of your family and who you know.

I am a gold owner, and do not believe it is a financial relic, but I believe that Japan has discovered a way in the 20th century which will become the way of the world in the 21st century which we now enter...a massive network of formal agreements which create an environment of trust...allowing the unlocking of untold energies in human creativity.

I think that gold will play an important role in the near future, because we do not yet have a system we can all trust...as a matter of fact, the very abuses seen in the PM markets are a sign of how the biggest players are the most dishonest.

But will you not agree with me that the example of how the dollar could leave gold behind (as long as it could create more value out of oil than the oil costed) or how the Japanese could bootstrap themselves as an island nation with no resources to have more wealth than any Arab nation who has all the oil and gold...that these examples show that "the creation" of wealth in the future is not connected to gold ownership...the fact that Bill Gates created a company in 20 years who's product is in such demand that he could buy 4 years production of the worlds entire silver mines if he cashed in his shares of Microsoft....lets not yet say the AOL and Netscape created wealth...give them about 5 more years to see if they last.

I do understand that gold is something that has no hidden debts and unfulfilled promises. It is just gold...the same material to anyone in the world...like water but more rare.

But, humanity, and its technological economy is evolving into something which will always be filled with debts and promises...if it were to all collapse today..the gold owners would feel rich but there would be a lot less they could buy....

In the final note, FOA. I would be interested on your view of Japan.
-----------

Since this is a long post already, let me tell you where I see gold going...I see the large owners of gold taking gold out of the vaults and consigning artists to fashion massive sculptures each weighing several tons (about $10 billion of today's dollars and maybe $100s of billions later on). In time, there might be about 10,000 of these statues fabricated. They would be displayed in public places like banks, corporate headquarters, governmental buildings, world fairs, etc. Each sculpture would have a value based on its gold content, but also a numismatic value (by artist and beauty and popularity). Any large organisation which wanted to claim a strong balance sheet, would own such a statue or several. That organisation would be allowed to borrow money (bond issues) against the collateral represented in the statue(s). Since the location and title details of all statues would be public knowledge, the financial liquidity of an organisation of this size would be visible based on the continuing ownership of such statues...obviously the physical sale and delivery of such works of art would be a very public event.

Good night and sweet dreams..or good morning an fresh coffee.

Poor old Solomon
Golden Truth
TO AL Fulchino and Number Six.
First to A.F, The name of the Firm that Richard 640 posted over at G.E some 6 months ago, is R.J O'Brien Investment Services,Inc. They are located at 555 West Jackson Blvd., Chicago,IL 60661. They've been in business since 1914, you can phone them at 1-800-535-0363 or fax them at 312-408-4775. They are really nice to deal with and they have the lowest commissions around. For my Dec390 Gold calls i bought and long since sold at $500 a contract, i paid $30/contract and only $20 extra per contract for commission.
Round trip cost $50 bucks each. They have the lowest charges on the planet, i know i shopped around some commissions cost4 and 5 times more than the price of the contract, so Al you can thank Richard 640 and not me if you like! Go for it AL and hang on! It might be a wild one! YE- HAW!

Hi number six thanks for posting that article on OIL, but i already read it, it sounds a little Y2Kish for me. I think i'll stick to the FUNdamentals on this, that also includes the EURO dollar, i think it plays a bigger part in all this than we realize, i don't think F.O.A has been here day after day beating his brains out, for all, of us, for nothing.
I think this could be a very exciting time, i just hope GOLD will start to soar soon also, that would be the icing on the "Cheesecake" as "ANOTHER" once said.
Actually to be correct he used, cheesecake to describe GOLD saying the price of cheesecake is falling because no one wanted any, then went on to say, it was falling because everyone was buying. Man i love "another's" analogies, by the way if you are out there or reading this please find the time to post here or drop a line to F.O.A. He says you don't write anymore, how come? Come on, give it up for all of us here. I know many would like to hear your "Thoughts"! again.
Please consider it (Big Smile)

G.T
beesting
R. Powell and ALL----Reason for large block trades.
http://biz.yahoo.com/rf/000107/tr.htmlOn Jan. 7 post#22467 I posted a news brief from yahoo.
My post was kind of long, but the news brief was very short, this is what it said:

HSBC upgrades mining stocks from "under weight" to "market weight".

Comments; HSBC(London based company) who took over Republic Bank of New York and may be the worlds largest bullion bank, used a different term under weight to market weight(from hold to buy??) when they upgraded the whole Gold mining industry, with the above announcement on Jan. 7th.(very low key-no fan fare)IMHO this triggered the large block trades.
Jan. 7th was when the first big Gold mining block trades started and they're picking up steam(3 Friday???).
AT the time I thought it was very significant and posted # 22467 that day. Nobody noticed!(boo hoo).

Those in the Know....Buy Gold.....beesting.
SHIFTY
DRUDGE
I just finished a letter to Drudge. It was not my first. I have had his e-mail address in my address book for a long time, so it made it easy to forward articles about this issue.
Number Six
@Golden truth, Marius and all - OIL information (from an 'insider' I correspond with)...
We've got an oil industry that has been experiencing problems. 2 desperate refineries have been in such production problems that they've had to go onto the open markets and buy gasoline at high premiums to cover their contractual obligations to their wholesaler/jobbers. These and other refineries have seen their incident rates of problems increasing and reportedly again due to embeddeds. IN fact, it is still too early to say, but we may be seeing the first stages of a cascading crossfault situation in oil. Will we? I don't know. I'm just saying there is enough out there to indicate that as a future possibility. The real key won't come until after the end of the month, especially true out in the oil fields themselves.

You're not going to hear about these problems anytime soon. People keep asking me when we'll know. I really don't know. Things are pretty quiet and we've only got a half dozen refineries actually being publicly admitted to having problems...but there are many more also with problems. Are all? No, I doubt it. I know of at least 10 that are not reportedly experiencing any problems yet and probably won't because of those 10 they had very few embedded systems in the first place. Chevron, Exxon-Mobile, BP Amoco, Texaco, Shell, these are the folks with a lot of embeddeds to be worried about.

Y2K - I never stated it would be a 10. I argued against TEOTWAWKI all along. I knew better. I did argue for the stronger likelihood of a "7" if we had a system collapse of infrastructure at rollover... otherwise I pegged it at a "5" as worst case. It may not be that bad...but one thing is for certain, It ain't over. It's just getting started. We'll see how it plays out. When I know that nothing happened to embedded systems after Feb 1...and it may take a couple of weeks or more to know that...then if there's nothing then we can look at calling the game early, perhaps. But right now, there's problems and developing trends to suggest its just beginning.

Frankly, it is still too early for those of us truely in the middle who understand the time parameters involved, it is still too early to write off the embeddeds systems. They are out there, they are actively going haywire and they are creating problems to life and limb both in the oil refineries and natural gas pipelines as well as in mfg like those 2 food plants that blew up last week.

In case you have not noticed it, the oil market is not collapsing like it was supposed to after "nothing happened" at Y2K. Problem was, things did start happening, quietly inside refineries and out in the fields. Things are going on. I can tell you that there have allready been some close calls in those refineries. Calls that could have shut those refineries down really quick and for extended periods.

It is still possible for a "5" to be developing...which could only work to create an energy crisis as great or greater than 1973/74 Arab oil embargo. Already we've seen one oil report published indicating the outlook now for a 4%shortfall in production (about the same as the famous embargo)...Now why would we be anticipating a shortfall when we're supposed to have all this surplus and the OPEC boys are not tightening farther? Technically, even holding status quo at OPEC the glut would have remained but albeit greatly shrunken. Instead it is going to be a deficit??? What gives here??? I'll tell ya what gives, the oil industry is having production problems out the wazoo...and it just popped up after New years... We weren't hearing any of this stuff pre Y2K... but now NOW NOW all of a sudden...its

"oh, we've got a few production problems" and "Oh, btw, we may have a 4% production shortfall, but its nothing to get excited over. yada yada yada." ...

Now you just tell me that its all a big coincidence - cannot possibly be related to Y2k, embeddeds and cascading cross-defaults because you've now come to realize the truth that Y2K was a big hoax.

Keep in mind. I am not saying there is a "5" yet to come for certain. I'm saying it is still not only possible but VERY possible but no matter what.. it is still too early to conclude anything yet particularly with respect to oil.

This is often said...

"Don't think for a monent that they can't gerry-rig a refinery in days or even hours."

Refineries are never "jerry-rigged". Explosions kill people and break things in refineries. You get a cat-cracker exploding, and let me tell ya, you'll be a couple or three years in getting that refinery back up in most cases. I know. I've been there and seen it first hand, more than once. Any serious explosion can occur by one false spark in the wrong place,& that goes for embeddeds too. A serious explosion in the cat or light ends and you're looking at many weeks to months. Hell's bells..., you can have a simple fire take down a refinery for as much as 90 days depending on circumstances.

$40 oil is a real possibility and who knows it may go a lot higher if things do indeed start cascading into cross defaults. I'd say $65.00 is not out of the question, nor even $100.00 under those circumstances. Now will it get there? I don't know. But if it does hit a "5" then yes, I'd see high enough prices to bust that bubble real good no matter what the Fed does. Also, expect to see a war too under such a scenario...Possibly involving Saddam again.

lamprey_65
beesting
Yes, I didn't take note of your HSBC post. Also, did you notice Goldman Sachs' recent pick of Newmont Mining in their list of 89 favorite stocks for the year? Things are in the works, I do believe.

Lamprey
lamprey_65
Solomon Weaver
Enjoyed your post concerning Japan and the use of gold.

The Japanese have always fascinated me in that they seem to be able to sublimate our (U.S. citizens') worst problem - unbridled self-interest. I do believe, however, that they tend to take group think a bit too far...at least from the perspective of a New Hampshire resident, anyway -- Live Free or Die!

On your dream of unlocking the beauty of the world's gold. Yes, that would be something to see! Funny, I've also lamented over having such a wonderful metal locked up inside dreary vaults. I can't remember the country (Thailand?), but I recently watched a television special about how gold leaf is used to decorate the domes of buildings and religious statues. Simply gorgeous...and let's not forget that it has been said that a mini-pyramid of gold once sat atop the Great Pyramid.

Maybe it's not so far fetched after all!

Lamprey
Number Six
When do the BOE gold sales finish?
I spotted this on kitco yesterday - my question

When do the BOE gold sales finish?

Goldteck (Don Wallenchuck Report) ID#432286:

This afternoon on T.V., the Stock Market Observer program on Channel 26, The U, out of Chicago, featured one of their regular market timers who also writes a newsletter. His name is Don Wallenchuck ( sp.? ) , and writes the Wallenchuck ( sp? ) Report.When asked what his forecasts were for the coming year ( I believe that was the time period ) , he said that after the Bank of England gold auctions are over, and the next 2 months of gold options expire, that gold will take off and he expects it to go right through $800 an ounce. He also said that commodity prices this year are going to skyrocket ( my words, can't remember his ) , oil is going higher, higher, higher, and interest rates are going to go up and keep going up. He said that all of these things are inevitable and there is nothing that anyone can do to stop them from happening. I can't remember his EXACT words, but, this is what he said, and he meant every word of it. The lady on the screen who is one of their regular interviewers ( she was talking with him on the phone ) , showed a smirk of disbelief as she ended the interview.
SteveH
repost
www.kitco.comDate: Sun Jan 16 2000 02:16
Quad (The new endangered species ...) ID#240109:
Copyright � 1999 Quad/Kitco Inc. All rights reserved
Small currencies vanishing as big bucks take over...... Britain may be showing a growing scepticism about the virtues of signing up for the euro but others, from Latin America to the Balkans, are falling over themselves to adopt someone else's currency. Ecuador announced this week that it plans to replace the sucre with the dollar as the country's legal tender. Puerto Rico was a pioneer of dollarisation. Australian and New Zealand dollars hold sway in the South Pacific where the French franc does not act as the local currency.

Estonia - already pegged to the German mark - this week began debating adopting the euro when notes and coins are introduced in 2002. Montenegro, still part of Yugoslavia, is already using the mark in parallel with the Yugoslav dinar but there are signs that it may soon switch to just the German currency. Elsewhere in the Balkans, Bosnia uses the mark as its official currency.

Others have regimes where the dependence on an outside currency is less overt but just as great. Argentina and Bulgaria have currency boards where the local currency still circulates but the authorities hold enough dollars or marks to buy up every new peso or lev in circulation.

Ordinary citizens are spurning their own currencies in favour of those proven to hold their value. "There isn't an adult in Moscow who doesn't know the rouble-dollar exchange rate," said one western resident.

In Cuba decades of hostility, not to mention a trade embargo, have not prevented the hegemony of the greenback.

Some economists are predicting that the world's big currencies - the dollar, euro, mark and the yen - will bring the curtain down on small currencies. Nobel prize winner Robert Mundell predicted this week that in 10 years' time the euro zone will have expanded to cover 50 countries, the dollar will have spread throughout Latin America and much of Asia will look towards the yen.

Professor Steve Hanke, from Johns Hopkins University in the US, reckons much of central and eastern Europe will have adopted the euro directly or via a currency board within the next few years.

But why should countries want to give up their own currencies and with it control of monetary policy? Supporters of the change claim a widely held currency delivers stability, an anchor in the battle against inflation. Professor Hanke, who is advising Montenegro and Ecuador on currency strategy, argues that adopting an external currency, directly or indirectly, works. "Currencies in developing countries rarely float in a sea of tranquillity."

He blames weak monetary authorities, tempted to print money as a short-term fix to long-term problems. The solution is to take control of monetary policy away from expediency driven central banks to ones with a track record of providing stability - "either putting a hangman's noose round the central bank ( by dollarisation or its mark equivalent ) or a straitjacket by adopting a currency board." Countries which have opted for such external discipline have experienced faster growth, lower inflation and lower budget deficits, he says and dismisses criticisms that such options are only available to small countries.

'On-your-own' downside

"The economies of California, Texas and New York together are larger than the whole of Latin America, yet all three are dollarised. Have you ever heard California asking for its own central bank?"

The downside is, as the Federal Reserve makes clear to countries toying with adopting the dollar, that it will set interest rates only in response to economic conditions in the US. Outsiders can't expect the Fed to rescue them if their economies get into difficulties. The message from Washington is "you are on your own". A country with its economy in the doldrums would suffer a further twist of the knife if the Fed were to raise interest rates; a squeeze on both companies and consumers, plus an exchange rate that makes exporters uncompetitive.

Nor can the political consequences of what can be seen as reverse colonialism - surrendering control of economic policy to a powerful but indifferent neighbour - be overlooked. The US approach is in contrast with Europe's single currency zone but only as far as its 11 members, which have a say on the direction of interest rates, are concerned. Non-members either using the mark or tracking the euro are still out in the cold.

But is this all an argument for Britain signing up for the euro or shunning the single currency? Professor Hanke draws a sharp distinction between dollarisation and monetary union. The first involves giving up control of monetary policy. That can be reversed. The second involves surrendering monetary sovereignty. "And the only way out of that is if the whole thing blows up." http://www.newsunlimited.co.uk/business/story/0,3604,122316,00.html
SteveH
While on the subject of reposts
www.kitco.comQuad (General Chronology Of Events(1800-1890) ID#240109:
Copyright � 1999 Quad/Kitco Inc. All rights reserved
http://www.trufax.org/chrono/crb.html ... Chronology of events ( 1900-1929 ) ...... http://www.trufax.org/chrono/crc.html .....

Chronology of events ( 1930-1939 ) ... http://www.trufax.org/chrono/crd.html

Chronology of events ( 1940-1947 ) ... http://www.trufax.org/chrono/cre.html

Chronology of events ( 1948-1957 ) ... http://www.trufax.org/chrono/crf.html

Chronology of events ( 1958-1966 ) ... http://www.trufax.org/chrono/crg.html

Chronology of events ( 1967-1974 ) ... http://www.trufax.org/chrono/crh.html

Chronology of events ( 1975-1979 ) ... http://www.trufax.org/chrono/cri.html

Chronology of events ( 1980-1986 ) ... http://www.trufax.org/chrono/crj.html

Chronology of events ( 1987-1991 ) ... http://www.trufax.org/chrono/crk.html
nickel62
Market valuations of internet stocks are a result of many factors.`
I noticed yesterday several posts about the high valuations of high tech stocks and thought I would add a little information to keep the perspective on track.While the little guy investor has fueled the surge in these stocks it iis the professional traders and investment bankers that are pulling the strings. They set these companies up with a large amount of locked up stock that can not be sold for quite a long time and therebye have a company where the actual "float" or shares that are available for trading is relatively small in comparison to the total number of shares outstanding maybe 15 - 35%. This creates a situatuin where the relatively small number of shares can be easily manipulated higher. There are various tricks to accomplish this. Putting the stock in an index that uses a certain market capitalization to determine how much of each stock every person that invests in the index will own. This creates a situation where the computers that are buying to mimic the index automatically purchase the stock whenever they get an inflow of money. The various mutual funds and private institutional accounts that are measured against this index will also tend to buy a like-sized percentage wise position with their money to avoid underperforming the index. All this positioning of captively predictable demand might actually exceed the available stock if the float is small enough. And believe me they watch for that type of situation. Next they might try to induce someone to short the stock to create future buying demand as the short must purchase the stock in the future to cover his short position .Then they use the research analysts to hype the stock and pump it in the CNBC type media.This draws the naive public who don't understand the rigging and they buy with a follow the leader mentality regardless of any concept of value or fundamentals. The stock then outperforms which means it will be put in more indexes and more computers will buy it and as it rises and the indexed funds and managers outperform and attract more money they will buy more of the total index in order to invest there new cashflow.This leads to more goosing and the cycle begins again. That is a game that is as old as Wall Street, and is played in Microsoft and General Electric and IBM as much as AOL and EBay, it is just modified slightly to account for the larger number of outstanding shares(larger more broadly used indexes like S&P 500 and DOW Industrials are used).So when you see a stock at a ridiculus valuation it is not the little day traders that got it ther they are only the unwitting pawns who are blamed. They will also be the suckers who still own it when it goes back to 1 cent /share.

It pays to use your brain even today in the stock market.

Remember if you are playing poker with these guys and you don't know who the patsy is, it is probably you.
nickel62
By the way if this sounds familiar to gold bugs.
It is because the same type of thing might well be going on in the gold market.If so we might be at the reversal point plus 4 months and counting.The lifeboats are ready to leave the Titanic we just have to find an iceberg first.
Al Fulchino
Golden Truth &Richard 640
Thanks to both. And if you are watching, Richard 640, I think your posts would add a lot here. Please consider. Thanks to both again.
TheStranger
Nickel62 (#22993)
Good Post. I believe you have acquired a perspective of current Wall Street history that, for most of us, will come only after the fact. Thanks for turning on a light.
FOA
Comment
ALL:
It looks like we lost a big piece of my FOA (1/15/00; 14:58:12MDT - Msg ID:22961). It was all on this side as my whole system locked down. I lost quite a bit also.
Most of the remainder of that post was agreeing with ORO's views as he perceived them. What happened back then could be accepted from several angles, as real events offered the same outcome. My purpose for presenting them in our perspective was to generate a beginning sequence
of influence for our present situation. In other words, this is where the official thinking started from on this matter. Did this influence monetary events to proceed as they did? I would say at least 70% so. Still that was the past and we have evolved substantially today.
If my computers (and their links) don't fail again, I'll post "Overview" and some comments / replies.

thanks all FOA

SteveH
C-Span and G-Span
Spent the last 1.5 hours watching AG's most recent talk before the Econ. Club of NY.

Two observations of his comments.


Wealth effect is symmetric.
Euro viewed from 2010 will be seen as very positive for US and dollar.

Symmetric meaning what benefits accrue from rising will unaccrue from falling.

Very positive for the dollar? He didn't elaborate as to why that would be. Oddly, I thought he could mean that should the dollar have problems the Euro would be there for the World to continue to operate. Did he say that? No. Did he mean that? I don't have any idea. Why else would it be good for the dollar? Thoughts?


Peter Asher
Re- "Knowledge is power"
http://news.excite.com/news/ap/000115/13/lunar-eclipseOn his fourth voyage to the New World, Columbus and his crew
became stranded on an island now known as Jamaica. When the
natives there refused to provide food, Columbus, based on
information from an almanac, told the natives that he would demonstrate his power by causing the moon to turn dark.

Sure enough, as the almanac had predicted, the moon went into
eclipse at the time Columbus foretold. This so impressed the natives
that they fed Columbus and his crew until they were rescued by a
passing Spanish ship.
demonstrate his power by causing the moon to turn dark.
Peter Asher
OIL: (From Michael Hyatt's Bug Watch Forum)
http://www.michaelhyatt.com
12/31/99 - Turkey resets clocks to 1980 on oil pipelines
1/2/00 - Motiva's 220,000 b/d Norco, La oil refiner down due to
"unexplianed power outage" -220,000bbd
1/3/00 - Nigerian Oil plant down - locals causing problems.
1/3/00 - Shell oil in Singapoer reduces oil output 20%. No
explanation.-100,000bbd
1/4/00 - Coastal Eagle Point NJ Oil refinery down. Internal loss of
generating power? -140,000bbd
1/4/00 - Coastal Corpus Christi oil refinery, FCC problem. -
103,000bbd
1/4/00 - Equilon's Wood River, Ill oil refiner down due to
"unspecified crude unit problem" -210,000bbd
1/5/00 - PDVSA & Hess is diverting a cargo of oil back to Europe,
was headed to US.
1/7/00 - Motiva's Delaware oil refinery down due to fire. -110,000bbd
1/14/00 - BP Amoco, Yorktown, down due to mechanical failure. -
62,000bbd
Black Blade
Dot.com investors beware
I recieved the following as part of an email message from stockscape.com, just thought it a bit interesting.

Rage Against the Institutional Investors

Are institutional investors intentionally preying on the ill-advised actions of retail investors as the markets see incredible valuations for Internet and technology stocks? That's the argument put forward this week at the Economist, which has spotted a disturbing trend happening between the two factions.

According to a venture-capitalist at Softbank, Wall Street's
heavyweights decided last year to take advantage of an-overheated Internet market, even if they hardly believed in its merits. And with the recent sell-off in the dot-com sector, much of it from insiders, it looks like it's the small guy that is getting burned. Institutional investors decided last summer that they could no longer merely pooh-pooh a market dominated by a whole class of investors they see as clueless. So they chose to prey on them'.

Then again, a dot-com market correction might not be so fatal afterall. A good deal of institutional investors, many of whom missed out on last year's buying opportunity, are still chomping at the bit to get in the game. Make no doubt about it, the coming spring should be interesting for Internet stocks.

--http://www.economist.com/editorial/freeforall/current/index_fn3028.html

Pork Bellies vs. The Dot-Com

This week's decision by Merrill Lynch & Co. to fold much of its commodities operations underscores a bigger trend out there -- dot-com stocks have turned pork bellies and gold futures into yesterday's commodities among small investors.The commodities exchanges in Chicago and New York may be booming, but that doesn't mean that the demand for
agricultural commodities or gold is necessarily running the same course.

But some experts believe that small investors, shunning the
tried-and-true for the sexier dot-com offerings, may be burning themselves in the long-run. ' Traditional commodities need only a round of inflation or an inevitable upturn in prices to be attractive again,' writes AP business writer Dave Carpenter. 'When that happens, the small investor who wants to buy commodities again may find it more
difficult.'

-- http://www.merrilllynch.com
FOA
More Overview
Moving on from my earlier posts, today we see where we are and where the trail may lead::

FOA (01/10/00; 20:39:02MDT - Msg ID:22663)
An Overview

FOA (1/11/00; 6:23:10MDT - Msg ID:22690)
More Overview
-----------------------
http://home.att.net/~gmoritz/public/Deficit.jpg
We stop and share the view!

In the early 90s the world was not experiencing any visible results from our new Euroland currency creation (Euro). On the surface things continued much the same as before. The EMU (European Monetary Union) was somewhat in order, but most of the world financial analyst completely wrote off any of it's possible effects on the dollar. A view that was accepted because the US and the dollar were becoming ever more dominant in world affairs. Still, an increasing dollar reserve base impacted the economies of foreign nations as the US dollar trade deficit and the debt
that represented it expanded without relief.

I'm told that an excellent graph of this is still available on the net at the above link. It shows how
dollars have been building up overseas without fail from 1976. Yet, in this visual expression of dollar flows we can see the first fluctuation of a new currency order taking shape. Between 91 and 94 our dollar flows made an abrupt turn for the negative. Some would say that this was just a
function of the dollar becoming stronger. We say it represents a new "hands off" policy by foreign decision makers. This turn was in effect allowing the dollar to enter a multy year self destruct mode, during which deficit dollar flows would expand into oblivion. The US would be flooding the world with dollar reserves at the exact beginnings of Euro success.

After over two decades of non-stop foreign dollar inflation, the dollar float had become so large that any transition from dollar settlement into "Other" settlement would permanently remove it from reserve status. This forward looking thinking would eventually be spelled out in the events directly before us today. In these events we will witness and document the "Facts" of a dollar fall from
grace.

Unlike past bouts of local US price inflation affecting dollar value perceptions, this transition from dollar reserve use will be felt first in currency exchange rates as the Euro slowly replaces the dollar as the major trade holding. The later impact from this will be a massive "super hyper price inflation" in the local US marketplace. Much the same as seen in the third world country panics in Asia. But
prior to this, the largest of all currency exchange rate transitions will try to express itself. That will be the true dollar value exchange rate of gold. A transition so large and all consuming that it will completely wreck the present leverage in the paper contract gold market we today call "the gold market". Long before this new real physical price of gold is realized, the marketplace will stop all
function as physical deliveries, at any price come to an end for a time. Eventually, a world physical market will return.

Onward for another view:

The strong US economic success has been spelled out more in the our SOL (Standard Of Living) than if expressed in financial accounts. Dollar exchange rates, interest on dollars, stock market values, home values all represent what an American "can buy" if they decide to spend their wealth. Not what they presently have as owned wealth, paid up 100%. This leveraging of dollar affairs has created an "illusion of savings" that in effect allowed a high SOL. In other words, we live high on the hog today because our present equity values and savings don't really exist. Time has
transformed the entire dollar system into a giant "futures contract" that only represents the wealth we could obtain in partial "future purchases". Just like the gold market, we mostly trade paper wealth and call it real. Yet, if a large percentage demand for delivery ever happened, the contracts
would fail. Yes, our wealth and economy status is really based on us cashing in and buying just a little at a time. if we didn't, the illusion would be exposed. Only our present dollar economy is "super leveraged" not just into the future of US goods production, rather it also completely depends on future foreign fulfilment to produce those real goods. Truly, most of our present sizeable financial
wealth is little more than a function of the "acceptance of dollars overseas" by others.

Few locals today consider the view from the other side. They proclaim that the dollar is king because the "others" want to spend it here. It's the very same mentality of a gambler that's winning. He doesn't want to hear that the house is on fire and will accept any other "good news" that
prolongs his current "prosperity". In reality, if the above dollar deficit chart was ever forced (from outside pressures, Euro?) into reverse, no amount of real US goods production could be brought using present dollar price rates. In other words, foreigners could never spend their dollars at a rate that matches our SOL values. Indeed, some of the biggest players now know it! It's all an illusion
that has spanned 25+ years from the loss of the gold standard and it's about to be tested.

Onward as we look behind and before us:

In the 90s, big oil understood what was driving the acceptance of dollars. And from my earlier posts, we can grasp how their knowledge was gained through the oil embargo effect. Still, as long as international oil could be settled in dollars at prices well below it's economic value return, US debt, dollar reserves and dollar investments looked very good This train would run as long as another system was being built. Keep oil cheap and the dollar deficit flood would continue.

Why would they do this for free? They didn't and neither did Euroland! People "in the know" knew the effects a new reserve currency would have on dollar values. They also knew the future impact on physical gold. As long as the gold market kept gold priced at a discount to the real value
of oil, buying some gold with excess oil dollars more than made up for any loss of investment or loss of reserve values. Europe needed this concept to work and they helped maintain the present gold market trend for this purpose. A good way to wait for a dollar retirement, no? If the Euro was not born (a real possibility a few years ago) big oil was more than prepared to include physical gold settlement into it's payment package. Just a minor inclusion of gold would have gunned the market and replaced any lost investment gains from a botched Euro introduction. So, the participation in gold and gold banking made good sense.

Indeed, even now the paper gold market expressed a major "duality" in real value depending on the strategic location of it's contracts. Some leveraged gold banking backed with Euroland guarantees is today far superior after the Euro success. (I think this concept is hard on most people.
Still, it will look much different after the train wreck that coming.)

Going further into the duality values from my earlier "overviews"; Oil prices today are on the rise and doing so in total conflict to perceived marketplace function. It's no mistake as to why this dollar price rise is happening now after the Euro was born (we have been discussing this for some time). Just as a high gold price would expose the dollar by presenting it's true past inflation (world dollar
money supply growth), a rising oil price exposes the US economy to the super leverage it contains. Especially if one can grasp how that economy was built on oil backing through dollar settlement. Once the threat of a dollar slump is made possible by high oil, expect big oil to run to Euro
settlement for international trade. Perhaps run is not a good word? Let's just say a transition will begin that shows the world the trail ahead. This is the period when the Euro will rise very much against the dollar (2.00 or 3.00 Euros per dollar?). As oil becomes cheaper in Euros, their local
economy (Euroland) will experience a dramatic positive shift in activity relative to the US and other countries tied to US trade. Does Japan sound like one on the wrong side? (TownCrier, yes, no?)

Because the ECB has no pressing need to keep gold prices in place, gold could initially run in Euros also. Still, eventually Euro gold prices will not be anywhere close to dollar gold prices as international dollar reserves are liquidated. In effect, the disgorging of dollar reserves will show no negative accounting on ECB books as gold prices more than make up for dollar reserve destruction. In fact, once the Euro becomes the world reserve, there will be no reason to hold dollars at all.

Onward, looking only forward:

In fits and starts, oil prices will keep rising based on an expected reserve currency transition, not dollar oil use economics. Any substitution of alternate oil resources in the US will run head long into a local cost inflation roadblock. $200 dollar crude will not be seen as enough to drill for reserves nor switch to other fuels.

The Euro will keep taking market use share from the dollar, especially if major US players continue to trade the Euro down to parity. Eventually (and presently as this is happening now), dollar reserves held outside the US will be forced into shorter and shorter maturities as the "return
on" these holdings becomes more important than their "use as trading currency". This will drive dollar rates far above Euro rates, draining liquidity and forcing the Fed to continue "Most" of it's pumping action (what so many thought was Y2K related). Rising dollar rates will be in response to
this new currency problem, not the present non-existent local US inflation. Later, the fed will be seen as far behind the inflation combating yield curve. However, these rising rates will fully cap the local stock market. Weather it falls will depend entirely on how fast hyper inflation later accelerates. In this environment, foreign exchange controls will play a major negative roll in pricing stocks.

Gold will, at some time meet it's 2nd bout of paper destruction. The next will be far worse. If the currency crisis becomes in full view, there will be no small physical gold lenders to soften the blow. We shall see.

More and replies later. FOA

beesting
Peter Asher #2300 OIL.
Peter, FOA, and all, I had a thought while reading this line of # 2300:

< 1/5/00-PDVSA & Hess is diverting a cargo of oil back to Europe, was headed to U.S.>

Comment:What happens if the oil producers see more value in the Euro dollar than the U.S. dollar? Could we be entering a price bidding war for oil?
If I was a producer of oil or any commodity I would sell my product to the highest bidder.
If oil is being squeezed into short supply and the Euro is percived to have higher purchasing power in the future, wouldn't oil producers accept Euro's over dollars?

As far as the valuation of currencies, Kuwait seems to have no problem with a currency 3 & 1/3 times more valuble than the U.S. dollar. Only Japan that totally depends on trade is active-ly trying to suppress purchasing power of their money. Comments!!
Those in the Know....Buy Gold.....beesting.
beesting
FOA #23002
FOA, I was writing my 23003 post at the same time you were posting 23002, and hadn't read 23002, however it seems to follow right in sequence with your post.
Thank you so much for your time effort and energy. My family I feel, is better prepared for what the future may bring thanks to you, ANOTHER, and all the posters here.....beesting.
FOA
Reply
Solomon Weaver (1/15/00; 22:16:10MDT - Msg ID:22983)

Hello Solomon,
Good post!
Your point about how average citizen there has a " "dramatically lower material quality of life" " is something I completely agree with. I have known more than a few of them. This is the real difference between their "leveraged experiment" and ours (US). Theirs was based more on trading
with America and it's dollar to the effect that it built "paper asset wealth", not a better SOL (standard of living). Because we own and print the reserve currency, we gained the same "leveraged wealth" but also increased the SOL. When this system fails, they will never have had anything to show for it. This is the road they are on now as their currency function has run flat into a failing dollar world. Hyper inflation is in their future!
Their social fabric and organizational skills did create a producing machine, but at what cost in human means? You see, it's impossible to produce yourself rich if you trade the efforts for some "rights to future buying power" like the dollar.
I wish we could all operate a well as they do and also use their ethics (well some of them). Perhaps, in a later time, across this dollar valley we will unlock the creative spirit in all nations as have the Japans done for themselves.

Mr. Weaver, you write:

-----------------But will you not agree with me that the example of how the dollar could leave gold behind or how the Japanese could bootstrap themselves as an island nation with no resources to have more wealth than any Arab nation who has all the oil and gold...that these examples show that
"the creation" of wealth in the future is not connected to gold ownership.-----------------

Solomon, gold ownership does not create wealth, it retains wealth created. Just because gold today has a massive amount of past "wealth representation" hidden from view, does not mean that the new owner of gold will have had gold create this new wealth for him! It's no different than if you found a $100 bill on the street, "it's new "wealth representation" created by someone else and found by you". This is our main story. I think far too many confuse out thrust for gold today with "trading for profits" motives. This is not the case.

Further you say: ---------

But, humanity, and its technological economy is evolving into something which will always be filled with debts and promises...if it were to all collapse today..the gold owners would feel rich but there would be a lot less they could buy....----------------------

foa: Unlike most die-hard gold bugs, I view gold as another form of wealth currency in transition. Not a run for the hills the world is falling investment. Yes, the US will lose a lot of not real wealth. But, as I have said so often, this is a perceived wealth based on an illusion. We will not lose something we don't have. Still, I expect a great deal of prosperity as this progresses. Just as many other countries
have suffered tremendous loses as the US gained a greater SOL, the reverse can also happen. Many think that without a US powerhouse, the world will fail. It never has and never will. Just a Clark Gable (Mr. Butler in "Gone with the wind") travelled the world after the Civil war, I submit
that the same world will be waiting modern travellers that retain their real wealth.
As you say " " humanity, and its technological economy is evolving" " , I agree and it will not stop if the US pulls back.

Also you note: --------------
.I see the large owners of gold taking gold out of the vaults and consigning artists to fashion massive sculptures each weighing several tons (about $10 billion of today's dollars and maybe $100s of billions later on). In time, there might be about 10,000 of these statues fabricated. They would be displayed in public places like banks, corporate headquarters, governmental buildings, world fairs, etc. Each sculpture would............. (and the rest of your post)

Ha! Ha! That is a good way to see it. Let's watch for this to happen!
Thanks FOA
------------------------------------------------------------

Aggie (1/15/00; 20:27:06MDT - Msg ID:22970)
Another????

Hello Aggie, yes there is a new Another and he is from Provo Utah, no less. Stay with him and do exactly what he say's. I promise you your life will be forever changed! (great big huge sarcastic smile) Oh, by the way, I'll stay with the original here.

FOA
-----------

Cavan Man (1/15/00; 17:24:07MDT - Msg ID:22966)

Cavan Man, thanks FOA


Cavan Man
Dear FOA
You have made more than one reference to their wealth "not being real" but rather, a "perception" type of problem. What's the old adage, perception is reality?

I can assure you that most of the people I know who are highly leveraged, own no gold (not even gold equities) and are mostly invested in US equities for the most part do BELIEVE their perceptions however misconceived are their individual (and collective) reality. I submit to you there are very troubled (social unrest) waters ahead in this country if events progress as you forecast. What do you think?

I remember the animosity paid toward ME persons and nations during the 70's due to the oil crises. Americans can become inhospitable with great alacrity when it comes to their gasoline. How can all come to pass (as it evidently must) without major domestic and (hopefully not) international upheaval? Add xenophobia to politics and the recipe for disaster becomes written upon all minds.

Thank you.
Journeyman
Oil shale: A spoiler, FOA?
http://www.britannica.com/bcom/eb/article/7/0,5716,119357+4,00.htmlI'm beginning to understand the FOA & Another scenario much better -- and a large amount of it makes great sense to me. Thanx for the effort FOA!!

Yes, many here view gold as a speculative play right now, which it may well be. But if you are to speculate, you need the mind set of a gambler, prepared to take losses as well as gains. While it impresses me that some here have that mind set, many seem not to be aware of the loss side of the proposition.

But FOA, there is one factor, it could be minor, I don't have the context knowledge to judge, which may affect your thinking a bit. Oro, you especially may be able to put this into context in terms of "strategic" value.

The factor is that the largest deposits of oil shale, an estimated 60% of the world's supply, exist in the continental U.S. This means production costs will be accounted in dollars, should it become economically feasible to exploit them, which means external oil price increases would be cushioned, should these shales be developed.

An excerpt from Britannica online (see Link: above) gives the details:

Nearly 60 percent of the world's potentially recoverable shale oil resource is concentrated, however, in the
United States (see Table). The aforementioned western and minable eastern oil shales of the United States have
been estimated to contain an in-place oil resource of some 1,670,000,000,000 barrels. Using a 50 percent allowance
for unrecoverable shale and a 25 percent allowance for conversion to synthetic fuel, the production potential for
shale oil in the United States is estimated to be 626,000,000,000 barrels.

Clearly the size of the reserves is significant. The question is, is it significant enough to affect your scenario FOA?

Regards,
Journeyman
Strad Master
FOA - Two questions
I have two questions that emerge from reading your most recent large posting. 1.) Awhile ago (when the Price of Oil was a few dollars lower) the Clinton Administration declared they would not "permit" the POO to rise too much more and would dip into strategic stockpiles to stem any rise in prices it saw as destabilizing. Apart from the distinct probability that those words were nothing more than "jawboning" to get the price lower again, would they try something along those lines to maintain status quo? Could they enjoy any success? If they did, it probably would be only short-term success so what could be the long-term consequences?
2.) Would it be prudent for those who speculate to buy Euros with dollars and just hold them against an inevitable price rise you see in the relative near future?
Do you remember my question of a few days ago about the circumstances in which you and Another might reveal your identities? Is that ever a forseeable possibility?
My warmest best wishes to you. Strad
Peter Asher
Good start
Al Fulchino
FOA
you wrote:and forcing the Fed to continue "Most" of it's pumping action (what so many thought was Y2K related

You are in effect stating that Alan Greenspan was not truthful when he said this money ( I believe around 150 billion) was strictly for y2k confidence among the citizenry.

Secondly, is there evidence that dollar flight to the euro is taking place now? Afterall, oil is in fact now making its run upwards, yes? If, it is yes, gold should be being unleashed right now.

Thank you for yout time and efforts.
Al Fulchino
nickel62
Thank your for your earlier post today. It makes all the sense in the world. Thank your for sharing.
beesting
Colin's Hot News
http://www.users.dircon.co.uk/~netking/finan.htm#tquotnsLink from midvinternatt at Kitco.

BIS's balance sheet total--19,000 metric tonnes of Gold.

Lots and lots of good Gold related stuff at the above URL....beesting.
SteveH
FOA
I watched the entire speech of AG this afternoon. Recorded though it was, I looked for evidence of a slip regarding your allegations as to the fate of the dollar. The last question by the Banker on the stage right asked what effect the Euro would have on the dollar. I previously mentioned that AG said it will be seen in 2010 as to having been extremely good for the dollar.

While he spoke mostly of the new economy, his theme was essentially the cracks or possible errant paths the economy could take and why he remained vigilant for inflation. We tred new ground that has no precedent.

But, I suppose the most significant portion of his speech and questions and answers was the complete non-mention of anything discussed on the usagold forum. In other words, nothing of a gold short position, no question about gold manipulation, no mention of inflation being an increase in money supply (he did say he doesn't use CPI as it is only a survey and not indicative of true inflation). Although significantly, the questioner did point out that the Euro bonds exceeded the US bonds last year. He did talk of margins and how they have been up significantly the last two months. He said that even though margins could be looked at more closely, only individuals were subject to them as small investors did not have alternative finances available and so only they would be subject to margin account requirements. Large institutional investors had alternative funds and they were therefor not relegated to margins nor their restrictions. Somehow I think he said that it would seem margins would be an important indicator he wasn't sure it really was. Or so I thought he said in Greenspeak.

So it was not what he said under the spotlight, rather what he didn't mention and what he didn't get asked that was in the shadows that was most important. Since his speech was by no measure a confirmation of your last post, and since he said the dollar would be viewed 10-years hence as having been very good for the dollar, one can only surmise that it is the dollars exit strategy or that all of what you say is mere conjecture.

I believe that enough 'demonstration' of events has born out much of what you say, I must ask how AG can in all concience speak on a world economy and specifically a US economy that on the surface is breaking new records every day with no inflation and no hidden downside triggers but yet he continues to warn, to prepare those who listen for inflation and who knows wha else.

I must say, he is the master at double speek and thoughtful yet uncertain prose.

So, how can he speak for 1h 25m and not let loose an indication of the oil/gold/dollar relationship and its predicted (by you) impact on the US/IMF faction?

Peter Asher
Steve, you said
>>>>So, how can he speak for 1h 25m and not let loose an indication of the oil/gold/dollar
relationship and its predicted (by you) impact on the US/IMF faction?<<<<

The answer to that quetion can be found in Orwell's "1984" and Huxley's "Brave New World"
Solomon Weaver
for the silver bugs....
http://www.gold-eagle.com/silver_section/silvermonthly.htmlhttp://www.gold-eagle.com/silver_section.html

China ranks as the number one world consumer of silver - nearly all used in the photography industry.

Silver's price hit an all-time high of $52.50 per ounce in 1980, subsequently falling to its recent history low of $3.51 in 1991. Among the most prominent precious metals (gold, platinum and silver), silver tends to be the most volatile in price. In the 1979/80 precious metals bull market, silver's price increase was double gold's. And during the 1982 price surge, silver tripled gold's percent price increase. In the 1985/87 rally, silver just nosed out gold (96% to 79%). However, silver's percent run-up in the 1993 bull market was again twice that of gold.

-----------

The blue hot link above should transport you over to the silver chart showing history since 1980 and the big spike...looks like a very well behaved market.

Poor old Solomon
SteveH
Peter
So that I don't have to reread those, what is the obvious answer made apparent?

SteveH :-?
SteveH
Protecting rights?
http://dailynews.yahoo.com/h/ao/20000114/cr/20000114011.htmlWhat seems to be the impetus of these leaders believing they can violate reasonable rules of seizure, just compensation? Incredible! It is epidemic and out of control.
FOA
Reply
Hello Cavan Man,

You write:------------- Cavan Man (1/16/00; 15:23:37MDT - Msg ID:23006)
I can assure you that most of the people I know who are highly leveraged, own no gold (not even gold equities) and are mostly invested in US equities for the most part do BELIEVE their perceptions however misconceived are their individual (and collective) reality.------------

foa: It's only been in the most recent period that such great wealth is held as "documented contract bookkeeping entries". Weather these numbers are stock values or saving accounts, they are all derivatives that indicate what "someone could buy, not what they have brought. As a percentage of American holdings, the actual converted and paid up wealth in the form of real useful things (cars,
houses, furniture, etc.) is tiny compared to the overall leveraged paper wealth holdings.
Most people equate the system like this:

" " I can cash out my winnings anytime and buy a gold bar. In fact, I did sell a little today and brought a Maple leaf. This proves that we can time our exit for our benefit" "

Truly, what this person is missing is that his actions completely mimic the overall American system and are what preserves it. Just as I equated the dollar to a gold futures contract, so too is the total dollar economy. In this system, we are, every day, taking delivery of some goods (comex gold delivery), just not total delivery as stated in the "full money supply" context (comex open interest).
As long as all of us don't try to buy with more than 5% of our assets (calling for delivery for say 100 contracts), the system works. Yes, any economic system operates with some relative savings for future delivery (retirement, saving for school, etc.), it's just the gross extent of our leverage
today has no possible comparison. The present risk is outside any historical precedent.
Without any yardstick for measurement, most people are comfortable that their paper wealth is somewhat real and remain with it. Only now, the foreign holdings of dollar assets has grown so large that if it "comes home for delivery", it will break the system without our buying help!

Your words:-----------------
I submit to you there are very troubled (social unrest) waters ahead in this country if events progress as you forecast. What do you think?-------------------

foa: C Man, from the beginning of time people have been gathering and losing what they have. It seems that as a people, it's our lot in life to, periodically do battle over "who took what from who" and "who failed to honour their contracts to deliver". It's nothing new. However, there is a
recent precedent that says things will be bad locally but not internationally.
The recent downfall of a world "nuclear super power" happened without a world war or the use of weapons of mass destruction. Russia was bankrupted without a shot being fired at the west for doing it. Does this mean that the US will sit still as it's dollar is gutted on the international markets?

You say: ---------------I remember the animosity paid toward ME persons and nations during the 70's due to the oil crises. Americans can become inhospitable with great alacrity when it comes to their gasoline. How can all come to pass (as it evidently must) without major domestic and
(hopefully not) international upheaval? Add xenophobia to politics and the recipe for disaster becomes written upon all minds.------------------

foa: I think that locally, the US will experience some bitterness as people realize what they never had. We borrowed so much from our unborn children that it could never be paid back. So, the international community changes the rules in a way that forces us to pay our own way now and we don't like it. Interesting, our debt supports a life style higher than most of the world and anarchy is
expected if we must repay it.

We will all have to see how this plays out. thanks FOA



FOA
Reply
-------------------
Journeyman (1/16/00; 15:55:09MDT - Msg ID:23007)
Oil shale: A spoiler, FOA?

But FOA, there is one factor, it could be minor, I don't have the context knowledge to judge, which may affect your thinking a bit. Oro, you especially may be able to put this into context in terms of "strategic" value.

Clearly the size of the reserves is significant. The question is, is it significant enough to affect your
scenario FOA?
---------------------------

Hello Journeyman,
If not another drop of foreign oil was imported into the US, world oil production could be cut in half and still receive the same dollar revenue as today. You see, oil prices are only one part of this drama. Dollar use and value outside it's reserve roll is the main problem.

In addition, as stated before, even $200 a barrel for west texas crude may not spur oil shale development if local dollar price inflation becomes too great.

See the picture? thanks FOA

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

Strad Master (1/16/00; 18:39:13MDT - Msg ID:23008)

Hello Strad Master,
The same answer above applies to your question of using the US oil reserve. Also, in the past it was a real political card to play, Today, it's just a card.

You ask:-------------
2.) Would it be prudent for those who speculate to buy Euros with dollars and just hold them against an inevitable price rise you see in the relative near future? -------------

I would say one should choose their savings accounts with all the considerations offered here. The world financial system is always slipping like an earth fault. The question is can your wealth survive a full quake? For myself, Euros look just like a regular way to save some of my money.

Also:-----------

Do you remember my question of a few days ago about the circumstances in which you and Another might reveal your identities? Is that ever a forseeable possibility? ----------------

foa: the major push of these posts is that you look for economic events that explain where we have been walking. If they tell you your trail is correct, then we are thinking for ourselves and perhaps seeing the world as others do. Not knowing us forces you to look closely with your own eyes. The understanding gained in this way is wealth that lasts forever. Thank you for reading and thinking
FOA

Peter Asher
Testing cut and paste
Bid
Ask
Change from New York
close
GOLD
284.90
285.85
+1.50
+0.53%
SILVER
5.12
5.14
+0.01
+0.20%
Cavan Man
Steveh23013
1. Because he doesn't want to spook the markets?
2. He's tried to sook the markets already to no avail and he knows if he tries again it is in vain?
3. The FOA THOUGHTS are impossible to relate coherently in ten minutes or less?
4. Even if he could relate the THOUGHTS no one would believe him anyway?
5. He know the US economy is toast and there is nothing he can do anyway so why try?
6. Mr. AG really belives he can control events to his liking; he really believes that?
7. Mr. AG, IMF and US Treasury know all about what is about to unfold and they have a good strategy to deal with the situation? (I hope so and I hope the strategy includes the rise of POG and non-aggression)
8. He knows that no matter what he says the smart money will take precautions and the dumb money will get hammered that is the way it has always been and always shall be so why sweat the small stuff; just show up at work, punch the clock and keep on cruising?

9. He's taken steps to protect his assets and the heck with everybody else?

10. We're fools for buying gold (for any of the many good reasons) and should rethink equities?

Mr. AG, surely there is someone visiting this site if only occasionally for you. We wish you well and suggest you consider raising the bar for gold. Think about it.
Peter Asher
Steve, sorry, I forget those aren't the bibles they were a while back
1984 was total brain-washed 2-way mandetory TV set always on, "Big Brother is watching you." When they found his book of notes, they even repaced the tiny piece of lint he had carefully placed to detect that event.

Brave New World had a drug called Soma that all the lower classes took. Society was Geneticly engineered into Alphas Betas Deltas Gammas and "Even" epsilons.

Robot's Steve, Automatons, Brainwashed or drugged; or rendered dumb or blind by Bubble.com free money(Soma) and Greenspeak.(Big Brother)

He's not saying it because he doesn't want them to know it. Did you think he's here to help you? (Smile, sort of , heh, heh)
Cavan Man
FOA23019
"Dollar use and VALUE outside of its reserve roll is the main problem."

That's a nutshell. Thanks FOA. Have a teriffic week!
Cavan Man
FOA 23018
"Interesting, our debt supports a lifestyle higher than most of the world and anarchy is expected if we must repay it".

I guess I have been watching too many "action" movies lately eh? Debt is a very powerful narcotic.

Unlike cultures that are 5000 old, you will have a lot of "jumpers" here I am willing to bet. They will truly be "americans", not peoples who have settled here from other shores in the last couple of generations or so. THEY know how bad it can be and what one must do to make ends meet. Speaking for myself, I haven't a clue.
FOA
Time to go!
SteveH (01/16/00; 20:28:31MDT - Msg ID:23013)

" " one can only surmise that it is the dollars exit strategy or that all of what you say is mere conjecture." "-------

foa: Steve, every thing we humans say and think is conjecture until "something real happens as a result" of that conjecture. Ha! Ha! The real trick is in understand what is "mere conjecture" and "conjecture with a severe purpose". (smile)

Also: The man is doing the best he can with the tools Washington gives him. No more, no less. Besides, Peter has it right: Peter Asher (01/16/00; 20:33:14MDT - Msg ID:23014)

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

Al Fulchino (01/16/00; 19:17:23MDT - Msg ID:23010)

-------------You are in effect stating that Alan Greenspan was not truthful when he said this money ( I believe around 150 billion) was strictly for y2k confidence among the citizenry.------

foa: Al, did he really say that? (smile)

--------Secondly, is there evidence that dollar flight to the euro is taking place now? -------

foa, I think it's more like the Euro is becoming more useful a tool than the dollar. Read the Barons article this week. If indeed, the assets are drifting towards the Euro as a rising US rate is indicating, then a flight could occur. However, I doubt they want a stampede now. A slow drift would be much better.

------Afterall, oil is in fact now making its run upwards, yes? ----------

foa: Looks like fits and starts to me. But the trend is there. Truly, someone is turning the valves to adjust the dollar oil price.

-------If, it is yes, gold should be being unleashed right now. ------------

foa: If the gap that Michael talks about is still working (I think it is), then the paper market is running out of physical supply. The fact that they had to call in markers from small official sources the last time (to get physical lent), indicates that we have reached the last of the private stocks. We shall see.
--------------------------------


Thanks all,,,,,,,,,,,,,,,,,,,,FOA


Peter Asher
U.S. yacht dealers ride economy's big wave
http://news.excite.com/news/r/000116/17/bizfeature-leisure-yachtsThis is where the stock sellers spend the buyer's "Savings."
Journeyman
Who's right, Kudlow or Greenspan? @SteveH Peter Asher, all

Can you apply what you've learned here @ USA GOLD U? If you
can answer these questions, you're well on the way to
understanding the essence -- and credibility -- of the FOA
scenario.

This is a new and improved repost. I got no takers the last
time, except Sir Al. Perhaps the questions are too easy??

CNBC's "Chief Commentator" Lawrence Kudlow, in a discussion
with "Chief Economist" Bill Wollman yesterday (Fri. January
14, 2000), faulted Alan Greenspan for what he considerd a
glaring omission from Greenspan's speech to the Econonic
Club of New York the previous evening. Kudlow began by
pointing out that "inflation" is completely a monetary
phenomenon, that is, "too much money chasing too few goods."
He's on solid ground there:

"There is perhaps no empirical regularity among
economic phenomena that is based on so much evidence
for so wide a range of circumstances as the connection
between substantial changes in the quantity of money
and in the level of prices." ... "It follows ... that
_inflation is always and everwhere a monetary
phenomenon_ in the sense that it is and can be produced
only by a more rapid increase in the quantity of money
than in output." -quoted in Judy Shelton, _Money
Meltdown_ (New York: The Free Press 1994), p. 176 & 177

Prof. Kudlow went on to point out the core CPI (Consumer
Price Index), touted as the lowest indicated core inflation
rate in over 37 years. Finally he cited the low price of
gold as also indicating low inflation.

Kudlow then sprung Greenspan's "glaring omission:" Despite
the fact that the speech was mostly about "inflation,"
Greenspan never mentioned "money supply" even once. Kudlow
then made his point: Greenspan and the FED shouldn't aim
monetary policy against an intact economic expansion by
raising interest rates to qwell a non existent "inflation."

This isn't the first time Prof. Kudlow has presented this
argument against FED tightening and critical of the FED's
stance as being pre-emptive on an inflation which doesn't
exist. Did Greenspan miss the boat by not connecting
currency depreciation ("inflation") with "money supply" in
his talk?

QUESTION 1: Why would FOA, Oro, and probably TownCrier
disagree with Prof. Kudlow's take on inflation? What did
Kudlow apparently miss?

QUESTION 2: If all the indicators (gold, CPI, etc.) indicate
no inflation, why DOES Greenspan talk tough about fighting
"inflation?"

QUESTION 3: Why doesn't Greenspan pay attention to money
supply directly in relation to "inflation" anymore?

HINT: The answers to all three questions rest on the same
underlying idea.

Regards,
Journeyman
Peter Asher
Journeyman, well met

Actually, I've been working on that today along with the history you mentioned a week or so ago about the silver standard deflation. Could you please post the Msg# of that? I was just about to ask.

For an appetizer, I don't (haven't) agreed with >>>inflation" is completely a monetary
phenomenon, that is, "too much money chasing too few goods."<<<<

Also, I get the Impression that Kudlow is saying the reverse of this. That because there is no inflation, there is therefore no increase in the money supply.

My answer is going to require a few more evenings of work. I've written a lot on this viewpoint before, Here's one from 11/22.

Joey, Steve, Nickel62, Stranger

First of all, Joey! A belated welcome, I've been AFK too much of late. Excellent writing this morning, one of my favorite topics. In several posts over the 13 months I've been here I have maintained that the definitive cause of Inflation is "The power to command price." This power can derive from several economic paradigms, hence the eternal disagreements over cause and effect.

My premise is that expansion of the money supply and credit creates an abundance of choices. The inflation/deflation thrust is then effected by the degree to which that available purchasing power is applied towards Production or Consumption. Buying up everything in sight, without expanding the ability to create replacement, will cause inflation. On the other hand, committing available purchasing power into the creation of new production and delivery systems INCREASES the supply of goods and services while freeing up less money to chase them.

Fiat money is at it's best when earned and at it's worst when indiscriminately loaned into existence. I believe one of the reasons that we do not have rampant price inflation yet, is that many spending decisions of individuals have reduced the cost of source to market, while simultaneous increasing mercantile competition. Just-in-time inventory and Dot Com marketing have been built on the productive products of the new technologies and in doing so absorbed some of the increased purchasing power of the current money boom. If and when the current cost cutting phase runs it's course, then the degree of consumption will increase and drive up prices. That is, if all other factors remain equal. Since nothing does stay constant in economic flows, things are always a 'maybe'.

In summation, it is not how much money is in people hands that ultimately shapes economies; it is what they choose to spend it on. ----Guns or butter, More factories, or more of their products. "Give me bread, but give me roses."
Peter Asher
While the Comex cat's away.
http://www.kitco.com/silver.graph.htmlThe Asian mice will play! (Gold and silver both)

If this is not the Kitco computer fooling around again things could be interesting. Can't check via MRCI due to no futures trade today.
Peter Asher
Confirmed
http://www.metalsman.com/masterprices.htmNothing is real before an hour of London trading though.
Journeyman
Requested reference @Peter Asher
I believe the MID# (Crime of 1873, an indirect indictment of gold) you were looking for is: (1/9/00; 12:52:40MDT - Msg ID:22585)

Hmm! Now that you mention it, I think Prof. Kudlow was indeed doing a little reverse engineering, deducing a stable money supply from the inflation indicators. Tsk, Tsk!!

Looking forward to your other insights!

Regards, J.
beesting
Journeyman -Inflation, time for a quick answer.
I don't know if this is the answer you want but Alan Greenspan is worried about the inflation in the stock markets.
Prices going up in a never ending spiral, doesn't that sound like inflation when applied to products.
Well apply it to the stock market.
See you in the morning......beesting.
Number Six
Martin Armstrong - repost...
From Kitco - has the ring of truth IMHO...

Date: Wed Jan 05 2000 04:24
GoldBird1a ( Armstrong-Republic-manipulations ) ID#396247:
Copyright � 1999 GoldBird1a/Kitco Inc. All rights reserved
Whilst I have read a lot on this site about Armstrong and his supposed short gold position etc etc etc. I just thought
everyone should know that it is all BS. I have worked insided Republic Bank and quite frankly the whole thing stinks of a
major set up intended to frame Armstrong big time. Armstrong was right about the manipulation of silver and a whole lot
more . Not only was silver manipulated, they do it all the time. If you want to know the truth, it was Republic who has
been behind almost every manipulation I know of for at least the last 10 years, I've seen it first hand. Buffet is not lilly
white and this silver purchase of his was not the first. The manipulation by PhiBro in 1995 when they exercised the call
options way out of the money was executed by Andy Heck who now works for Republic. The CFTC went to PhiBro
demanding to know who the client was behind the trade and they refused to give up the name. The CFTC did not do
their job as usual and just walked away demanding that they exit the trade. PhiBro was owned by Soloman Bros and the
authorization to squeeze silver was given personally by Buffet. Does anyone really think that a small sub like PhiBro
could do a $1 billion trade without board approval from above? It doesn't end there. Bribes were paid to Russian
officials to "recall" platinum so it could be inventoried. Republic helped Tiger corner the market in palladium and stored it
for them just like they moved the silver from NY to London for Buffet. This thing even goes back to the manipulation of
the US Treas Auctions. The gov't boys are so stupid, when they threatened to take the license away from Soloman
Bros, Buffet came to the rescue. Ha! He was behind that trade as well and his name was concealed then as always.
Then that trader left and started LTCM and had a real merry old time. Look at who his investors were! Just before it
blew up, Buffet agreed to bailout that operation and wrote a letter stating that if his offer was ever revealed, it would be
void. That letter was published in the WSJ because it blew up before Buffet could put the deal to bed.

The point is, Armstrong was trying to fight the crowd. He knew what was going on and the word inside the bank was
that he might even have tapes of converstions between a lot of the players. Everyone is really worried about that for sure.
These guys take the market up get all you suckers believing the rally is real and then slam it again. How do you think they
make their billions? They don't care about bull markets. They shag the markets to make their billions off of the people
who don't have a clue. They rotate between the markets. All the same names were on the short-side in copper.
Sumitomo tried to fight these guys. They baited the Japanese into the trades offering them untold credit. They then would
short copper against them. Sumitomo tried to defend their position and ended up buying the entire inventory. When they
had Sumitomo loaded, they ran to the authorities and did them in calling it a manipulation. They made a fortune on that
short trade. To add insult to injury, Sumitomo ran to Goldman Sacks for help, Goldman started selling thousands of
contracts in copper that day and then accepted the work out the following day after front-running their own client. Jimmy
Goldsmith was involved in this one as well as Safra, Tiger and a host of others. They amazingly are all on the right side of
everyone of these trades.

Hell - bribes were even paid to bank officials at the Central Bank of Thailand to start the Asian Crisis! That was the
evidence the Japanese took to the G7 meeting and demanded controls against the organized hedge funds. The US gov't
refused to do anything against the group of players because this thing is so dirty nobody wants the truth out there. They
told the Japs they would agree to sanctions only. That's why Armstrong is being served up as the Xmas turkey. Quite
frankly, he knows too much.

Safra was paying bribes to people inside the IMF as well. They all thought they had the IMF in their pocket. That's why
they all invested so much into Russia. They even set up Bank of New York on behalf of a revial group of thugs in Russia
and because Republic hates Bank of New York because they are not part of the club.

These markets are never going to breakout until someone breaks up this organized mob of billionares. The gov't is either
too stupid or they are involved with them ==== a high probability! After all, Armstrong had a $1 billion credit line in the
bank and everyone knew it. Suddenly, his credit line was pulled and Republic took $500 million of his clients money
pretending it was never there. That order came from good old Mr. Safra himself and was carried out by George
Wendler personally. And if anyone believes that story about Safra's death, I guess they believe in Santa Claus and a few
other sudden deaths when the heat got turned up. If Armstrong or his clients got Safra on the stand, the whole thing
could have unravelled. His bodyguard was changed just after this affair started. You fill in the blanks.

Armstrong was never short 700 tons of gold. In fact, to get the silver manipulation going, Armstrong was out of the
country and they ran their orders through Republic to make everyone think it was Armstrong covering short positions he
never had. The records are all there!

All this stuff is on tapes, docs and emails. The question is, will the gov't go along with the big boys and cover everything
up again? If so, they say already Armstrong won't make it to trial. They cannot afford a open trial with everything
Armstrong knows. He probably knows far more than what has been written here. They just can't afford for the world to
know how rigged this game truly is and how these billionares really make their money at the expense of everyone else.

That's the real story. Take it for what it's worth.
lamprey_65
Block Trades
http://messages.yahoo.com/bbs?action=m&board=7079215&tid=nem&sid=7079215∣=15325A little work I did for NEM shareholders on the Yahoo board for those interested.

Lamprey
lamprey_65
Weighing in on Kudlow
I've noticed that Professor Kudlow falls into the trap we all must guard against when analyzing information - he already knows the outcome he's looking for and this skews his logic.

Example: Prof. Kudlow has been adamant for quite some time that low gold prices prove that inflation must be low. Now, I ask you, how can we possibly rely on an economic indicator which is being manipulated to the extend that gold has?

Oh, yes...he also loves that strong dollar ;-)

Lamprey
Number Six
http://www.smartmoney.com/smt/columns/rational/index.cfm?story=20000114
Looking Back at the Second Great Depression

By Paul R. La Monica

THE SETTING: the front porch of a raised ranch house on a quiet suburban street somewhere in Long Island, N.Y. The date is Jan. 14, 2045. A distinguished elderly gentleman with a full head of flowing silvery hair sits peacefully on a plastic lawn chair sipping a mug of coffee. A young boy comes up to him. Here is their conversation.

"Grandpa Paulie, do you remember GD2?"

"The Second Great Depression? Sure I do. Those were some tough years. So many people were out of work. The stock market crashed. Banks failed. We had to get rations for food and gas and wait on really long lines to get them. It's amazing the country bounced back. Why do you ask?"

"Well, we're learning about it in my macroeconomics class and I just don't get it."

"They're teaching macro in the second grade these days? God Bless The United States of AOL Time Warner."

"Yeah, our teacher keeps trying to tell us how bad it was and that the economy these days is starting to look like it did at the beginning of the century, but I just don't understand. She keeps talking about the unprecedented level of economic expansion, a GDP of 10% or something like that. And all this stuff about the PPI and the CPI being really high so the Fed may have to raise rates. But every time someone mentions raising rates, the stock market plunges. Wall Street hates higher interest rates, but my teacher says we're doomed if the Fed doesn't raise rates. If the stock market tanks isn't that really bad news? I'm so confused. We have a big test on this next week and if I don't get an A+++++ I'll never get into Yahoo!Harvard."

"Well sonny, you came to the right place. Sit down right next to Grandpa. Your father probably never told you this but I used to write about this type of stuff all the time for a great financial Web site called SmartMoney.com."

"Smartwho.com?"

"Ahh. That's right, you wouldn't know about any of that. Well, we were big, really big. But once GD2 hit, people didn't want to read about stocks and investing anymore, and all the financial news Web sites went out of business by Aught-Three. But that's another story. Anyway, back to GD2. You see, back in the 1980s and 1990s the economy was great, kind of like today. There was a wave of technological innovation. Unemployment was low, many people were getting rich in the stock market. They were good times."

"So what went wrong?"

"I'm getting to that. In 1998 the economies of other countries took a bad turn. Russia, Asia and Latin America. So the Fed cut interest rates three times in order to make sure there would be no crisis here. Nobody wanted to see the great economic times come to an end. And it worked. Maybe too well. The economy kept growing, and the following year the Fed raised rates three times to make sure it didn't grow too fast."

"That's what I don't get. Why is it a problem if it grows too fast?"

"When there's too much growth, you then have to worry about inflation. If prices rise dramatically, which is what happened in the U.S. in Aught and Aught-One, money becomes pretty much worthless. Everything costs a lot more."

"I thought the Fed was supposed to fight inflation."

"Well, the Fed, led by a guy named Alan Greenbaum...no, wait a second, it was Greenspan...had traditionally been a big fighter of inflation. But once Y2K rolled around, the markets moaned and groaned every time he thought about raising rates. Whenever economic data came out that showed a strong economy, investors panicked because they thought the Fed would then raise rates. Greenspan kept telling people that the economy couldn't keep growing at this pace without an eventual pickup in inflation. So much wealth was being created and Greenspan was constantly worrying about what would happen to this wealth if the economy overheated. So he just wanted to cool it down a bit by raising rates."

"I still don't understand. If this Greenspan guy was so smart and he led the economy through such prosperous times for so long, how come people got all mad whenever he talked about raising rates?"

"Let me try and explain it to you simply. Say you got sick, you had a really bad cold."

"What's a cold?"

"What's a cold? I really must be showing my age, huh. Well, EliPfizerLambertMerckGlaxoBeecham did come out with a drug to cure the common cold in 2021, so you wouldn't remember what it's like to have a runny nose, now would you? Anyway, I digress. Say you get that nasty new strain of Martian stomach flu. You know that really icky medicine you have to take?"

"Yeah, I hate it. It's disgusting."

"That's the point. You don't want to take it because it makes you feel sick when you first taste it. But if you don't take it you'll just get even sicker. Investors back in Aught and Aught-One thought that higher interest rates would be bad � even if they prevented inflation � because they would make it more expensive for companies to borrow money and that would slow the rate of earnings growth of all those technology companies a little bit. So higher rates were like that yucky flu medicine. You knew it was good for you, but you didn't want to take it. Nobody wanted to think about how rate hikes could help us avoid inflation and its evil aftereffects. Boy, were we dumb.

"After a while, Greenspan got fed up with all the abuse he took. He was tired of listening to the market whining, so he just appeased them and did nothing. He started to talk about how the growth at the end of the 20th century could be attributed to a once-in-a-century acceleration of innovation. Technology had made the entire economy more productive and efficient so rapid growth could be sustained without any inflation rearing its ugly head. So there was no reason to raise interest rates."

"Oops."

"Oops is right. Because he held rates steady, inflation did come back with a vengeance. We hardly realized it at first because the stock market was still booming. But everything got more expensive and people's wages weren't keeping up with all the huge increases in prices. So the Fed decided to print more money because it still didn't want to raise rates. And that's when things started to get ugly.

"The amount of money in the system was so huge that it was practically worthless. It got to a point where I would go to the store for a loaf of bread and it would cost $15, and if I went back a week later the price would already be $20. That's inflation."

"You used to go to the store to buy bread? Wow, life must have been rough then. So when did the Depression happen?"

"Well by Aught-Two, Greenspan was the most hated man in America. Because everyone was rushing to buy things before the prices became prohibitively expensive, there was a huge drop in productivity and a lot of people lost their jobs. And people were selling all their stock in order to get cash to buy things they really needed like food and clothes. The stock market crashed, and lots of companies went out of business, so there were even more layoffs.

"So President Trump decided to bring back old Fed chairman Paul Volcker, since he had a lot of experience raising interest rates. Volcker raised rates so fast that the economy froze to a halt within a couple of months. He said the only way to get rid of inflation would be to make rates sky-high. Once the effects of the interest rate hikes kicked in, inflation finally fell to a more manageable level, but even more people found themselves unemployed. The economy shrank, and the hope was that we would just have a short recession. But the Fed was afraid to lower rates to stimulate growth, because nobody wanted a return to inflation. Lots of big companies couldn't pay back their bank loans, and many of those banks went under, putting even more people out of work. And that's how we wound up sliding into the Second Great Depression.

"It took years before the Fed finally decided to cut rates and stimulate growth again. But the early years, Aught-Three and Aught-Four especially, were really the worst of it. Since I was no longer writing for SmartMoney.com, I had to become a fisherman. People still needed to eat, you know. Well, that's the story of GD2."

"Wow, Gramps! So what you're saying is that if Greenspan would have just raised rates in 2000 and slowed the economy a little bit, there wouldn't have been another Great Depression?"

"We'll never know for sure, but it seems like it could have been avoided. We were all just a little too greedy and shortsighted, and it came back to haunt us."

"The economy is growing really fast again these days, right? I hope the Fed doesn't let inflation get out of hand again, Grandpa."

"Me too, sonny. Me too."
lamprey_65
Searching for Equilibrium?
After watching the long bong yields creep higher over the past few weeks (and watching how it trades in relation to the equity markets during the day), I'm beginning to wonder if people are missing the point about these rising yields. It seems to me that bond market has become the bastard stepchild of investments. People who were saying that 6.25% was attractive to them 6 months ago are now totally ignoring bonds. Ok, yes, part of this is due to the fact that the Fed will continue to slowly raise rates, but intraday trading has me wondering if there is a liquidity issue also.

I watch the market go up and bonds fall...over and over again. Are bond yields going to continue higher on their own until they attract dollars out of stocks? People have become so used to the historically high returns in the market that 6.7% on bonds seems paltry now. How high must the yield go to attract investment...7%, 8%, 9%, 10%? Could it be that one day the market will wake up and housing starts along with the rest of the economy has gone in the tank because of high interest rates fueled by a rampaging stock market (and not Senior Greenspan)? This is just one reason why a run-away market is bad for everyone. We'd be much better off with our traditional 10-12% annual return in equities...of course, try to tell that to the momentum traders who racked up 85% on the Nasdaq Composite last year.

Lamprey
Peter Asher
Miner Aur launches hostile bid for ailing Cambior
http://news.excite.com/news/r/000117/08/minerals-cambior

TORONTO (Reuters) - Metal miner Aur Resources Inc. on
Monday launched an unsolicited all-share takeover bid for
Cambior Inc. that values the cash-strapped Montreal-based
gold producer at about C$170 million. ------
Peter Asher
What if it's that simple?

Been thinking about that Yacht article last night.(22:07:04MDT - Msg ID:23026)

We have heard tales of furniture, remodeling and second home purchases being put off so people can put their money "In" the market. Well, what if the things that get put off are in the price indicators and the things that get bought with the stock sellers profits are not. I mean in a general sense of course.

I doubt that anyone has pleasure yachts in the CPI. How could you tell if the price was rising on them or any other one (Or few) of a kind, luxury and custom made product.

What I'm saying is that maybe the components of the CPI are mostly the items that are put off so as to buy stock, and the products bought with the easy made gains are generally not. That is how you could have an equity inflation only.

After-market stock sales are wealth transfers, not product purchases. As I've said before, "The 5th largest currency." Joe and Harry change their dollars into stock shares which Bill turns back into dollars at a better rate then when he himself converted dollars into stocks. Joe and Harry's forgone basic goods purchases become Bill's Yacht.

CVSP (Comments, sir vous plaise) (Sp?)
THC
To FOA & Oro
Did you guys see this?

FWIW

BIS Banker Warns on Markets
Excerpt from Financial Mail on Sunday
By Alex Brummer, January 16, 2000

"Stock markets around the world are almost certainly overvalued, according to Andrew Crockett, head of the Bank of
International Settlements.
In an interview with Financial Mail, Crockett, who also heads the Global Stability Forum, said he believed there was a
possibility that 'there will be a correction'.

His concern was to make sure that financial institutions were not so exposed as to be 'placed in jeopardy and risk a broader
financial meltdown'

Crockett believed that most financial institutions were reasonably well capitalised and supervised 'and able to withstand a
correction'.

But he was concerned when, as now, 'markets get out of balance'.

He also warned that the high level of the US current account deficit and the associated low level of savings 'is not
indefinitely sustainable'.

The task of central banks was to help a smooth adjustment and not wait until the markets became volatile."

Far from being some kind of financial apocalypse nut, Andrew Crockett is the head of one of the world's wealthiest and
most powerful international financial institutions (see background below). Anyone who doesn't take his warning seriously
is the nut.

PERMAFROST
To Mr. ORO and the Forum in general
Re Mr. ORO's Msg. ID 22880 of 1/14/2000

I quote;
"I don't expect to have sufficient allies [sarcasm?] in seeking the freedom of my likewise independent-minded gold from the Central Banks..."
Prey tell, sir, do you know what the acronym GATA stands for? Do you think they are a bunch of fools, like myself and perhaps other nonacolytes of yours for attempting/wishing to do exactly what you are deriding?

Because the non-Western peoples' gold is held "in non-standard form in jewelry and local monetary forms", [monetary racism, ORO ?!] "the liquid gold available to the markets is just not there."
So we just shut up and settle for your Euros instead of real money, gold? Because of a royal decree by Lord ORO?

You then turn around and contradict yourself by claiming: "I do hope to see people prefering the gold to Euro." This, my friend, as STATED by you above, presumably being an impossibility!

As for the Israeli-Chinese connection: In the Arab-Israeli wars thousands of Soviet-made tanks were DESTROYED by the Israelis, not captured, to the best of my knowledge, in large numbers like you're implying. ASSUMING large quantities of war material were left in Arab hands, the taking of "the enormous stockpiles from the [alleged] spoils of the 1967 War and the Yom Kippur War...the Lebanese War" posits LARGE SCALE INVASION of Syria, Egypt and Lebanon where large military bases are overrun. Are we living on the same planet?

As to the Israeli military complex manufacturing and supplying Soviet-design heavy weaponry in significant numbers to the Chinese WHILE fighting with the Arabs AND designing and building their own tanks (I think it's called the Merkava; a very different beast from the Soviet T-series) and other arms--not a very reasonable propositon, I dare say.

Finally;
"...your philosophical training must have done you some damage"...
Philosphers tend to refer to such remarks as ad hominem attacks--for you, my dear, it means 'killing the messenger.'
Ask your mentor FOA what that means, if you have difficulty grasping simple but true concepts.
Hipplebeck
(No Subject)
I watched the Greenspan speech on c-span yesterday. The question and answer part was much more interesting than the prepared statements.
Greenspan said he doesn't believe in the cpi numbers and instead uses something he called the personal inflator numbers. Does anyone know what this is?
He talked about the Euro. He said it would be seen as the biggest event in the century.(looking back from 2010)
beesting
@PERMAFROST #23041 Addressed to the Forum in General.
Sir, please read the Guidelines and Prohibitions at the top of the page completely, and explain what you think it means, to the Forum in General....Thank You....beesting.
Hipplebeck
more Greenspan
He also said that the "wealth effect" was something new, and that they are trying to quantify it to see what it means.
Also, Greenspan said that looking back 10 years from now there will be lots of bank lending officials who will be very unhappy with their decisions.
He spoke of something happening in the margin loan area that they are keeping their eye on. There is a huge rise in margin loans going on.
RossL
@PermaFrost

I see that in your philosophical education you have not only mastered the straw man, but also the non-sequitur.
beesting
Indian Gold demand up!!
http://www.kitco.com/_a/news/4667.htmBombay Jan 17, 2000:
Gold demand in India, the worlds largest market for the metal, is set to pick up significantly in 2000 as a reviving economy boosts disposal income, traders and analysts say.
We are expecting a 15% rise in demand in 2000 over the previous year. Indians bought 815 tons of Gold in 1998.
Demand in the 9 months to Sept. last year was 659 tons, up 4% year on the year. Domestic demand for Gold is almost entirly met by imports, as production is negligible.
Those in the Know....Buy Gold....beesting.
TheStranger
Hipplebeck
American GDP (Gross Domestic Product) growth numbers are announced each quarter in both nominal terms and inflation adjusted terms. The difference between the two is the implicit price deflator of which Greenspan speaks.
rsjacksr
Will OPEC soon seal the fate of the bull market as it did in 1973? by Dr. S. Goldman
http://www.simplex.co.il/guests/opec.htmA very good read on why there will be a short fall in oil production in the coming year but not to the point that it will cause the U.S. to go belly up(that's a maybe).

Borrowed from http://www.fiendbear.com/index.html



ORO
PERMAFROST
Your last.

1. Israel-China. Well documented fact. News has been coming out as the relationship has been declasified over the past year. I also have direct and indirect confirmations of my own, some from the time of the events themselves. The wars did not occupy Israeli resources all of the time, but rather a small portion of the time. Israel's military industries were booming through the 70s selling to Iran and to China, to South Africa, to Europe, to any dictator who could extort all his country's wealth to buy these arms.

2. Arab countries that were Soviet clients kept their stores of munitions as close to the battlefield as possible. The Syrians never imagined losing the Golan Heights in 1967 and stored all their munitions there. The same goes for Jordan in the West Bank, and Egypt in the Sinai. Same story repeated in 1973-4 war. Israeli troops were 101 kilometers from Cairo, 130 or so kilometers from Syria. The whole of the Syrian and Egyptian forces were massed for the surprise attack. The collossal Arab loss was, in part, a result of the Israeli military industries being able to quickly move to production of ammo and parts for Soviet equipment captured. US/NATO equipment and ammo was shipped in great excess by the US and it was not necessary for Israel to produce any at all. It takes little imagination to understand the situation if you had seen the arms captured yourself. Tanks were not included in the deals with China, so far as I know. Only the technology to build them.

3. Gold and the Euro. In the statement:
"I don't expect to have sufficient allies [sarcasm?] in seeking the freedom of my likewise independent-minded gold from the Central Banks..."
Sarcasm was intended in the manner you indicate. The Central Banks holding the bulk of MONETARY gold will not release it. It would not be in the nature of governments to disarm themselves financially in their battle against their people.
[PERMAFROST] Prey tell, sir, do you know what the acronym GATA stands for? Do you think they are a bunch of fools, like myself and perhaps other nonacolytes of yours for attempting/wishing to do exactly what you are deriding?
---------
Here I do not deride their efforts but applaud them. Their movement is towards honesty and free markets. They have not stated any intention to "release" gold from Central Banks. Quite frankly, their position is set squarely against that.
--------------
[PERMAFROST]: Because the non-Western peoples' gold is held "in non-standard form in jewelry and local monetary forms", [monetary racism, ORO ?!] "the liquid gold available to the markets is just not there."
So we just shut up and settle for your Euros instead of real money, gold? Because of a royal decree by Lord ORO?
--------------
Facts of life. The organization, refining, and minting costs in both time and monetary resources needed to put these gold resources to use are not here yet. When the time comes and gold is traded at its true market value, the gold will come out and join the marketplace.

4. [PERMAFROST]: You then turn around and contradict yourself by claiming: "I do hope to see people prefering the gold to Euro." This, my friend, as STATED by you above, presumably being an impossibility!
------------
It is unlikely, rather than impossible. Hope reigns eternal.

===============
Finally,
[PERMAFROST]: "...your philosophical training must have done you some damage"...
Philosphers tend to refer to such remarks as ad hominem attacks--for you, my dear, it means 'killing the messenger.'
Ask your mentor FOA what that means, if you have difficulty grasping simple but true concepts.
-------------
The intellectual habits of some philosophy graduates I conversed with over the years often come down to arguments against non issue "straw men", as I contend you do as well. However, that does not justify a derogatory attitude similar to your own.

You are right in berating me for this comment's derogatory tone. I regreted it the moment I clicked the "post" button.

My apologies.
rsjacksr
John Crudele accuses Washington's CPI figures as being phony and attempts to prove same.
http://nypostonline.com/business/22245.htm[snip}
" Soon after Washington released it's hokey inflation report on Friday, the bond market fell so sharply that the yield on 30 year government bonds climbed back to the 6.7% level. Meanwhile the price of a barrel of crude oil rose frighteningly fast to more than 28$."

In other words, the markets that count are not accepting the numbers.
rsjacksr
Repost from Fiend Superbear: SMART MONEY GOES PESSIMISTIC?
http://www.nightlybusiness.org/Gersh/gersh1-14-00.htmA special web column by NBR Washington Bureau Chief Darren Gersh

I've noticed that the smarter the money, the quieter it is. There's a
reason people who have many billions to move around are not yacking
on the cable shows instead of doing their day jobs. If you're moving a
lot of money around, you don't want others to get their first, you don't
want to tank the market, and you don't want to share your ideas with the
world.

That's why I was struck when a former top economic official told me he
has never seen such a disconnect between the optimism at the
bottom, and the pessimism at the top. Retail investors are excited;
the hedge funds and investment bankers are bracing for the worst.

Now, this former top official (I don't like not naming names, but here
confidentiality is the price of candor) has been wrong before -- he's
been bearish for a while, but given his background, he simply can't be
ignored.

His argument is both quantitative, and based on personal exposure to
top policy makers. The numbers tell this story: corporate profits as a
percentage of total market capitalization has dropped from around 12
percent to below 6%. Check out the US current account deficit, and
you see we are borrowing close to 400 billion dollars a year from
overseas. That, he says, is unsustainable. "When it ends, it's going
to be ugly."

This former official says one of the nation's major investment banks
gives a 30% chance of a "hard landing" in the next year. (Something I
haven't heard its well-known strategist mention.)

This is a glimpse into the debate taking place at the very summit
of financial markets. Some very smart people are seriously thinking
about when (not so much if) the bull market ends, and they are starting
to plan how they will pick up the pieces afterwards. Small investors
ought to be doing the same thing.



(c)2000 Community Television Foundation of South Florida, Inc. All Rights
Reserved. Terms of use.
SteveH
Hedge Fund
Cavan Man
rsjacksr
Is the current account deficit and trade deficit same?

Thanks.
rsjacksr
Re: Brinker's followers preparing to sell . by E. Richard Harriman 17 January 2000 16:43 UTC
http://csf.colorado.edu/forums/longwaves/jan00/msg00640.html[snip] "Given that Brinker has the largest listener base of all other investment
advisory radio programs by far, and he manages private accounts as well as
advises professionals, his influence is significant. (He is a partner in
The BJ Group with Sheldon Jacobs).

What is more important, he is "the first" permabull to become "outright
bearish" during the mania. This is a profound development, IMO."
rsjacksr
Re: Cavan Man
rsjacksr:Is the current account deficit and trade deficit same?"Check out the US current account deficit, and
you see we are borrowing close to 400 billion dollars a year from
overseas".

I would think that the account deficit also included money borrowed on bonds
JCTex
Bulletin from Murphy
Le Metropole members,

As a result of the efforts of GATA
Treasurer/Secretary, Chris Powell, one of the
most powerful and respected members of the
United States Senate has sent letters to Alan
Greenspan, Chairman of the Federal Reserve
System and to Lawrence Summers, U.S. Secretary
of the Treasury.

In those letters, this Senator asked both
Mr. Greenspan and Mr. Summers to answer the
11 questions that were presented to them in
the center spread RollCall open letter of
December 9, 1999.

In addition, this Senator asked that they
respond to him "directly."

GATA will keep you informed as to this
Senator's progress in obtaining what was requested.

GERMANY FIRES ANOTHER SHOT ACROSS THE BOW

It is very, very clear that Germany (probably along
with other European countries) is very unhappy
with the orchestrated effort to hold down the
price of gold.

I do not have all the appropriate details but
Caf� sources tell me it was announced today
that the Bundesbank is going to mint 1 million
gold coins that will commemorate the 50th
anniversary of the D Mark.

Last year the Caf� reported that it was the
Germans who were most behind the Washington
Agreement in which 15 European countries
agreed to limit future gold sales and to
curtail their gold lending practices.

The price of gold then shot up over $80 before
the gold market manipulators could marshal
their forces to add enough supply to orchestrate
the price down once again.

That is why we believe today's announcement is
far more significant than creating gold demand
by minting the coins. It is another shot across
the bow to those that are holding down the
price of gold to suit their own interests. It
also is clear evidence that there is a split
among the major central banks of the world
about what is being done to the gold market.

Central bankers do not like sudden radical moves.
They want stability. We strongly suspect that the
Germans know that a future unstable situation
is being created by those holding down the gold
price. Too much gold demand is eating up too
little gold supply at too low a price. The gold
loans are TOO BIG to be paid back in a short
period of time, etc.

Yes, the Germans know this and are telling certain
shorts to cease and desist with their price
capping stranglehold of the gold market. The
Germans know that the longer this goes on, the
bigger the problem will be when this taught
gold slingshot finally is slung.

Thus, they want a gradual move up in the gold
price NOW, so that things do not get out of
hand in the future.

For what it is worth, that is my take on this
gold coin announcement.

Germany has spoken. Oil is at $28 per barrel.
Commodity indexes are all going into new
high ground. Bond yields have risen from
5% to 6.7% in a year.

The gold price should rise SHARPLY. If it does
not, it will become even more clear that
certain financial powers are HOLDING DOWN
the gold price. Those entities then must
be immediately exposed.



Beowulf
Cambior in the news again. Possible take over.
http://biz.yahoo.com/rf/000117/pf.htmlFOCUS-Miner Aur in hostile bid for ailing Cambior
CoBra(too)
Potpourri of last hour postings...
* "What Fridays inflation report missed" by John Crudele - [also on The Cafe (tku rsjacksr)
* Smart money goes pessimistic (again tku rsjacksr)
* Hedge Fund troubles (Steve H. - tku)- Manhattan Fund meltdown on W.St. exposed - The fund as revealed massive losses going back three years, thanks to its bet 'against' Internet stocks, raising more questions about the regulatory framework surrounding the sometimes secretive industry!???

-BTW - the hedge fund manager is a young Austrian emigre' of 29 y's, starting his $500million fund in 1996! - Being an Austrian in itself, doesn't mean you've even read Hajek or Mises, not to mention Schumpeter or others (so, Black -Sholes may fill in some of the blanks), no, you've got be young, flexible and totally lacking any experience or track record and by all means you've had to abandon any hint of economical, market and monetary history - only then - you would qualify to run millions or even billions of other peoples money - excessively leveraged - into the ground! And only then you would qualify to leverage your business to the gills with the major banks in their strive to outperform
their competitors in "virtual" earnings deriving from their derivative (thanks to B...lack-S...holes no risk) positions.
After all this great game of leveraged derivatives has surpassed 100 trillion $ - a figure no banker can safely negate for his bottom line, a line, which he well may has to re-define as, probably systemic cause for collapse.

- It also seems to me the accounting standards in this IT (and any other -) industry are not only catching up with auditors, but also with regulators, seemingly being at a loss as to how to apply old world accounting rules to the new paradigm of goldilocks economics.
Financial and other Regulators - SEC, (C-)FTC ... have taken a back seat, seemingly mesmerized by watching rules and regulations they've been introducing over the decades, decaying overnight by global mergermania in te quest of becoming the (ultimate) IT-, Pharma-, Auto (no-motive)-, Compu- and I co of the globe, yet trying to dismantle MS into "Baby Bills" on alledged overpricing? - One can go on and on and on... you've got my drift, anyway!
So to recap:
*There is no inflation - see CPI, PPI
*valuation and accounting standards belong to another millenium.
*There is no other currency (god /Greenback), except the $
*Gold is a barbarous relic - any standard built upon the metal/commodity is obscure- not befitting modern cyberology.

And finally - As the famous geologist Frank Joubin said:
* It's not for gold alone - it's for the enhancement of civilisation!

Hoping, against hope, that the world comes to terms with the ongoing financial and political mania in a civilized way, as
the quantum leaps of modern technology provided and designed for the advancement and to the benefit of all - proprietary Innternet "TM"'s are as "virtual" as "reality" in terms of the goods and services produced in the real world - for the benefit of all of us.
Regards CB2

PS: Stranger - Fremder - Servus auch Dir - mein Freund - Bin froh Dich wieder hier zu sehen. Bin auch nicht immer der Meinung unserer Giganten (Riesen), doch zu alt-oesterreichisch um mich aufzulehnen. Tue dies von Zeit zu Zeit in meiner eher unobtrusiven Weise.





Al Fulchino
FOA
I can see it now. February 1st Wall Street Journal Headline

FOA ASSERTS GREENSPAN PRINTED GREENBACKS FOR REASONS OTHER THAN Y2K

February 3nd

OPEC REDUCES FLOW UNTIL DOLLAR MEANS TRUE VALUE

February 4th

MUSIC WILL STILL PLAY! : Investors have time to grab seat until paper stops playing, Expert says not enough seats.

February 5th:




:)





INVESTORS CRAWL FROM DOLLAR TO EURO : Washington Worries

February 3rd:



TownCrier
Yen climbs on expectations that G7 will maintain a "Hands off" position of "shared concern"
http://biz.yahoo.com/rf/000117/qi.html"Going up to the G7, anyone expecting a clear-cut statement will be disappointed. With regards to Summer's comments, we know the U.S has been very unhappy with the lack of performance of the Japanese economy. And with a large trade deficit, there is no way the U.S. is going to sanction a statement which will effectively make the dollar even stronger than it is on a trade-weighted basis." --Neil Parker, treasury economist at the Royal Bank of Scotland

To the Currency/Economy Managers...pull those levers, push on strings, press the buttons, fill pails with cold water and dunk your heads in them 'til your ears are full...
Al Fulchino
Sorry lousy cut and paste
very bottom feb 3rd should be feb 2nd headline and is out of sequence...sorry
TownCrier
Another angle for you, Sir Al Fulchino
Your post from the weekend:
----------------------------------------------------
Al Fulchino (01/16/00; 19:17:23MDT - Msg ID:23010)
FOA
you wrote:and forcing the Fed to continue "Most" of it's pumping action (what so many thought was Y2K related)

You are in effect stating that Alan Greenspan was not truthful when he said this money ( I believe around 150 billion) was strictly for y2k confidence among the citizenry.
----------------------------------------------------
A couple months ago we posted from The Tower a crash course in evaluating the statements of men in upper-most positions of control/responsibility. The message to be carried away from that brief series of posts was that these men are not "chatty," and say only enough to deliver an intended message, yet leaving ample room to maneuver as might be required. In short: Words count.

While you and I can pop open a couple of barley sodas and loosely chew on the wind as we sit on the fence rail between our lawns that need raking or mowing...saying whatever we want, with a laugh and a slap on the back to easily set things right if our words happen to run afoul. It doesn't work that way at the level on which the Fed Chairman operates. You can use your firsthand experience with this principle when you consider some of the flare ups we've had at the forum because someone might not have communicated without ambiguity. Heck, half the time I don't even know what they mean when they say "inflation."

Knowing that "words count," we can look at the two sources of information you've pitted against each other and see that there is no conflict.

Because I'm not certain of the context from which you've gleaned your quote of the Fed Chairman, I'll start there with my few assumptions that will imediately be seen to render this discussion null and void if you know them to be incorrect. If Mr. Greenspan said that "this money ( I believe around 150 billion) was strictly for y2k confidence among the citizenry," it is the belief in here in The Tower that the "money" he was referring to was the EXTRA $50 billion that the Fed ordered to be printed. Only the physical representation of our money supply would play upon the confidence-factor of the public consciousness. As it played out, not all of that printed money was called forth from the vaults...the "virtual versions" on banking ledgers was not held up for exchange. Mr. Greenspan did not lie.

Now we turn to the words of FOA that you felt to be counter to those of the Fed Chairman...essentially that "most" of the Fed's pumping action was NOT related to Y2K. From this we see that FOA did not say anything about the Fed's printing action. There is an important difference. Of the Fed's various coupon passes and the infamous repo operations we continue to report on, these did not necessarily have a direct correlation with the physical money supply. The Fed can add reserves more easily in the form of ledger entries than by shipping vault cash. Vault cash only moved as needed for the public demand, but the full extent of "pumping of funds" as FOA indicates was not directed for that same purpose that Mr. Greenspan spoke of the printed cash.

I hope this was helpful.
TownCrier
The GOLDEN VIEW from The Tower
With U.S. markets closed for the holiday today, we'll turn to the London gold fix for our pricing benchmark. Following Friday's PM fix at $283.30, today's morning fix was smartly higher at $284.90, and if finished on a higher note...with the PM fixing at $285.35 per ounce on the spot markets.

In our only other gold news of the day, the Bank of Canada weekly financial statement revealed their gold assets to be up $2 million from the previous week -- at $511million, attributed to the latest revaluation of these reserves. More notably, the bank has not conducted sales so far throughout this month in addition to inactivitly in the preceding fiscal quarter.

OIL

As with the COMEX gold market, the NYMEX energy markets were closed also, so well size up the action in London. On the International Petroleum Exchange, Brent crude oil futures tacked on another 48� to last Friday's settlement, largely on the same conditions that spurred the NY markets higher on that day where NYMEX crude futures closed above $28 per barrel. IPE Brent crude is priced lower than WTI, so for comparison purposes we've only given the price change...to avoid any unnecessary confusion.

And that's the view from here...after the close.
JLV
What's the big secret?
What's the name of the Senator that GATA speaks of?

Maybe it's 'super secret'.
Jason Happy
speaking of "printing greenbacks"
http://www.bep.treas.gov/pro.htmBureau of Engraving and Printing; Production Figures

1980 - 1997

How money gets into circulation
R Powell
Barrons lists June 2001 call option
The Jan 15th issue of Barron's lists a June 2001 (not 2000) option on gold. It's a June 2001 400 Gold call -the right to buy gold at $400 PER Oz. until sometime in May 2001. The asking price for this previlege is $360. It's the only gold option listed in the year 2001 although this doesn't necessarily mean it's the only one offered. I wonder whose making this offer? Risky business and some would say not as good as physical in hand but if gold does command much higher dollar prices anytime in the next 16 months? Does this offering bring to mind the possibility that the powers that be (presently) have decided that they can't hold the price down as they have in the past but they can or think they can hold it under $400/oz. for 16 months more? Retreat,Regroup and Make a stand at $400! For 16 months of time I'll take that bet. I know-- it's just fiat currency I'm hoping to gain but I need it to pay some fiat debts and if I can gain enough I'll use some to aquire some tangible assets.
TheStranger
CoBra(zu) und Alles
Dank f�r Ihre St�tze. Ich achte Ihnen sehr viel. Es ist immer gut mit meinem ... sterreicher Freund wieder zu sprechen.
Sind Sie einer Schifahrer?

Go Gold! I have been reading Mundell all day. Only trouble is, the more I read, the less I seem to know. Slowly I seem to be raising myself to a level of basic ignorance.

ALL - I am interested in FOA's comments about recent money growth in the U.S. far exceeding what can reasonably be explained by Y2k preparations. In fact, I mentioned this odd circumstance in a private e-mail to canamami early last month, though I had no explanation to offer. It seems things just get curiouser and curiouser in the world of high finance these days. We are told by the Fed that inflation threatens. Interest rates are raised, and yet money growth explodes. What a fascinating economic time in which to live.
Galearis
An interesting Kitco post....
Date: Mon Jan 17 2000 19:59
rhody (@ Ted Butler et al: I do believe that time will tell) ID#410367:
Copyright � 1999 rhody/Kitco Inc. All rights reserved
who is correct in this hedging controversy. I think that if
I was a shareholder in ABX ( I'm not ) I would be very upset if
I knew management was forward selling product at spot prices
below its cost of production. This can only affect a further
slide in gold prices, or retard a rally. I have said this
before and I say it again. Barrick gold, with Brian Mulroney
as a director, and George Bush as a former consustant, is an
arm of the US Treasury, and hence is part of the campaign against
gold perpetrated by the US government in defense of the USD,
which is in the throes of lossing status as world reserve currency.
Gold is political. Placer Dome Gold is also heavily hedged
in excess of 40% of production. John Crowe, former president
of the Bank of Canada, and an appointee of Mulroney is a board
member on PDG. I detect a pattern. Proponents of fiat currency
have taken up residency on the boards of major world gold
producers. All of these producers hedge heavily, and anyone
who invests in their shares is supporting the sell off of gold
and the demise of their own investments.
It's really quite simple, and yes I think Ted Butler has got
it exactly right. I can't dump my ABX, as I never owned the
stock, but I do intend to dump my remaining few shares of PDG,
and use the proceeds to buy physical metal. It's the only
way I can hurt these people. Oh yes, when you buy metal, take
delivery. If you leave it in a bullion account, it will be leased
out without your knowledge or permission, and if this market does
blow up, I strongly suspect bullion accounts will be frozen by
the government. Regards, Rhody.
Journeyman
Easy does it @Sir Permafrost
Mr. Permafrost, I understand your general anger at the situation foisted on us and our kids and grand kids by the government-banking cliques. I probably share it. But the bad guys win when they get us to attack each other. We may not agree here with all the details, but we are allies. Think about that and save your attacks for the real enemies.

Regards,
Journeyman
SteveH
low inflation explained...
www.gold-eagle.comPOG for FEB now up $2.00 at $286.40

repost:



THE panic over inflation is about to begin.
(ray) Jan 17, 18:03

NY POST 1/17
WHAT FRIDAY'S INFLATION REPORT MISSED
by JOHN CRUDELE

THE panic over inflation is about to begin.

That probably seems like an odd statement, given the fact that Washington announced on Friday that the Consumer Price Index rose just 0.2 percent in December. And the day before, wholesale prices were reported to have risen only 0.3 percent in the last month of the year.

But the bond and commodities markets decided on Friday that the government's inflation stats can't be trusted. And as I've been saying for a long time, they are right.

Soon after Washington released its hokey inflation report on Friday morning, the bond market fell so sharply that the yield on 30-year government bonds climbed back to the 6.70 percent level. Meanwhile, the price of a barrel of crude oil rose frighteningly fast to more than $28.

The 0.2 percent rise in the CPI should have had a positive effect on bonds and crude. It didn't, because that number was phony, which I'll explain.

The big problem right now is that the sour mood of bonds and commodities could spread quickly in the weeks leading up to the Federal Reserve's early February meeting. The Fed is expected to raise interest rates at least a quarter point -- a hike Wall Street hopes will be the last for a while.

But don't count on it.

If you look closely at the government's inflation numbers as well as at private statistics and translate Greenspan's words into plain language, it is clear the inflation panic that's coming will cause borrowing costs to rise at least as fast as in '99.

Why are bond traders and the folks over in the commodity pits so nervous?

There are a lot of reasons. Consumer confidence remains very high because the stock market bubble is making people feel giddy. And this "asset inflation," which was first described as a concern years ago in this column, is making even the Fed antsy.

Take the CPI as an example.

Although the inflation number rose just 0.2 percent in December, it increased 2.7 percent for all of 1999. While the 2.7 percent figure isn't all that worrisome on the surface, it is substantially higher than that of the prior year.

And '99's inflation becomes more bothersome when you consider how the figure was obtained.

In order to keep inflation looking that low, Washington had to record a huge drop in the price of computers and telecommunications equipment. And it isn't that these high-tech products are actually declining in price.

What's going on is this: Computers are simply getting more powerful. The government determined that the price of computing power came down.

In order to keep consumer inflation at the 2.7 percent level in '99, the government had to contend that the price of personal computers and peripherals declined 26.5 percent. And it said information-processing was down 19 percent.

Go through the CPI list for last year, and there is nothing that even approached a double-digit price drop.

But there are loads of prices that went up substantially. Energy prices were up 13 percent; fuel oil, up 23.5 percent; gasoline, up 30.1 percent; public transportation, up 6.8 percent and tobacco.

Of all the markets, only stocks believed that inflationary pressures were as low as the government said. Even Greenspan questioned the validity of Washington's inflation picture. "I think that the Consumer Price Index is not the particular index which tells the most we need to know about consumer inflation," the Fed chief said after giving a speech last Thursday night in New York. "The reason is mainly that it is weighted very unusually."

You read it here first. Greenspan has been using private inflation surveys that are predicting much higher prices in the months ahead. And because I knew that, I was also able to predict last year's three interest rate hikes.

The outlook this year for rates isn't much better.

The market itself has already pushed borrowing costs sharply higher. And the Fed isn't going to be able to resist several more hikes, all of which will come early in the year.

Worse, if the Fed wants to calm the bond market, it will be forced to drain an enormous amount of the liquidity it put into the banking system in anticipation of Y2K problems. If it doesn't remove the money from the banks, worries about inflation will be even greater than they are already destined to be.

How long will it take before concerns about inflation and rates start poking holes in the Wall Street bubble? That is anyone's guess.

But the months ahead could be very, very tricky.�Please send e-mail to

jcrudele@nypost.com



Journeyman
Who gets the seigniorage for paper money?
http://www.ny.frb.org/pihome/fedpoint/fed01.html
The excerpt below from the above link explains where the (seigniorage) profit from the printing paper money goes -- to the Federal Reserve Banks. (Earlier on the page it explains that it costs 4 cents to manufacture a paper bill.) The seigniorage for coins goes to the US Treasury, though it manufactures BOTH currency and coin. Not bad -- for the banks, a?

"The distribution of coins differs from that of currency in some respects. First, when the Fed receives currency from the Treasury, it pays only for the cost of printing the notes. [$.04/note] However, coins are a direct obligation of the Treasury, so the Reserve Banks pay the Treasury the face value of the coins."
+
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045

Regards, J.
R Powell
Richard 640
Richard 640 asked for the whereabouts of Jimmy Rogers who he remembers from CNCB. I can't answer on the gold-eagle forum where he asked but I believe Richard 640 visits here so I leave a message. Jimmy Rogers has taken time off to travel around the world. Last I knew he was in Rissia and reported that things were even worse then he had been led to expect. He reports monthly, usually from a different country each time, in 'Worth' Magazine but as my subscription has expired I have lost track of him. His article was the only reason I subscribed to begin with and they were always enjoyable but nothing else interested me.
Journeyman
Who gets the seigniorage P.S.
P.S. I just followed the link posted by Jason Happy to find the info from my previous post. Thanx, Jason!

Regards, J.
SHIFTY
journeyman
I wish I could buy coins at face value. What do the reserve banks use for money?
Al Fulchino
Jimmy Rogers
Richard 640 and R Powell> You are right R Powell, but I beleive in addition he is heading up a new business venture if my memory serves me. My memory doesn't remind me what the new business was though. Sorry. But he looked happy! :)
canamami
Stranger on Inflation
The Stranger,

Thx for your reply to my post of this weekend. I had internet troubles and a lot of work this weekend. I was on an unannounced posting holiday for a while, and it is now an announced one due to an unforeseen crunch at work. I believe this is the inflation e-mail to which you referred in a post this evening.

Everyone,

This was a private e-mail which the Stranger sent in reply to two questions I sent him. I have edited the e-mail, but have included all material parts concerning inflation in this post:

"Two quick questions re inflation and gold.
First, I gather that you don't subscribe to the theory that the Fed and
other CB's have started to reduce the rate of money supply growth, which
could eventually cause a liquidity crunch in the markets, but also take the
wind out of future inflation."


Well, [canamami], I don't see any trend reduction in the aggregates yet, no. But,
at best, we can only guess at central bank motives, anyway. The important
thing to remember now is that monetary policy takes many months to filter
through to prices. So, I wouldn't let any sudden growth reduction alter my
intermediate term outlook.

"Second, do you believe that a sufficient number of people still believe in
gold as the alternate and ultimate money for it to regain its role as an
inflation hedge (I assume you do, given your decision to invest in gold). "

Abso....lutely. The baby boomers are the only generation in history to
have tied up most of their investment assets in tax-deferred retirement
plans. As such, inflation-wary investors will have fewer options than their
parents, who, for example, could buy rental properties, collectibles, etc.
Gold, and particularly mining stocks, have much faster liquidity anyway and
should be the first things people turn to. I don't know how big a ride we
will get, if and when this turnabout in perceptions occurs, but I feel very
strongly that a world, which heretofore expected DEflation, will reward our
prescience with SOMETHING. The important thing is still to be standing when
it happens....

I appreciate your remarks about government disinformation, [canamami]. You would
certainly be in a position to see that sort of thing first hand.... [If I recall, this concerned a comment I had made about manipulated inflation statistics].
Al Fulchino
Sir TC and FOA
TC As usual, you offer words for us to chew on. Thank you for your words on inflation. I understand what you are saying, but I do believe that FOA was implying that money creation was partly being created under the auspices of y2k. FOA correct me if I am wrong. If I am correct, then I am simply blown away by the idea of it.
lamprey_65
Jimmy Rogers
Last I heard Jimmy was traveling around the world in order to find new investment ideas. I thought he was supposed to have a website, but I can't seem to find it.

Lamprey
canamami
The Stranger on WSJ Oil Article and Inflation (An "A+")
Sometime ago, I posted an article from the WSJ which considered why the rise in oil prices was not having the expected general inflationary effect. This prompted some (mostly) negative reply on the Forum. The Stranger replied with what I consider to be the definitive rebuttal of the WSJ's position, although please note some aspects may be slightly dated (I believe it's now over a month old). Here it is:

Hi, [canamami....]
I get the WSJ at home, and I read your oil article first thing this AM.
I know you took some undeserved flak at the forum for posting it. I say
"undeserved" because many fine points are made by the article. Nonetheless,
I still believe the government is fudging inflation numbers while the media
stupidly co-operates. Let me give you a for instance: The article you
posted asks us to believe that rising oil is of minor importance to the
airlines, yet it fails to mention that the airlines have already raised
prices three times this year.

You know I am no conspiracy theorist, [canamami], but why was oil reported UP
1.4% in Friday's PPI, and then energy prices reported DOWN in the CPI?
Furthermore, the services component of the CPI came in at +.4% (+5% annual)
yesterday. SERVICES COMPRISE 65% OF THE AMERICAN ECONOMY, yet that number
wasn't even mentioned in the WSJ this morning (at least not that I could
see). Rather, everywhere in the media, the CPI was cited as proof of zero
inflation.

The article also claims that the 1970s price spiral was exacerbated by
an overaccomodative Fed that has now managed to become "much more aggressive
about pre-empting inflation". Excuse me? Is not money flooding the banks
even as we speak? Since mid October, bank reserves have risen at an annual
rate of 180%, far exceeding anything we saw in the 70s. And guess what!
Only a very minor portion of that increase has been in M1, which, I hasten
to add, belies the notion that the growth is primarily Y2k-related vault
cash.

With bonds in full retreat, can there be any other conclusion. Despite
the excellent theater of three Fed rate increases this year, there is afoot
a DELIBERATE sub rosa effort to inflate the dollar. A lot more than just
oil says the policy is working....
Chris Powell
Senator helps GATA, Germany helps gold
http://www.egroups.com/group/gata/339.html?Latest from GATA Chairman
Bill "Midas" Murphy.
Chris Powell
Normandy hopeful after avoiding Goldman's worst
http://www.egroups.com/group/gata/340.html?From the London Evening Standard.
Jason Happy
Statistics, Facts?, & Govt. Reported Figures...
Journeyman, thanks for saying that my post was... useful.

RE: http://www.bep.treas.gov/pro.htm and
and http://www.ny.frb.org/pihome/fedpoint/fed01.html

Solomon Weaver
Kudlow and the forest of trees
Journeyman (01/16/00; 22:21:12MDT - Msg ID:23027)
Who's right, Kudlow or Greenspan? @SteveH Peter Asher, all
------------

Journeyman perhaps I will take a stab at your question. As I see it, classical (post depression era) economics states that if the "money supply" of a "nation" is "inflated" at a rate higher than that nation's GDP, the resulting glut of money will in time be felt as "higher prices" which is the common man's definition of inflation.

But in the post cold war years, the use of the dollar in both the settlement of international trade, as a reserve asset, has grown such that we can see massive new dollar issue (above historical precedent) and yet do not find the prices rising in the USA.

The great chance in the seniorage of the USA was that each time we print a dollar, we get to use it first. The great tragedy is that the printing of those dollars always starts with a debt, which requires interest payments. Money (oops again, I mean currency) has been made so easy to Americans that we have forgotten what it is worth, foreigners who have an uphill struggle in comparison, have not only produced what they needed themselves, but have saved enough to pick up the tab for Americans (a tab which they expect will be repaid). How much better would America have fared if those new dollars had first been spent (not loaned) into a massive program in science and technology which would hire engineers from all around the world. As much as we all love gold, knowledge is power. No matter how severe a depression we face, nobody can take away all the things we have discovered about nature and ourselves.

I am sure that Greenspan and his folks are primarily watching the international markets for goods, credit and trade as they decide to inflate or deflate dollar supply, but in speeches he is forced to sound domestic. Remember too, that all those countries who import to us are as interested as we are to hear the rosy news about their customers economy.

An additional factor which I am unsure how to really build in is that the GDP measures goods and services...As FOA pointed out earlier today, most wealth is in the form of "derivatives" (he means a future claim not a bird in the hand). Goods, once produced, can re-enter the economy to bid for dollars (a type of dishoarding), but services once delivered are just that. Example, if I spent $50,000 on a Porsche last year, I could try to sell it for $40,000 again if I needed. But if I spent $50,000 on heart surgery, well just glad I'm alive. America, to a large extent a service economy, does not use GDP to produce durable goods, but rather cycles the money to grease the great wheels of services...this will make us quite vulnerable to collapses in monetary velocity.

Another aspect of the GDP that is elusive is that years ago people generally had a choice between real economy and grey economy...for example either grandma watched the kids (no GDP) or one pays a school (GDP). Today, so much of what a family does has been "monetized" and an immense services industry has evolved to manage that.

I was living in Europe during the early 90s and I remember how the USA was recovering and Europe was just going deeper into recession. Our CEO there kept telling us that the problem was one of "structure"...that America had restructured its way of business (through mergers and virtual accounting tricks like NPV and cash flow analysis, and that American companies had put the shareholder first) and that Europe needed similar structural changes...what I now realize is that contrary to Europe, America had the ability to print money and take on massive debt. Now, one of my predictions (if FOA is right about the Euro) is that as the world begins to dump the dollar and move to the Euro, the flow of imports will shift towards Europe. Europe will begin to repeat the mistakes which we have just made and they will feel they are in the middle of a new paradigm of Eurointegration and free world trade (as the Euro gets stronger, venture capital to Europe will surge and many of the great advances of the 00-10 period will be based in Europe. New silicon valleys will emerge in European bio and materials technologies...Mercedes will be the GE of the new era...perhaps in the end, they will be lesser fools...

There is also another aspect which people do not look at (accept in the positive). All of those dollars overseas do reenter our economy and they bid up the prices of assets. It is almost impossible to buy a house in California and pay for it with a Postman's salary. The cost of buying a few shares of America's Factories (stock) has skyrocketed far above the usual 10-12% cost increase per year. WHEN YOU ALREADY OWN A HOME OR STOCK you feel you are getting richer, but in truth, it is now more expensive to get in.

For some odd reason, with the costs of so many investments rising, it is a magnificent anomaly which has kept the cost of buying gold or silver at historic lows (for Americans).

Poor old Solomon
Solomon Weaver
Deepening FOAs comments on oil shale
Journeyman (1/16/00; 15:55:09MDT - Msg ID:23007)
Oil shale: A spoiler, FOA?

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

Journeyman....I would like to compare two great reserves of energy which could have freed America from the shackles of Arab oil. The first is the massive shale you have described, the second is the sun. The problem they both face is that to use either of them will require a massive retooling and capital investment. The development of shale to oil would take place behind the scenes and the govt certainly believes the cost to develop them should lie with companies. The development of solar technologies would be out in the open, in public, it would require changes in architecture and a shift in homeowners attitudes and spending habits. In the dramatic changes which FOA discusses, with dollar liquidity being destroyed and massive dollar based debt, who in the world would suddenly want to loan America a bunch of dollars to capitalize these types of changes??? When there is massive unemployment, the govt can hardly finance their debt, let alone start an oil shale Manhattan Project.

Here is what I see as the greatest tragedy of our great American Era. After all those decades of building great networks of roads and telephones and airports that were the envy of the world, we took the American dream (two cars and a TV in every home on a half acre lot) much too far and got in the party mentality...we borrowed from the world to build new homes that could have harvested the sun but only put us in debt. We spent hundreds of billions a year on smart weapons to play world cop when we could have spent 10s of billions to develop shale.

Now, the gig is up, and we have squandered our chance.

(by the way, last year we spent about $5000 to put a solar water system on our home that can withstand cold winters. Today with the temperature here at 2:00 pm at 0 degrees F, the glycol coming off the panel was 120 degrees F.) I am absolutely certain that if 20 million Americans would "invest" in solar water, that the exact same unit I purchased, based on the same design and materials, would cost only $1000-1500 based on ecomomy of scale. Now I spent $5000 and oil was $20 and I calculate a 15 year payback. If the unit were $1500 and oil was $50, it would translate to a 2 year payback....imagine this, Americans had the technology in their hands which could have allowed millions of families to invest in something which after two years would have supplied free hot water for decades...now, when we realize it, the capital flows to get there are going to dry up)

As beesting would say, those in the know, buy solar.

Poor old Solomon
R Powell
Lamprey --Jimmy Rogers
The site is www. jimrogers. com He's in London now.
elevator guy
The latest Midas
Has anyone else heard the rumor, that anytime a senator or congresman or congreswoman tries to investigate the Fed, they are met with an untimely death?

I dont like to even say such a thing, lest it strike terror in the hearts of our elected puppets, uh, I mean, our elected officials.

But I was just wondering if any one else has heard of such a ludicrous, impossible scenario happening.
Sippin
Bob Brinker goes bearish??????????
Rsjacksr,

I missed Brinkers program this past weekend. He was incredibly bullish in the fall of 98 when the markets were getting hammered. He stoutly predicted that the low of 7800 or so was a GREAT buy and the market would return to 9800 in a couple of months. Many callers have thanked him for making them a fortune in a matter of months. He is a market timer, but not a monthly, yearly timer. He is a long term timer. I found it amazing how religiously he believes in his " Market timing theory".

Also, Don Walochuck,(don't know if this is correct spelling) is also a top market timer who has won awards as the best market timer for 8 out of the last 11 years or so. He too is predicting some pretty wild stuff in the upcoming months and years. He too, is a long term market analyst. His predictions are for all commodities( including Gold) to make a big move soon.

I don't know if these guys are going to be right, but I do know that Brinker has some statitical data that has made him pretty confident in a downturn in the Stock Market. If you have ever heard this guy, he has his whole reputation on the line and he must have some pretty heavy stuff to move in this direction.
rsjacksr
Sippin (1/17/00; 22:13:37MDT - Msg ID:23087)
Thank YouFound the article but didn't have a clue to the identity of the individual, but that's nothing new. thank's for filling in the blanks
R Powell
Solomon Weaver/ Journeyman Re Who's right Kudlow or Greenspan
Town Crier and I are of the opinion that Mr. Greenspan sometimes speaks here but with a psydoname of course. Perhaps you might invite Mr. Kudlow to give us some answers or opinions regarding your questions. It can't hurt to ask, his e-mail address is listed on his web site which is www.larry kudlow.com - then click on contacts for the e-mail address.
Peter Asher
Solomon Weaver
(1/17/00; 21:16:27MDT - Msg ID:23083)
Kudlow and the forest of trees

Good post, fills in several pieces of the puzzle. Especially liked the depiction of the dichotomy between goods and services.

Your >>> How much better would America have fared if those new dollars had first been spent (not loaned) into a massive program in science and technology which would hire engineers from all around the world. <<<< is an excellent example of what I mean when I say that money spent on production capability does not cause inflation. One thing though, "Spent (not loaned)", what is the difference? Is it collecting the tax first, rather than creating the money and then collecting the taxes??
backlash
Re: R Powell (1/17/00; 17:50:48MDT - Msg ID:23066)


Have I been duped ! !

Something must have happened that I have difficulty understanding. Please enlighten me.

If options to purchase gold at $400/oz. in June of 2001 cost $360, does that mean $360/oz. or $360/100 oz.? I believe that is what a contract is considered to be (100 oz.)
If the $360 is per oz., I believe that I would rather just buy the gold right now for $285/oz. and put it into my hot little hands, thank you very much.

If it is for a contract of 10 or 100 oz. at $400/oz., I think I am beginning to understand the concept of derivatives. I personally prefer to call it leveraging. (I understand that word better and I think it means the essentially the same thing in this context.)

Thanks for an answer.

bl
Bill
Really deliberating over purchasing some June 300 calls.
I usually find that fear of downward pressure means the market will increase.
PERMAFROST
Elevator Guy; ORO; RossL; and comments for all...
[Elevator Guy] "Has anyone else heard the rumor, that anytime a senator or congressman tries to investigate the Fed, they are met with an untimely death?"
--To the best of my knowledge, President Kennedy was assasinated a short time (a week or so; I'm not sure) before he was about to push for legislation designed to take away the authority to issue money from the Fed and relegate it to its rightful trustee, the Congress of the United States of America. ORO, any comments/rebuttals? I've heard it whispered this was the real reason he was killed.

My two-cents worth of speculation: I think that if the game of fiat money were to end, that'd entail A HUGE TRANSFER OF WEALTH and power from the First World to the Third World because many denizens of the latter respect and own gold (and are producers of commodities in most cases), unlike your average Westerner who sneers at it. I think unspoken awarness of this is one of the reasons as to the uneasy equivocations by some in this forum.

RossL; and Forum also
To condemn someone in public without elaborating evidence or at least an argument is not a sensible thing to do. IMHO, I am simply reacting to what I perceive as being the promulgation of half-truths and willful creation of confusion and intellectual miasma on this forum. If you guys want me to stop posting here because I'm purportedly not following local etiquette, let's hold a referendum with our keyboards. All posters: just take the time to vote 'Permafrost GO!' and I'll stop writing here.

[ORO] "The intellectual habits of some philosophy graduates I conversed with over the years often came down to arguments over non-issue "straw men", as I contend you do as well [I think worse of them than you do]. However, that does not justify a derogatory attitude similar to your own.

"....

"My apologies"

Well, you're getting subtler in your argumentum ad hominem. "Apologies" accepted.
SteveH
Yield...gold higher
Feb gold now up $3.40 at $288.30. LT Bond yield at 6.71%.

Consider that the wealth effect is potential v kinetic inflation. Borrowing against wealth effect will ensure loss of portfolios in a bear market.

History will prove many hidden now, obvious then falacies believed or ignored by the many and known for what they are, by the few.

Examples:

Inflation was in the stock market.
CPI was manipulated.
CNN/CNBC allowed rampant biased reporting by self-interests of the bull market perpetuating the myth of the wealth effect.
Signs of impending bear market and hyperinflation will have been obvious in hindsight.
Derivatives and hedge funds will have become targets of legislation and restrictions, but too late.
Oil will become known as the back-breaker of the bull market.
People, whose fortunes were lost, abhorred goldbugs (who abhorred those who conspired to hold gold down).
Gold was manipulated.
S&P index was manipulated.
Enforcement and oversight bodies didn't do their jobs because of gag orders and retribution threats against junior investigators.

care to add yours?
ss of nep
I VOTE Permafrost stays.


I like the cold.
SteveH
So clearly put!
www.ktico.comrepost:

Date: Tue Jan 18 2000 07:26
WAUMPUSCAT (Gold and the Trade Imbalance) ID#245288:
Copyright � 1999 WAUMPUSCAT/Kitco Inc. All rights reserved

The USA international trade deficit compels the repatriation of dollars to the United States and their investment in the stock, bond, and real estate markets. This circumstance has caused the current bubble that has so concerned Chairman Greenspan. So long as inflation is suppressed by the flood of foreign goods and the resulting dollars can be mopped up by the investment markets, the price of gold will remain stable at a low level. But let the current flow of international trade and monetary units change, for any reason, and gold will probably become the refuge of choce for frightened investors. Any guesses as to when and at what price?
elevator guy
Permafrost
To Permafrost and all-

There may be times when Permafrost is rough around the edges, but it is for MK to decide if he has violated the posting guidlines. Lets trust MK's wisdom at maintaining the civil atmosphere of the forum he created.

Counterpoint is necessary, lest we become a wayward outpost of only the converted, an iconoclast group of ego massagers who entertain ourselves with slapping each other on the back for posts that fit the prevailing paradigm.

Debate can not harm this forum, but only stregnthen it, if what we belive can stand the light of day. Let the debate continue, hold the lamp of wisdom and truth high, and be not afraid of the passing traveler known as Permafrost.

If we are open minded, and fight the good fight with zeal, civil debate can only stregnthen what remains, purge the dross, and cause the forum to shine like gold, for all to see.

And always fight your battles with integrity, dont let mud slinging become your only weapon, as it cheapens your position, and weakens your argument. Sometimes, in order to maintain the clarity of your position, you must ignore the occasional slung mud of your opposition. Fight on, and win the battle by being forthright, dodge and parry with logic, refute the error with appropriate counterpoint, and make your case, holding your head high, and you can, because you have honor.

And always observe the posting guidelines on MK's site.
FOA
Comment
Solomon Weaver (1/17/00; 21:56:15MDT - Msg ID:23084)
Solomon Weaver (1/17/00; 21:16:27MDT - Msg ID:23083)

Excellent posts, sir!

------------------------------------
On another subject:

ALL:
I view this forum as a large discussion group on the floor of a convention hall. Each of us roaming between different faction groups, listening first, then taking part in the debate. From group to group we walk taking in all the fine new points. We can best be viewed as a large body of
people all adding to the information pool in a mostly serious, thoughtful way.

Then some kid runs up and stands at the sidelines and shouts out a few good thoughts and immediately says "To the Forum: You're all stupid and being mind controlled!". Then he makes a face, sticks his tongue out and runs away. During this episode, most discussion stops, everyone looks, tries to respond, but eventually goes back to work.

So, should we have security lock these nuts out? Well, in my opinion, early on we don't have to as long as we understand them and they don't ruin the whole convention. By understanding them I mean; they are smart and have something to offer, but when they make a face at everyone, it's just
an expression of "emotion without real background" not serious thoughts or discussion. Just as we all have children or young relatives that visit, we usually tolerate their behaviour until the talk (and events) becomes more serious. Then they must leave.

As "PH in LA" once put it, "they come in with both guns blazing and never read the rules". Indeed, they don't care about any "groups" rules! They want to spit on you if they feel like it and proclaim that that's the only way for adults to communicate! They dirty the air with innuendoes that our very own conversation (yes, our private talk) is half truths and dishonest. And point out that no one here is smart enough decipher this. In the end, it's demonstrated that some children, even though they are now old and have been around are no more than just "old immature kids with an
attitude"! A mind set that abhors humility and is usually brought on from a lack of real success in life.



FOA
goldfan
Immature kids with attitude
FOA Thank you for your many interesting and useful insights.As for the occasional noisy kids interrupting the discussions, I'm content to trust the gatekeeper.

FWIW
Goldfan
Al Fulchino
Solomon
Your writings are enjoyable and sipping a fine tea is a great accompaniment while reading. I have a question for you. You wrote : ...what I now realize is that contrary to Europe, America had the ability to print money and take on massive debt. ..end quote.

I have always been under the impression that European Central banks could print money just as we do and that they also had debt. The numbers may be not be as high as ours. If what you say is true, then I understand your point. But if my assessment is accurate, they can also print their way to the paper brick road. If you can clarify, if you have the time or anyone else can I would find it useful. TIA
Peter Asher
Value judgement
There is an ancient phrase "It's not what you say, it's the way that you say it." Disagreement in the full context of our subject matter, when delivered in attack mode, IS an attack!

>>> So we just shut up and settle for your Euros instead of real money, gold? Because of a royal
decree by Lord ORO? <<<< Is "Inflammatory and an attack on the person."

>>>> unlike your average Westerner who sneers at it. I think unspoken awareness of this is
one of the reasons as to the uneasy equivocations by some in this forum. <<<<< As a generality and devoid of subject, also an attack. What exactly is was said? By who? How is it an equivocation? And "uneasy" is a claim on character!

To condemn someone in public without elaborating evidence or at least an argument is not a
sensible thing to do. IMHO, <<<< "Physician, heal thyself"

>>>> I am simply reacting to what I perceive as being the promulgation of half-truths and willful creation of confusion and intellectual miasma on this forum.<<<< The depiction of the anatomy of a half truth is a welcome aspect of debate. The simple stating of same is an attack. "Willful creation of confusion" is an evaluation, only the writer knows what his will is. "Intellectual miasma on this Forum" Definitive attack on the group as a whole, insulting and, of course, presumptive.

Permafrost! You make some good points and do contribute value to the discussion, but when you head out to visit the Castle, try leaving the "Attitude" at home
goldfan
Dollarization and Euroization
http://www.bloomberg.com/feature.htmlToday at the link above :
Game of Leapfrog Puts Euro at Risk
(Commentary) By Mark Gilbert

"The prospect of economically unproven Eastern European countries usurping the currency that 11 nations fought hard to bring to life may give investors yet more reasons to sell euros."

My question, in what way is a currency damaged by others unilateraly adopting it? Can their banks "create" it by making loans denominated in that currency? If they print it, that would be counterfeiting and subject to some kind of sanctions, but I don't know about loans??

Anyone got any ideas about this?
Goldfan
Peter Asher
Goldfan
The only thing that truly backs any fiat currency is the ability of the issuing nations to deliver the goods and services entitled. A bank note, unredeemable in gold or silver, is simply a "Purchasing right" for product. If the Euro adds to the member nations on whose production it lays claim to, than it's value becomes altered according to the economic strength of the newcomers.
PERMAFROST
Elevator Guy; Peter Asher; FOA
Mr. Elevator Guy,

Your words stand in glaring contrast to those of FOA--and I KNOW you're no friend of mine. Thanks for the effort you put in your message.
BTW, the legislative efforts that I alluded to (it even had a number as an official bill to be presented to Congress I think) were duly shelved immediately following Kennedy's assasination.

Mr. Peter Asher;

With all due respect, sir, I never stoop to calling people names like your camp has done re Msg. ID 23098 by FOA.

FOA;

Strange...I have the nagging feeling that what you wrote there (Msg. 23098) hurt YOUR credibility more than it did anything else.

For God's sake man, you actually called me a nut! Was that really warranted? Does THAT fit the guidelines?
USAGOLD
Today's Gold Market Report: Gold Up on Number of Factors
Market Report (1/18/00): Gold broke to the upside in early New York
trading reacting to a number of factors. First, the weekend G-7 talks in
Tokyo failed to generate any support for Japan's appeal for a cheaper
yen. A failure by G-7 to organize a policy to keep the yen in check will
work against the dollar and euro and help gold. Second, according to
GATA's Bill Murphy, Germany has announced a plan to mint one million
gold coins to commemorate the 50th anniversary of the Deutschmark. This
would add roughly 30 tons to an already stressed physical supplies.
Third, gold seems to be finally reacting to the oil price increases as
gas and oil retailers gear up for retail price increases in the months
to come. This could send a wave of inflation and uncertainty rumbling
through the economy. Fourth, Deutsch Bank released a bullish gold study
in which analysts predicted gold supplies would drop 27% in 2000 from
1579 tonnes to 1152 tonnes. Lastly, a separate study from T.Hoare
Cannacord in London says fundamental demand will push gold to an average
$320 per ounce during the year 2000.

The market took all of this as good reason to go higher. Quoting FWN's
European report on the London action: "Dealers said gold's climb higher
was on the back of 'pretty good levels of short covering amid growing
optimism and confidence in commodities markets in general and because
people want to square their positions ahead of next Tuesday's Bank Of
England auction.'" Next week's BOE sale will be its fourth 25-ton
auction.

Commodities for the most part are down in the early going with the CRB
down half a point, The bond and stock markets are also heading lower.
The dollar is stronger against the euro and slightly weaker against the
yen as the markets await more news out of the Tokyo meetings. Oil
products continued their surge with crude gaining 23� on the Mar
contract to $27.37.

That's it for today, my fellow goldmeisters. See you here tomorrow.
PERMAFROST
The B.I.S/Euro block versus IMF/dollar one...
is sand in the eye. The Bank for International Settlements was created by the same kind of people that founded the Fed etc. The chief executive? of the BIS during WWII was an AMERICAN! I'll give you names, dates and numerous accounts of how the Germans colluded with American Corporations and Financial Institutions tomorrow; I need to look up some documents. These entities are most likely extant today under different appellations.

Don't forget to vote! Last I counted, I was on my way outta here!
Peter Asher
Permafrost
"My camp"??

Thank you for making my point!
Hipplebeck
to permafrost
I think it is good that you raise contrarian positions.
Of course you're going to take heat, but that is good too.
It sharpens everyone.
Keep up the good work.
If an idea can't take the glare of bright minds dissecting it there is something wrong with it.
Hipplebeck
goldfan
I too think it can only help a country that issues a currency when others adopt it.
Canuck Gold
PERMAFROST's attitude
Elevator Guy; Peter Asher; FOA; other interested parties

I don't know why you guys get engaged in any form of interaction with PERMAFROST. He might have some interesting points to make, but the way he makes them makes me tune out and these days I just automatically skip over his post without reading them. He may not go away or post less abrasively, but if no-one responds to anything he has to say, that will effectively silence him. Don't rise to the bait because he obviously enjoys rattling your cage.

CG
ORO
PERMAFROST -
I do not have a problem with PERMAFROST, however dirty our exchanges may be.

The critical commentary comes from a sharp thinker and would do us all some good. Criticism does not have to be constructive for it to be helpful. Particularly as he digs up material doccumentation.

As far as the BIS is concerned, it was set up to do war debt collections among nations. It turned out to be necessary for the functioning of the markets to have a bank at which all CBs can meet to clear transnational fund flows, as central banks do the final clearing within their respective countries, no entral body was otherwise available to them to do this function.
Hipplebeck
oro
Isn't it a sad commentary on us humans that representatives from countries at war with one another can meet and figure out who owes what to each other as if war is just another business? Sometimes it is just down right embarrasing to be a member of the human race
rsjacksr
Has the Market Gone Mad?
http://www.pathfinder.com:80/fortune/2000/01/24/jun.htmlAnalyze this: Nasdaq rockets in December, crashes in early January.
Investors pay absurd prices for stocks they can't name in businesses they
can't explain. Can anyone make sense of this?
By Shawn Tully


Very good analysis of the pros and cons of the probability of DOW 36000
and what kind of growth rate or wayward thinking that's required to get there
Aristotle
Hipplebeck, here's a variation on your theme in Msg ID:23112--
Good thoughts, and you've inspired me to propose this alteration:
---Isn't it a sad commentary on us humans that representatives from countries sharing a planet with one another can fight and figure out who can kill how many of each other as if war is just another business? Sometimes it is just down right embarrasing to be a member of the human race.---

The part you've described where we can "meet and figure out who owes what to each other" is the only aspect of a violent conflict that we needn't hang our heads in shame about. Only in fair trade and international settlements can we see everyone in the human race reach the finish line. Business is the essence of mankind. Let's hope we learn to do it well and save the ourselves further embarrassment--in case someone's watching. ;-)

Gold. Because we know what it means to be human. ---Aristotle
agbull
Should Bill Gates etc. From Jan News and Views
Thank you Michael for your News and Views always appreciated. Reading the Bill Gates article by Marc Faber, i could not helpl but think about his Consider section if everyone in the world bought $11 worth of gold etc.

Consider if everyone bought 2 troy ounces of silver (avout $11 US) It would equal 12 Billion troy ounces or about 24 years worth of production. Now that would get the silver market moving. Or if Bill Gates chose silver like his friend Warren Buffett did $100 Billion into the silver market is about 20 billion ounces of silver or about 40 years worth of production. For these and several other reasons, still bullish on AG after all these years!
rsjacksr
Legal problems for Western Areas Ltd
http://biz.yahoo.com/rf/000118/wa.html[snippet and paraphrased]
It is proported that Kebble, backed a plan to give financial assistance to another gold company, Durban
Roodepoort Deep , in order to secretly (under the table) buy shares in gold producer Randfontein Estates.
Randfontein Estates is the target of two takeover bids -- one from Kebble's Western Areas and the other, Harmony Gold Co . Randfontein since has recommended its shareholders take the Harmony offer.

There may be some fallout for Canadian partner Placer Dome, who last
year paid $235 million for a 50 percent stake in the Western Areas mine and South Deep project, one of the country's richest gold deposits.

goldfan
Dollarization and Euroization

Thanks Sir Peter you said;
Peter Asher (1/18/00; 8:19:57MDT - Msg ID:23103)
Goldfan
The only thing that truly backs any fiat currency is the ability of the issuing nations to deliver the goods and services entitled. A bank
note, unredeemable in gold or silver, is simply a "Purchasing right" for product. If the Euro adds to the member nations on whose
production it lays claim to, than it's value becomes altered according to the economic strength of the newcomers.

---this seems not to be enough of an explanation?

As a citizen of Canda, I am occasionally aware that many here would like to see us adopt the US dollar for our currency. So the question of what would happen is germane to me. Right now, based on what I read here and have come to believe, I think that both US and along with it the Canadian dollar are more or less doomed. But I am nonetheless interested in the prospects for the Euro (not the yen, I think the Japanese have signalled they will sink or swim with the US), Maybe there are resons to think the Euro is as shaky a currency, in spite of its infancy, as is the US dollar right now. And I'm trying to understand what these might be.

One. If it can be counterfeited in large quantities by other countries, without fear of reprisal, doesn't this make it impossible to manage its value? Two. I have understood the paper dollar to be "a promise to tax" the people, to maintain its value. So, if the issuing country is not the one doing the taxation, or if it is, but refuses to do the taxation needed, then the dollar or the Euro is doomed to rise to the sun, burn and crash. Three. Can the Euro, as a basket of currencies, be picked apart by arbitrageurs, arbing for example, gold against the lira, then back to euros at a profit? I'm no expert at this stuff, and maybe I'm not even using the language right, but.. these are my questions.

Maybe these currencies ought to be called Icaruses??

My questions are still out there
Goldfan
PH in LA
Frosty the Childman
Today, after wearing his welcome thin to the point of its being withdrawn, our friend Permafrost challenges us to vote on his banishment. I propose we do nothing of the kind, rather that we hold his feet to his own fire.

After much trumpeting of his philosophical underpinnings in the form of a degree from Cal State LA, Permafrost belies his academic training by consistently demonstrating weak thought processes. "For God's sake man, you actually called me a nut! Was that really warranted? Does THAT fit the guidelines?" he screams, as if he alone is entitled to civility. (PERMAFROST 1/18/00; 8:28:03MDT - Msg ID:23104) Yet on other occasions he berates us with: " TO THE FORUM PARTICIPANTS: Your fawning and obseqious behaviour towards the local gurus places you in the same ship [the Titanic?] as the sheeple you frown upon." Who is he to treat us so? Well, besides his famous degree from Cal State LA, he brags "I've been reading this forum for a month" as if this somehow qualifies him to say: "are we to believe... that the dollar is NOT backed by oil... or ...that it is? The fact is, it is NOT..." Period! No documentation. No discussion. Just an assertion by a graduate of Cal State LA (delivered in an unpleasant tone of voice). He then proudly proclaims: "The only conclusion I can deduce from these FACTS are that you are either trying to surreptitiously mislead your following or simply making an [---] of yourself." What "FACTS"? He offers no facts, no documentation, no persuasion. Mere assertion! At the same time, he objects strenuously to being called a "nut". Does he think that by accusing us of "making an [---] of ourselves" that he has insulated himself sufficiently? After reading this forum for a whole month, he appears to have absorbed so little from FOA that he gets "the nagging feeling that what (FOA) wrote there (Msg. 23098) hurt (FOA's) credibility more than it did anything else." So much for credibility. Frosty understands so little of what FOA so painstakingly offers over a period of years that he cannot bring himself to believe because FOA's credibility is damaged by use of the word "nut"?

These are the thought processes that scream petulantly for the respect and admiration due a graduate of Cal State LA! Well, perhaps they were adequate to merit graduation from Cal State. But they are not sufficient to convince me to place even a single financial asset at risk by heeding them. ORO suggests that "criticism does not have to be constructive for it to be helpful. Particularly as he digs up material documentation". This may be accepted as far as it goes. Yet, where is the much-heralded documentation? Grandstanding for attention with insults and whining "For God's sake man, you actually called me a nut! Was that really warranted? Does THAT fit the guidelines?" provides no documentation whatsoever. It may be appropriate as the posture of an undergraduate philosophy major hoping for a passing grade from his professor, or to impress his girlfriend, herself struggling for a passing grade in philosophy. But it fails to impress more serious thinkers, such as are found here.

There is no reason to expell Frosty. He does not clutter the board with a plethora of nonsense such as Christine offers. He is not stupid. He is just extremely immature... and he does hold an undergraduate degree from Cal State. Perhaps by staying here he can progress onwards towards a Master's degree. If not, we can ignore him. As FOA says, children are tolerated until matters get serious. In the meantime, maybe they will grow up. We were all children once. Most left this kind of behavior behind by the age of 4. Some persist with immature behaviour into and beyond their teenage years. As adult human beings, we can only set an example for those whose actions and handling of themselves have not developed properly.

Let him stay. Maybe he'll learn something.
ORO
Hipplebeck - Business of War
War sees its share of profiteers, the BIS was set up after the war.

DuPont made his fortune in the war of 1812 and the Civil War supplying both sides. Bankers in Zurich managed gold payments for both Nazi and Allied sides in paying for oil and other goods. Many have made fortunes by using their foresight to position themselves for success in the threatening approach of war.

The Irq-Iran war was encouraged and supplied on both sides by all players but for Israel. Germany, South Africa, China, Portugal, Belgium, Switzerland, Soviets, US - all sold armaments into the conflict and got much oil in return. It is no surprise that oil bottomed at $11.60 in Summer 1986 as the war was winding down.
Summer 1986 also marked the end of US independence from OPEC. OPEC imports were 200 MBPM then and are back up to 2500 - a ten fold increase. Furthermore, that was an interesting turning point in all the markets that was later reversed - in 1992-3.

Many data series in the gold and oil industries are no longer collected, they had abruptly stopped in Summer 1997.
Broken Oak
money 'being absorbed' in markets and real estate
Any 'money' (currency) used in markets, whatever markets they are, does not vanish upon the transaction. It simply changes hands. The digits are still out there. That's the problem with this 'money'. Its like a bad penny always turning up again and again.

The problem is when all this debt money is not held but is put into motion in markets.

Right now we have a situation where debt has created a huge ocean of 'assets'(loose currency) on the one hand and a counterpoint of 'liabilities' (debts) on the other hand. The debt money is spent into existence by the Federal Government via 'US GOV Bonds'. The kicker is that these bonds can be monetized by the Federal Reserve Banks (ie - they can be bought off of the market with freshly created 'currency'). Hence even more 'currency' since the counterpoised debts no longer exist. So these repos can double the amount of 'money' in the world literally overnight. After this is done there is no way to 'lose it' again (by paying off bonds with currency and calling it good).

The Federal Gov has $5.75 TRILLION outstanding debt (created 'ex nilo' by the FRBs to pay for federal government deficit spending). The Federal Reserve Banks also have loaned huge sums of 'money' from created 'ex nilo' (out of nothing) to major banks world wide. This is the total 'money' now out in the world. The potential is that these counterpoised debts created out of thin air will in fact be monetized, which will release yet another huge wave of currency out into the world. In fact this is what has been happening as the FRB system has been buying US Gov bonds back out of circulation (ie - exchanging bonds for spendable currency units called 'dollars', repos). One can only presume that the big banks will also be given the opportunity to 'wipe the slate clean' as well. What are we talking about then in terms of total currency? Is $15 TRILLION too large a figure to contemplate?

Right now the American economy GDP is running approx $8.5 TRILLION with a very high velocity rate (dollars change hands quickly). That does not mean that there are $8.5 TRILLION being utilized in the economy, but that the total turnover is that figure. The total number of dollars is much smaller. The domestic price/demand dynamic (current prices/wages as an expression of the need of money, the willingness of people to use money and the relative rapidity if the turnover of money vs. the availability of goods and services) can very easily be upset by a return of excess dollars into that economy (from the world).

Considering that the amount of currency now in play in equities and real estate markets is huge in comparison to the size of the 'real' economy (as much as one can call an economy 2/3rds based on "services" as a 'real' economy) and that currency in play is never 'extinguished' but only being shuffled from one set of hands to another set of hands all day long yet is not going 'out there' to compete with all the other currency being used in the 'real economy' which is used to buy goods and services, I would suggest that this little 'inflation' thingie that AG is concerend about is no minor concern.

As the Euro (and later the ASYe(ua)n) begin to be used along side of the FRB currency (the supposed US Dollar) then nations will have a choice about whether they wish to be part of the US dollar 'equilibrium' game. There are three things which entice a second, third or fourth tier nation to use first tier nation debts (currency): access to markets to sell goods into, police protection and the opportunity to purchase advanced weapons from that first tier nation.

None of these things is now the sole supply of the USA. The French military accords/exersizes with Kuwait in the past week demonstrate that people are shopping around for other vendors. The ultimate result of this will be a major 'disciplining' of the USA by repudiation of its currency in world markets and hence a major return of unwanted US dollars to the domestic economy of the USA, where a new price/demand 'equilibrium' will be arrange.

Unfortunately that will mean a great deal of pain and privation in the USA. Everyone will be a millionaire, but no one will care.
Broken Oak
Counterfieting
One might well ask who is the counterfieter. Is it the bank which magicly creates currency digits in the electronic system OR is it some shmuck who runs off a coule of hundred on his home scanner/laser printer??? This supposes that one can tell who is legitamately creating 'money'.

Is it legitamate to create money based on debt?
Broken Oak
LONG BOND: 67.53 and rising
Like watching the equities markets, only the meaning is much more clear. BONDS AWAY!!!
CoBra(too)
Some need more than persuasion -but
From: newsout@stockwatch.com500.000 oz's covered (may be 1 Q) is a first step to
see the light - and besides it may be
the snowflake starting the avalanche.

TKU CB2

PS: Stranger - your stout inflation
predictions are starting to prove you right.
... and yes I'm a skier and have (co-)
organized the 19th. International Stock
Exchange Ski Championship event in Bad Gastein Jan. 1987
- 850 brokers from 31 world exchanges for a week
in an Alpine Resort! Imagine! - So NYSE followed up
1988 in Aspen ("Lefty Lewis - of Lewis Gavin & Co- Specialists)- See you at Aspen Mountain (BTW. I think the main cableway is called "Silver Queen")or Whistler Blackome.
Better still make it back to either Kitz or Lech. Kind regards.

All: please excuse the personal note - thanks



-
BH
PERMAFROST's attitude
http://www.usagold.com/Canuck Gold and PH in LA

well said


I think, everybody is a guest here and it is not on the guests to organize a voting or to ask the other guests whether one should stay or go.

As far as I have learned it is always the host (and him or here alone) who decides whom to welcome or to refuse -
and to set the rules!

rsjacksr
Monetary Policy
Question for the forumIt appears that the Americas ( Argentina, Ecuador ,Canada, Panama (already dollarized) and whomever else we are not cognizant of, is being pushed, pulled, leveraged (or any other term you can think of, ) into accepting the dollar as their currency.
1) Could this be why old Al has been stockpiling cash for this purpose and
2) What are the benefits or liabilities of such a move.
Are they in fact already partitioning the world into spheres of monetary influence (choosing up sides ????).
See the following site for related article.

More Nations weighing currency shift �..
http://www.washingtonpost.com/wp-srv/business/feed/a59098-2000jan18.htm

Canuck Gold
rsjacksr (1/18/00; 12:14:59MDT - Msg ID:23125)
Excuse me but the Canadian dollar is completely separate from the US dollar, as is the Australian dollar etc. FYI.

CG
ORO
Aristotle - Madness and Method.
ORO (1/13/00; 23:43:29MDT - Msg ID:22870)
Have you had a chance to review my source quotations and references?

I have gone back to reading these memoirs over. A few things that were interesting in the re-read include the fact that the gold window closure was considered as far back as 69 by Burns, who was then part of the BEA. The plan for the mechanics of closing the gold window was prepped by Volcker himself (then at Treasury) in detail at least 4 months before the decision was made. The time reference is ambiguous but the planning started in late 1970. An interesting point was that no Kissinger people were at the meeting where the decision was made.
Leigh
CoBra(too)
Hi, CoBra!! Would you mind checking the link on your last post? I tried to click onto it and got "navigation cancelled." Thank you!
Aristotle
Looking for help from Peter Asher--
Hi Peter,
Having read your Msg ID:23103 which was directed to Goldfan, I find that I'm not left with a peaceful, easy feeling about some aspects of the nature of our modern currency as you've described it. Let's walk through point by point and I'll share my thoughts. You and I almost certainly use the same currency along with millions of others, and it is our various individual perceptions about this currency that surely give rise to our differing actions when we are fortunate to find ourselves with excess currency resources.

Your words are in "quotes":

"The only thing that truly backs any fiat currency is the ability of the issuing nations to deliver the goods and services entitled."

I would agree insofar as this--at the end of the day, when the currency has been spent, the "backing," as you've chosen to see it, is finally revealed. In my own perception, until the currency is spent, the only "backing" it has is the collective borrowers' commitment to repay their loans to avoid the consequences of default. If you remove honor and remove "consequences," you'll soon find your currency has nothing behind it.

"A bank note, unredeemable in gold or silver, is simply a "Purchasing right" for product."

Peter, this notion of "right" is what doesn't sit naturally in my mind. I don't see how holding a dollar is a "right" even under the most optimistic evaluation of the currency. Thomas Jefferson assures us that we are each endowed by our Creator with certain unalienable rights--Life, Liberty, and the Pursuit of Happiness being among them. In the spirit of this grandest notion of unalienable "rights," I see the dollar holder having only the right to continue to hold that dollar, to fold it, to put it in his pocket, to tuck it behind his ear, to drop it on the ground, or to try to spend it. In this act of trying to spend it, we can see that it comes up woefully short of commanding any kind of legal right or claim. Prices can double overnight, and there is no "right" built into what a dollar may purchase that offers any protection at all. To repeat, the "backing" is only revealed after the purchase has been attempted and successfully discharged with the currency. A dollar that was revealed to buy shoelaces today truly carries no purchasing "right" to buy those same shoelaces tomorrow.

A better way to look at currency than as purchasing "rights" would be to see them as purchasing "receipts." They record after-the-fact what was received for goods or services rendered. When you build a house for someone, and receive your payment in dollars, these dollars don't carry any "right" for you to purchase shoelaces. In a stretched example, wild hyperinflation could render higher prices for tomorrow's shoelaces than the house you built today. Clearly, the dollars only represent what YOU RECEIVED for YOUR past effort -- a simple ledger entry or slips of paper. If the dollars were received as part of a loan, they they merely represent, once again, what YOU RECEIVED for YOUR promise to pay them back somehow into the future. Anyone struggling with legal tender laws need only to recognize that dollars have been blessed by legislative decree that they can't be refused in the discharge of a debt -- BUT that says nothing about the price that the merchant might elect to charge on any given day.

"If the Euro adds to the member nations on whose production it lays claim to, then it's value becomes altered according to the economic strength of the newcomers."

Once again, Peter, unless you can convince me otherwise, I don't see how production can come under "claim," by a fiat currency. As described at the top, other than the commitments of those who actually borrowed the fiat currency, its regional value in trade need not be necessarily affected up or down based on the economic particulars of the region. Just as dollars printed in Washington can be seen to have higher purchasing power in Latin American nations, so too could euros printed in Frankfurt trade more dearly in the "unproven Eastern European countries" that you and goldfan were discussing.

To bring this all back to Gold, Gold is value-wise superior to fiat currency because it represents payment in full, and various contractual defaults by various strong OR weak entities only serve to make it grow ever stronger.

Gold. Get you some. ---Aristotle
rsjacksr
RE:Canuck Gold (1/18/00; 12:23:31MDT - Msg ID:23126)
Excuse me but the Canadian dollar is completely separate from the US dollar, as is the Australian dollar etc. FYI.Dear Canuck,
is it possible you mis-read my post or am I mis-reading yours??
rsjacksr
Gold UP
http://www.bloomberg.com/welcome.htmlGold UP $4.80 to $289.70
CoBra(too)
Sorry for bad link
Hello Leigh,
Thanks for notice.
In short it was a Globe & Mail article re.. Barrick from a CIBC analyst (Cooper) noting the underperformance of ABX vs some unhedged producers.
He estimated that ABX will add another 10moz of AU to their reserves in this quarter. What was new was that ABX is re-thinking their hedge srategy and will cover 500.000 oz's this quarter, bringing teir total forward position down to 13.5 moz!!!
GREAT - they're starting to get the message!

BTW-Leigh - I see some signs of the last sturdy gold bugs throwing in the towel. Today I was offered to take over the only German gold mining journal (13 y's publishing record), which I will - regardless of time consuming efforts. Have a great 2000 dera lady L.
Galearis
gold deficit for this month
I am almost hesitant to interrupt the fascinating fiscal and other philosohical discussions on this forum, but in all my visits throughout the various website lands and other media sources I have not heard for some three weeks any announcements of liquidity dumps by any CBs that are meeting the 180 odd ton gold demand for the past four weeks.

Or is some group doing this very quietly so as not to disturb the market too much? I say this with an element of sarcasm of course.

Lease rates indicate either a short attack is due in the very near future - or few are leasing at all.

At any rate, this little rally (I can say this because it has breached the $2.00 day rule for our controlled gold market :^O. We all wait with bated breath, yes? My hopes are not straining up, however.
Canuck Gold
rsjacksr (1/18/00; 12:56:07MDT - Msg ID:23130)
Well, I guess it depends on what you mean by 'dollarization'. As someone recently posted, we should attempt to make our posts unambiguous to avoid misunderstandings. There have been some musings from some quarters (though taken seriously by very few) that Canada adopt the US dollar but that is purely conjecture. The current cultural thinking in this country is not pro-USA (I was going to say 'is anti-USA' but that would have been too strong, but you get my drift). It won't happen in the near future (I doubt it will happen in my lifetime) and if the US dollar tanks, it will undoubtedly effect the Canadian dollar but not to the same extent.

In Canada, there is a strong desire to maintain a separate identity from the US. Canada retains strong links with Europe and there have been talks of us entering into a form of free trade agreement with the EC, separate from any involving the US. In the event that the US declines, Canada will undoubtedly increase trade with Europe to replace any trade lost to the US.

I don't really believe that countries will start to choose between either the US dollar or the Euro. They'll do whatever is in their best interest and right now, their best interest lies in finding a medium for trade settlement that will not be adversely effected when the US dollar declines. As anyone who follows this forum will be aware, TPTB in the US are calling in all their markers and manipulating the markets to delay the inevitable in the hope that they can find a way out of the mess they've created for themselves. Unfortunately for them, the hole is just too deep.

CG
Aristotle
For ORO
"Aristotle - Madness and Method. Have you had a chance to review my source quotations and references?" --ORO (1/18/00; 12:35:56MDT - Msg ID:23127)

I did, ORO. I'm glad you took my comments in the constructive light with which they were offered. To reiterate, my comments, then and now, were to raise your awareness to the interpretive pitfalls (seeing method in madness, and vice versa) so that you would be perhaps better able to walk the firm path of historical facts, focusing on the outcome moreso than the motive. To be sure, wherever good fortune and position has given you a glimpse behind the scenes for solid insight into the motives, you can use this knowledge to enhance your historical reporting and to focus your investigative energies in fruitful directions. Clearly, the best "degree" to qualify someone as an event's historian is the B.Th degree -- Being There. A privilege share by a precious few.

Speaking of Being There: Kissinger. You said, "The plan for the mechanics of closing the gold window was prepped by Volcker himself (then at Treasury) in detail at least 4 months before the decision was made. The time reference is ambiguous but the planning started in late 1970. An interesting point was that no Kissinger people were at the meeting where the decision was made."

You're absolutely right. As I, too, mentioned in my long post, Kissinger was not there at Camp David as the momentous decision was made to terminate the Gold convertibility of the dollar under the "New Economic Policy." Along with the absence of Kissinger's National Security Council, neither was William P. Rogers's State Department invited to participate in this final development. They were completely in the dark and taken by surprise. When word reached Alexander Haig (then Deputy National Security Advisor) that day of the decision made at Camp David that day (Sunday August 15, 1971), he reportedly phoned Robert Hormats (then staff economist for the National Security Council) at his home and said, "Bob, they've devalued the dollar up at Camp David. How important is that?"

For someone that was unsure of the importance of the decision, at least Haig chose the right terminology--they "devalued the dollar." In fact, they devalued the dollar all the way down to zero Gold weight--completely bankrupt.

Present at the Camp David meetings were John Connelly (Treasury Secretary), Paul Volcker (Undersecretary for Monetary Affairs), Aurthur Burns (Fed Chairman), Paul McCracken (Economic Council chairman), George Shultz (OMB director), Bob Haldeman (White House aide), Peter Peterson (Commerce Secretary), Herbert Stein (on the Council of Economic Advisors), and William Safire (White House speechwriter) -- as reported by Washington Post economics columnist Hobart Rowan.

So while an elite group was "in the know," our outreach arm was caught completely flat-footed; and Hormats, who had plenty of worldly political experience, was said to be stunned and knew that America's trading partners were also in the dark, and would not be pleased--to make an understatement. Haig met with Hormats in the White House later that day, and together with Volcker when he returned from Camp David they hastily prepared official statements for Japan, Germany, England, and France explaining the "development." When Hormats called Sidney Weintraub at the State Department to coordinate this effort, Weintraub was found to be in the dark. The U.S.'s own State Department was then added to the long list of nations' capitals needing briefing on the fateful decision. Absolutely surreal.

Here's a another glimpse at some of the poor grasp of matters and the loosely coordinated madness of the day, revealing that Gold was never intended to be gone for good. This is an exchange from the Nixon tapes between President Nixon and Bob Haldeman nearly a year later on June 23, 1972.

Bob Haldeman: "Did you get the report that the British floated the pound?"
President Nixon: "I don't think so."
Haldeman: "They did."
Nixon: "That's devaluation?"
Haldeman: "Yeah. Flanigan's got a report on it here." [that's White House assistant Peter F.]
Nixon: "I don't care about it. Nothing we can do about it."
Haldeman: "You don't want a run-down?"
Nixon: "No, I don't."
Haldeman: "He argues it shows the wisdom of our refusal to consider convertibility until we get a new monetary system." ******DID YOU GET THAT?******
Nixon: "Good. I think he's right. It's too complicated for me to get into. ...[unintelligible comment]...I understand."
Haldeman: "[Fed Chairman Aurther] Burns is concerned about speculation about the lira."
Nixon: "Well, I don't give a f@<% about the lira."

Just a little perspective-building food for thought.

In response to the text you offered following my comments, I liked it very well--a good historical presentation. It was delivered very well, and avoided the pitfalls toward which I was waving a cautionary hand. I'm confident you can in this fashion successfully deliver your important and valid message without the need to build the case of motives and deliberate (yet "unprovable") policy decisions. Regardless of the specific steps taken to get us here, the snapshots of our location remain the same. Your camera captures such detailed images of the facts and figures of the landscape at hand that your niche is secure. Keep in mind that my thoughts to you are offered under the assumption that you are working on a book for publication. Where it comes down to the thoughts you serve up for the forum, the nature of the media would certainly allow you to interpret "out loud" the motives you perceive behind the facts. Far be it from me to curb your analysis. Again, I completely approve (book-wise) of the flavor of that latter post. Discussion-wise, they are BOTH well at home on the forum here.

Gold. Get you some. ---Aristotle
Cavan Man
To Aristotle
Ari, if you're still out there.....

Great last post! Also, I read your five part series for about the fourth time today on a quick junket; simply teriffic!

Thanks so much.
Canuck
@ Permafrost
We have never spoke so please consider this like a
'third party' opinion.

FOA did not call you a nut (23098); if his analogy has lead you into that belief perhaps you doubt yourself. I saw his message as a 'bait' and you took it hook, line and sinker.
Perhaps he was alluding to your conduct and possibly not, I am not FOA so who am I to make that call. You made the call.

I am in agreement with Mr. Asher; your post to Oro ('Lord Oro') was agressive.

You seem a smart person; why have half of the people on this forum on your side, why not 'take' them all. It is YOUR
choice amigo.
JLV
Speculation
Since we seem to have established a new Gold/Oil ratio of 10 to 1, anyone care to speculate on the POG if oil goes to $37?

Looking around it would appear that Y2k disruptions are a real thing. Also it would appear that Saddam has been dealt a whole handful of aces.
R Powell
Mr. Backlash Re gold option
You are correct in equating an option with a derivative since the option's value is determined by the value(price) of the commodity for which it is an option. Buying an option requires paying a premium (purchase price). This is a one time fee not to be confused with selling an option! Onced purchased, the option's value can increase or decrease as the the dollar price of gold(in this case) moves up or down and the option may be sold at any time until it's expiration date. The contract on gold is for 100 oz. A good introductory book about the basic workings of the futures market is "How the Futures Market Works" by Jake Berstein. Basically the option in question gives the right to buy 100 oz. of gold at 400/oz. anytime during the next 16 months. Not a bad deal if gold goes to say $500, but a total loss if gold never exceeds $400. I believe all this to be true but I'm not a broker or financial adviser and caution should be exercised.
goldfan
Aristotle ... Currency, what is it? Whose is best?
Aristotle (1/18/00; 12:40:54MDT - Msg ID:23129)

Your note to Peter Asher,

Sometimes I imagine starting my own bank, beginning with a stash of gold, I invite others to deposit their gold, and then I issue them letter of credits so they can identify to others that they can pay for goods and services provided and have the means to pay up, without having to transport their gold everywhere they go, and try to keep it safe. These letters of credit are currency. People will want to use my bank to the extent that I am known to be honorable, to meet my obligations, always have enough gold on deposit to meet whatever demands are made that day. All this relevZAnt to your comments about honor.

We use to think of currency as promises to pay on demand, a certain amount of money, gold. Nowadays we simply print currency, as much as we need to get the stuff we want to consume now, postponing saving, and postponing payment, and keep on deposit the promises of people to pay it back. This currency is not always accepted everywhere we go. It's impossible to use Canadian dollars anywhere in the US,except along the border and in parts of Florida or maybe Las Vegas.

Banks today issue their own money, credit cards and debit cards. Even grocery stores around here are issuing them. So currency is not just paper, it's also electronic records.

What currency is worth, is how much of what can be bought at the time. What stored, or saved currency is worth, is the price that that day will be paid for the instrument in which it is stored and what that price will fetch, in Stradivariuses, or beef cattle when we try the exchange.

So I don't think that currency is a right, either to purchase, or as a receipt. As a receipt it measures only what has been bought, and isn't even there, only the "receipt" of the transaction, not the currency, is left behind with the goods.

For now I like the idea that currency represents a promise to pay, or on the part of governments, a promise to tax.

Our currency today is not a promise to pay anything. That is a major flaw. It still is a promise to tax people in order to maintain its purchasing power. It's been a long time since this promise was kept in respect to any existing world currencies. I wonder how soon the promise by the European Community, to tax its members to maintain the value of the currency, will be broken?

Sorry FOA
I don't trust the Euro either and I don't think anyone but some central bankers do, or some currency traders who are always happy to have a new token to gamble with. "People" won't use it. Maybe if I can believe myself and you and ORO and others, "people" will begin to greatly distrust the dollar too.

Maybe they already have. The reason why a lot of people are desperate to convert and mortgage everything they own for dollars for investment in stock, is perhaps that they are trying to get rid of dollars as fast as possible, to make a huge stash as a hedge against the lack of income for them, from slower, less "profitable" and therefore to them, riskier old-fashioned forms of saving. And also, for many, to deny the future is coming, and to try to get all the juice possible out of life right now.

Eat drink and be merry, for tomorrow we will be poor.

Nothing is good as gold.

FWIW
Goldfan
Aristotle
Cavan Man, "Great last post! Also, I read your five part series for about the fourth time..."
I'm glad you liked my most recent offering as well as you did. In light of your other comments about re-reading the long post, I can imagine why--this recent post was delivered very much along the same lines, wasn't it? Digging up little tidbits of history, "reminiscing" over the snapshots taken during our journey from "there" to "here."

I'm glad you've found the post to be useful. I can unequivocally say that an understanding of that information as conveyed in the series has done more for my peace of mind and quality of life than any other body of knowledge I've ever had the good fortune to encounter. There's(hould be) more to life than sweating daily over the Wall Street Journal. Coming to terms with the nature of our money allows me the freedom to simply buy Gold and forget about the talking heads on TV. I'm preparing a post (not sure how well it will turn out) that was inspired by a conversation I had a few weeks ago with mhchuck (sp?) in which I suggested for the purpose of our conversation that we afford ourselves the latitude to build the perfect monetary system. The current post is meant to be a better presentation of something I posted on January 3, following some comments I had offered to you regarding the question you posed on my long series of posts.

Thanks again for the nice words. I hope your reading brings you some small measure of the same comfort that I've enjoyed.

Gold. A no-brainer, and a time saver. ---Aristotle
R Powell
Town Crier or MK or anyone Re Germain gold coin
Questions please-- The Germain gold coins being minted, are they Germain marks or Euro cions? I had thought that the Euro was going to replace individual Euro-countries currencies. What will be the denomination of these coins? How much weight and purity of gold? Won't gold coins effectively place the currency on a gold standard? Won't every tourist or visitor leave with some in his pocket? Or are these coins not intended for general circulation? I seem to recall that Euro currency and coinage was due for general circulation starting this year. Mr. Kosares, will you have any of these for sale if they are indeed commenrative as I have no immediate plans to be in Europe anytime soon?
goldfan
New German gold coin
If the new German coin is not denominated in Euros but in german marks, then it will be a constant source of arbitrage against the % of the Euro said to be the "marks", Won't it?? So won't this kill the Euro??

What is the matter with my questions about this "basket of currencies", are they irrelevant? As irelevant as the CPI, which is a basket of itmes said to represent a whole economy, but easily manipulated to the point where it is not worth a d...

Maybe if I insult somebody, I'll get a response.. (rueful smile)

Goldfan


Aristotle
Been working all day toward getting to this response to Al Fulchino
Hi Al. Your comment in (Msg ID:23100) to Solomon Weaver caught my eye early on as I scanned the day's posts. As you can see, I got distracted in my effort to type these thoughts for you.

Solomon W. had said, "what I now realize is that contrary to Europe, America had the ability to print money and take on massive debt.," to which you, Al, made the asstute obsrvation:
"I have always been under the impression that European Central banks could print money just as we do and that they also had debt. The numbers may be not be as high as ours. If what you say is true, then I understand your point. But if my assessment is accurate, they can also print their way to the paper brick road. If you can clarify, if you have the time or anyone else can I would find it useful. TIA"

You are right--these other nations can all print/create currency just like we do. It springs into existence through borrowing, by both governments (through bond issuance) and citizens (through mortgages, etc.)

The single most important distinction, that makes their efforts at currency creation UNLIKE our own, is in the use of the currency, not in its creation. Whereas the dollar's status and use as the world's key reserve currency allowed it to be created locally and shipped abroad--and thus hiding the otherwise expected effects (higher prices/lower dollar value) of this growth in supply (inflation)--this luxury was not share by the other nations. Any additional currency they locally created stayed local, and therefore over time tanked in value if they failed to responsibly balance their books--such as through positive trade settlements. Any other nation echoing America's fiscal policies--but without the luxury of reserve currency status--soon enough finds themselves to be holding a failed currency. (Lot's of zero's on the bank notes.) The great reckoning occurs when reserve status for the dollar unwinds.

Gold. High ground in a rising tide of dollars. ---Aristotle
DAYOOPER
Poor Old Solomon
Could you provide info on the solar system you spoke of yesterday? I'm hoping to build a new house this summer here in the woods and would like to see if technology has finally perfected a system to handle our tough winters.

"PERMAFROST" From my deer blind I see value in your participation in this forum but the feeling I get from your writings, at times, makes me question your sincerity. Some of the rumors you speak of, in particular your statement about Kennedy, I heard during my Vietnam years. But the antagonistic method in which you approach this forum really isn't warranted and seems beyond a man with your education and ability to write.

TO THE FORUM!

Anyone remember when the price of gold and silver was on the morning and nightly news every working day? Gone!!!!
goldfan
SteveH re ESOPS
SteveH

something I found by you on the Stockman forum, concerning ESOPS
you said:


Stock price rises above option strike price.

Employee buys options by loan or spare cash.

Company issuing option makes bookkeeping entry at tax rate
of employee.

Effect of entry is to book cash and a profit.

Companies profit rises by percentage of option.

If company was at a net loss, this entry could throw it into
profitability. Employee likely tries or does sell stock as
price of stock moves higher in order to pay back loan.

As you can see this scheme only works to help company and
employee in a rising stock scenario. If the stock were to
trend lower for a quarter or more, then no options would be
struck by employees, no addition to companies bottom line
would be booked, finally the share price would lower, and
the cycle would build on itself. So far the tech stocks have
not passed through this downward spiral door, yet.

I don't understand what you've said here.

As I get it, the ESOP's work like this;

Company issues, not sells, stock options to employees in lieu of some wages. Options are the right to buy stock at a certain price.

Employees later, one year usually by law, exercise the option. That is, they buy the stock at the option porice, which puts money into the company's books as cash, and gives employees the stock.

Employees then sell the stock sooner or later, to gain the profit of the difference in price between the market price and the option price. This sum, all the capital gain, must be declared by the employee as personal income to the Fed Revenue, for tax purposes.

The company gets to declare the sum gained by the employees as expenses, as if the company had paid it!! so reducing their corporate income tax, but here's the joker, the company doesn't have to declare the "wage" as an expense on their books, so their net earnings is increased by the amount of the tax saved, but not decreased by the amount of the "wage" expense!!

According to ORO and others, this means, by the magic of P/E ratios, that a rise of $1.00 in MSFT this year, will automatically give a rise of $7.00 next year, if the P/E ratio holds constant, a true pyramid scheme!!!

Until the stock drops, when the whole thing unwinds and the earnings drop to losses, and the P/E goes into the basement, and MSFT owners are left holding 10cent on the dollar paper.

Am I right??

Goldfan
lamprey_65
Coincidence? I don't think so...
Noticed something today...

Looking at monthly charts, the low for gold was approximately $255 last year.

The low for the Commodity Research Bureau Index (CRB) was approximately 185 on the monthly chart.

The CRB closed today just above 209, up 12.97% from those lows...

Spot gold is now around 288.50, up just over 13% from its lows

Seems POG is now mirroring the CRB

Lamprey
TownCrier
Deutsche Bundesbank Press Release: Minting of a gold coin
Frankfurt am Main, January 17, 2000

The Central Bank Council of the Deutsche Bundesbank has discussed the minting of a commemorative gold coin to be issued in 2001 to mark the withdrawal of the Deutsche Mark.

The proposal envisages the issuing of a commemorative DM 1 coin in gold, the design of which will largely be the same as the DM 1 coin in circulation. Instead of the inscription "Bundesrepublik Deutschland", however, it would bear the legend "Deutsche Bundesbank". A gold coin with dimensions (diameter, thickness) identical to those of the DM 1 coin in circulation made of fine gold (999/1000) would weigh 11.85 g and thus significantly more than the corresponding coin in circulation (5.5 g). The selling price would depend on the current price of gold. Given the present price of gold, the selling price would probably be between DM 230 and DM 250 for each gold coin. It is envisaged that one million pieces will be minted.

The gold coin is intended to offer interested members of the general public the opportunity to acquire a unique and lasting memento of the Deutsche Mark. The net proceeds would be used to set up a foundation to continue fostering the general public's stability awareness in the field of monetary policy, which is associated with the Deutsche Mark.

The Deutsche Bundesbank will forward the proposal to the Federal Minister of Finance, who is responsible for initiating the requisite legislative process.
------
Sir R Powell, I trust this answers many of your questions.

Sir Goldfan, there is no "basket of currencies" in the euro (the exchange rates have been irrevocably fixed among the member currencies...1.95583 DEM = 1 euro, always), and there would be no arbitrage between this commemorative gold mark coin as a mark currency unit against the price of gold or against the euro.

Back to Sir R Powell...the legacy currencies may remain up until mid-year 2002. Introduction of the physical euro tender is slated to begin January 2002...off the top of my head.
RossL
Goldfan

You left out one of the scary parts. The ESOP companies write puts on their stock and sell them cheaply. This produces income. Investors then use these cheap puts as insurance against declines in the stock price. They buy, buy, buy the stock thinking they have hedged their risk. When the price goes down as you say in your scenario, it all falls apart. The real risk is the possibility of steep corporate losses on the puts. The losses would crush the share price even faster. Possible default on those put options that investors view as insurance.
ORO
Aristotle - Madness in Madness
The administrations have political levels and technical levels. The Politicos stand in the dark most of the time. The breadth of power makes mastery of issues next to impossible. The bureaucrathan - particularly its recognized technical leadership - make the decisions by coordinating the argumentation in front of the politicos. Unless given to uncontrolled bouts of competency, politicos go along and make the decision that will get them out of the recurring meeting(s). On rare occasions they may have an honest advisor to give opinions. Usually, the advisors coordinate with the rest of the bureaucrats.

The politicos do not actually have power unless they have a trusted clique and a true vision of what they want to accomplish. This rarely happens beyond the narrowest fields of interest.

The mad hatters can be dead without the bureaucracy skipping a heartbeat. Wilson was reputedly in a stupor for the last year of his life with the country being managed by his wife and a cabinet member.

The top bureaucrats are often involved in the revolving doors between their agencies and those they regulate, or control. The deals can be cut by a Chase VP (Volcker came from Chase) or a Morgan high official (Greenspan was a Morgan director) and come into existence as an idea in the treasury, the congressional committees, the BEA or the Fed with no apparent cause.

Volcker prepped things as he felt they should be. Buzz around the issues was making itself felt among the monetary folks. The options were explored in a memo he had made for him before. He did not use his own staff in the prep of the original memo nor in coordinating the elements of preparation for the game of presenting the options for the president's (or cabinet secretary's) decision.

The politicos make little of the policy.


Thanks again for the efforts you put in to the commentary. Much appreciated.
R Powell
Town Crier
Thanks!
USAGOLD
RPowell....
With the number of German Americans we count among our clientele, there is no question about this coin. If the Germans make it and offer it in the U.S., we'll handle it. Thanks TC for the timely update, and thanks RPowell for your interest.

On the euro, I come down in the "prove it to me" camp -- to bring up a sore subject (camps). I think the euro might at least become for awhile a better fiat currency than the dollar, but it's still fiat money. At the same time, the advances we have made in the gold market in recent months can be traced directly to the euro, the European central bankers and the euro's hard-won gold component. So now we have some political allies -- and powerful ones at that. I don't think any of us should casually dismiss that. Overall though, I'll stick with the yellow and the the philosophy which attends. The one thing I will attribute solidly to the euro is that it brings us a very important step closer to the concept of gold money (nationalized). And ultimately, that might be FOA's point. I have given up on the "all or nothing" concept. I can live with gradualism, but, at the same time, I understand that the road to gold money will be long, hard and require the persistent vigilance of the enlightened (and perhaps that is Permafrost's point). That's where this Forum comes in -- I can assure all our readers and participants that the knights and ladies gathered here will not let their guard down....not for a moment. I don't see a great deal of difference between the two positions presented here, but perhaps I'm missing something. If I am, it wouldn't be the first time. When it comes to camps, I think most of the important thinkers here come down on the same side -- gold money disassociated (as much as possible) from the political sector. Then perhaps we will no longer have the right applauding the left for coming up with a government debt charade that keeps the public taxpayer completely in the dark. That would indeed be a blessing......You have to ask yourself what would Ronald Reagan be saying about the nonsense going in this political election. Would he remain silent while both political parties bamboozled the public that there is no deficit, no inflation, no government waste? No choices? I doubt it...
goldfan
TownCrier (01/18/00; 19:12:10MDT - Msg ID:23148)
Sir Town Crier,
You said:

Sir Goldfan, there is no "basket of currencies" in the euro (the exchange rates have been irrevocably fixed among the member
currencies...1.95583 DEM = 1 euro, always), and there would be no arbitrage between this commemorative gold mark coin as a mark
currency unit against the price of gold or against the euro.

You imply there is no arbing against the Euro possible. What about this, (whether the coin, or Au, is not material). Say I can buy gold for 600 dm per oz. because the people like dm and aren't willing to part with them except for a lot of gold each. And, the Euro is out of favour because of the behavior of the French, say, too much welfare, not enough taxation. So, an Oz of Au will fetch me 350 Euros.

This means, if I go out and buy, with 600 dm, an oz of Au, then I can sell the Au for 350 Euros, and convert my 350 Euros into 1.995X350 = 698 dm!

Which I can then convert to 698/600 = 1.63 oz of Au, and on ... and on... a gold making machine. If you object that the situation will never be allowed to get like this with the dm and the Euro, then I will be able, for sure, to find one of those currencies where I can do it. Why not??? How can they control all the ratios in the Euro, and the value of each separate currency against gold, and the value of the Euro against gold, simultaneously?? They can't. They have to eliminate the inidvidual currencies, which I don't believe they have plans to do? ( I don't know) Perhaps they will declare that only the Euro can officially buy gold. We know there will spring up a black market to defeat this.

FWIW

Goldfan
lamprey_65
More on our hypothetical CRB/POG relationship
Ok, yes I know gold is part of the CRB Index...with that out of the way -

The CRB index peaked in May 1996 at 263.79
POG peaked in February 1996 at 418.40 (not sure which market, possibly LBMA)

The CRB reached its bottom in July 1999 at 182.67 (actually this was part II of a double bottom - first bottom in March 1999)
POG reached its bottom in September 1999 at $251.70 (bounced off $251-252 area from July-September)

Timing of CRB high/low approximately matches POG high/low...so far, so good.

CRB fell 30.75% from its highs
POG fell 39.84% from its highs

Now, I know this doesn't EXACTLY work this way (wouldn't it be nice!), but according to our correlation, POG never should have fallen much below $290 (you can thank the publicity of the BOE sales for that). Both have bounced just over 13% from the approximate lows I gave on my last post. I still want my 13%+ percentage move from this $290 bottom! I want my $328!

Does $328 sound familiar?...that's in the range of the last spike, last October - the CRB was at 209 then (where it closed today). POG should be $328....NOW!

Lamprey
Peter Asher
Ari, Goldfan, Solomon, Journeyman ---ORO?
Legal Tender!

Fiat money is a "Purchasing Right" when an economic system functions by goods and services being offered in a price defined by the legal tender of the realm. The quantity is not a right, but the right exists to demand goods at the offered price by handing over the requested amount of currency.

The fact that this fiat (Money of faith) can suffer loss of value by various events does not negate this. It seems that the potential for extensive or total loss of exchange value is being used to say that the right itself does not exist.

Production and currency compete for each other and unspent value fluctuates accordingly, Only when there is a major breakdown due to various excesses is value fully lost. I would define Currency is a right to acquire at a demanded or negotiated price, and Asset Money (Gold etc.) as a right to value itself.
R Powell
Debt, credit and what bursts bubbles
A not so cheerful article from vrongky at gold-eagle www. gold-eagle. com/editorials 00/droke 012000. html
ORO
Peter Asher - legal tender
The idea is that when one is offered a particular medium as payment in particular quantity, the purchase is consdered concluded, and the transaction settled. The medium is the tender, the quantity is the price. Since it is a matter of law as to what constitutes a medium of payment, it is called legal tender.

Rather than the banknote providing you with a right, it is the medium by which the government imposes a legal tender law that obliges the seller to accept the banknote at some price. This seller's rights are infringed in order to give the banknote (or electrofiat) a value. That is all it is.

The note says that it is legal tender for all debts public and private. When you make a purchase you create a debt until payment is made to settle it. The payment is tender. The legal standing is that a legal tender settles the debt in some quantity. Often the quantity is set by government as well. Resorting to this last kind of rule-making, is the sign of dishonesty. If the government did not expect the requested price to be higher (and continue rising) it would not have attempted to dictate the price.

Nixon's wage and price freeze was essentially an attempt to force all to take the dollars at a set price, so that the government can assure it gets more real goods for the extra currency it prints up. Their imposition implied that Nixon did not expect Americans to take a devalued dollar at the same ratio they did when it was redeemable in gold (at least outside the country).
TownCrier
The GOLDEN VIEW from The Tower
Have things changed in Euroland?

Throughout the first year of the euro (1999) the European Central Bank's policy toward their gold assets called for a quarterly revaluation, marking to market at the end of each 3-month period. This, however, appears to have changed...replaced by a market revaluation every 2nd week. Here is the evidence, submitted for your careful review and assessment...

In our GOLDEN VIEW of January 6th, we reported:
"Yesterday, the European Central Bank released its weekly financial statement for the week ended December 31st, which has significance to us for two reasons. First, the numbers reflected the 27 million euro reduction in gold assets as a result of the three tonnes of Dutch gold that was moved that week through the Bank for International Settlements. Second, and more significantly, the quarterly revaluation of the remaining gold assets more than compensated for this 3-tonne reduction. Despite this sale, the total gold assets of the European System of Central Banks rose by a net 1.765 billion euros, now at 116.483 billion euros."

And now we flash forward two weeks to today:
FWN reports that that the release of the weekly balance sheets reveals that the Dutch Central Bank moved another 11 tonnes of gold last week ...100 million euros worth for the week ended January 14th. HOWEVER, the ECB's balance sheet revealed that the gold assets of the ESCB climbed, in spite of the sales, by � 29 million to 116.512 billion euros. The FWN headline says is shortly and sweetly, "ECB gold assets change on revaluation up, 11-tonne gold sale." Looks like the pace of things are picking up. (By the way, of the 100 tonnes the Dutch bank said they would sell during this first year, since their December 6th announcement they have quietly and easily placed 41 tonnes so far through the Bank for International Settlements.

In the first day back in action following the Martin Luther King, Jr. holiday, a healthy appetite for gold helped to lift spot prices to $288.40, up $5.00 from the previous closing in NY trade (Friday.) Derivative traders lifted the settlement price of the February gold futures contract by $4.70 to $289.50 per ounce...nearly a three-week high amd 30� from the top of today's trading range. Brokers told Bridge News that initial buying came from a couple of large NY based trade houses, and others who had been selling ceased to do so in the face of the persistent rise. One trader said, "They were unwilling to hold shorts late in the day."

FWN offered this good commentary from a chat with James Steel:
+
James Steel, analyst at Refco, agreed that gold was supported by good
trade buying. Also helping Tuesday was a slight pullback in US stock
markets and the dollar, he noted. However, overall these markets have been
strong recently and have had limited any upwards movements in price, he
said. "The strong stock market and dollar are major overhead resistance
and the reason gold is below $300," he added.
+
Steel said that gold physical demand over in Asia is
strong, given that there was a good agricultural harvest in India. Also,
the approach of the Chinese new year is typically a time of strengthening
demand, he said.
"Asian economies are reviving quickly and the market is unconcerned
about the Dutch central bank sales which are easily absorbed," Steel
noted.
[It's always good to see an analyst with an eye on the all-important international gold scene...]
***
(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 Fed said today that they added another $8.985 billion to banking reserves through overnight system repurchase agreements. And while we're in the Fed world, we might as well mention that the 30-year bond closed lower once again, dropping 25/32nds in price. The yield has now climbed to 6.742%, and yet takers remain hard to come by.

OIL

Also on their first day back from the long weekend, American energy traders helped NYMEX oil futures reach a new 9-year-high, February crude cliimbing 83� to close at $28.85 per barrel. Bitter cold weather in the Northeast supported the market sentiment, as did comments by Venezuela oil minister Ali Rodriguez regarding Iraq. It's been ten years since Iraq last participated in OPEC accords due to UN controls over exports in the post-Gulf War era, but with the elimination last month of UN's output ceiling for Iraq, Mr. Rodriguez indicated that Iraq may be interested in participating with the others. The only sanction remaining by the UN is that the proceeds of oil sales continue to be directed only toward humanitarian needs.

And that's the view from here...after the close.
tedw
Bank of England Auction
http://www.usagold.com
Will the upcoming B of E auction be a non-event, negative,or positive for Gold. Opinions? What is the date of the sale?
Al Fulchino
Aristotle
Thank you for your response. It has been awhile since we have talked. Hope time finds you well.

I understand all of your answer. And like you, I see what is coming. And I see where FOA's thoughts regarding the euro and oil lead us. Now, the huge question is can we head off the destruction of the dollar's reserve status? I think the answer even at this late stage is yes. But, it involves backing part or all of our dollar with gold and maybe silver. As I see it everyone will want to own a euro if it has any true gold backing at all. Of course, even this will be possible to abuse if the CB's so choose. All the more reason to have a competing currency such as the dollar. And a strong true valued dollar at that. I am likely preaching to the chior here and may be a bit simplistic, but we have only two roads here in front of us. Compete with the new currencies that will emerge or drown ourselves with corrupt practices of dollar creation. It is very analagous to the three shell game played in Times Square. We tease the world with our currency, and when they pick the shell that they think the dollar is under, they find nothing. Then with slight of hand we put a dollar under an unpicked shell and say'" See!",and they keep playing until a friend who is watching catches on and warns his friend. We could have chosen the role of benevolent dictator of currencies. Instead we have chosen selfishness. I think Michael said he is willing to gradually move towards something of a gold standard ( I may have been a bit loose there, but I believe I am close enough to the mark). He will either see us move that way or things will get worse. It truly depends on having people of strong character in positions to see the value of true money that does not cheat from the widows and orphans. What a concept!
schippi
XAU & FSAGX Chart
http://www.SelectSectors.com/xautoday.gifFSAGX continues it's local Uptrend.
TownCrier
More for Sir Goldfan...and an extra comment for MK
After articulating your interesting example, you brought the vital point into focus when you asked, "How can they control all the ratios in the Euro...?"

That's one I think I can answer to your satisfaction. Think of the various legacy currencies (all eleven of them...French franc, German mark, Italian lira, etc.) that have been fixed to the euro in the same way that you envision here in America the five "currencies" which are fixed to the dollar and better known as the Lincoln penny, the Jefferson nickel, the Roosevelt dime, the Washington quarter, and the Kennedy half-dollar. As you can see, the arbitrage opportunity between these fixed "currencies" against the dollar would render the type of arbitrage opportunity you've described as rather improbable.

You pondered, "They have to eliminate the inidvidual currencies, which I don't believe they have plans to do?"

In my post to you and R Powell, you will see that the physical euro will be introduced starting January 2002, and the various physical national currencies will be withdrawn, losing tender status by mid-year 2002.

MK, thanks for your official thoughts on the prospects for carrying this commemorative coin...which apparently is to be offered at bullion prices. You don't see that happen very often. Over here in The Tower we also found it very interesting that the Deutsche Bundesbank had plans to "set up a foundation to continue fostering the general public's stability awareness in the field of monetary policy."

Did you see our comments in the GOLDEN VIEW regarding the apparent shift in ECB policy to a revaluation of gold assets on a two-week interval instead of the previous three-month interval? Things are definately getting interesting in Euroland.
TownCrier
Sir tedw...next Bank of England gold auction
Next Tuesday, January 25th, 2000.
Bid deadline, 11:30 a.m. local time. Results to be announced by 12:15 p.m. local time.

Pick us up a bar, will you?
Solomon Weaver
Permafrost - my two bits (junk quarter so to speak)
Permafrost:

First, I will state that I will gladly see you here at the forum, with all the good cheer of the round table...we are all kind fellows here and consider adverse opions. (And debate with you is easier than with my wife who does not understand logic nor the concept of false premises.)

Earlier today you said:

My two-cents worth of speculation: I think that if the game of fiat money were to end, that'd entail A HUGE TRANSFER OF WEALTH and power from the First World to the Third World because many denizens of the latter respect and own gold (and are producers of commodities in most cases), unlike your average Westerner who sneers at it. I think unspoken awarness of this is one of the reasons as to the uneasy equivocations by some in this forum.
-------------
I fully understand the idea of transfer of wealth during depression (commonly stated as from city to rural). Historically, this has been the transfer of physical wealth. In those times, and particularly in the very severe times you must forsee if you can really envision an end to the fiat money game, you should realize that there will be so much DESTRUCTION OF WEALTH that there will not be much left to transfer.

The West has embarked upon a path of no return...it has thrown off (wisely or not) the structure of the agrarian economy which those Indian and Chinese gold owning peasants still live. The entire world's paper markets could explode overnight, and we would still have the same factories and technologies there in the morning. Digital wealth will lock up and we will make due, particularly motivated when we see freezing and starvation as the payment if we demand fulfillment of all contracts.

My dear Sir Permafrost...I view Gold like the gyroscope in a spaceship...the entire world west and east have grown to a point where it is work together or die. Gold belongs once again as the guiding force like a gyroscope offers. The smallest deviation of any part of the ship is instantly visible against the inertia of the gyroscope. But just like the gyroscope is not the life support system, the "wealth" component of gold is not our daily bread. Our willingness to work with and for eachother is our wealth.

My Sir Permafrost - your words regarding "unspoken awareness" on the behalf of posters here at this table has failed to grasp that most of the knights and ladies gathered here are bold champions in the crusade to return to an economy where merit is rewarded justly, and truth is told. Perhaps, as in the days of Arthur, the search for this truth will consume us all as we drive ourselves insane.

Sir Permafrost - you are hereby welcomed to join us in this cosmic folly...and by your regular visits I see you count yourself amongst the most honoured of guests. Debate is entertaining but jesting is made jolly by the nectar we all share.

Poor old Solomon
Jason Happy
Thoughts on God, the Bible, & Gold:
Aristotle, The "perfect monetary system", that you have been thinking about, has already been created. Why re-invent the wheel? I am talking about what is described in the Bible. Here it is, as I understand it:

1. Money is a system of weights and measures, never to be tampered with. The balance of the scales must always remain true. It is a commodity money system based on two different commodities; not gold and silver, but gold and wheat. A certain measure of gold = a certain measure of wheat. Both the gold and the wheat are money, and are to be set at fixed measures and a fixed "price" between the other.

When crops are good, there is simply an expansion of money supply. When crops are bad, there is a contraction in the money supply.

In other words, God's job is to play "Alan Greenspan" by
determining the annual rainfall... Think on that.

Thus, if farmers all have a good year, they don't have to sell their product at a cheaper price because of the glut of wheat on the market.

People still have to pay the full, fixed price.

Conversely, during a bad year of low crop yields, the farmer still has to sell, at the same price, even when supply is low. After all, a famine is no reason to start price gouging anyone... if anything, it's a time to share resources with your neighbor, and start turning everyone back to God...

Since "wheat" is money, during those good years, not all the wheat might be sold. In fact, large grain silos are built to store the wheat for many years. From my y2k studies, I learned that wheat kernals, if properly stored, can be stored for up to 20 years and still be good to eat.

There is a Bible story about a wicked man who tries to store up a lot of wealth by tearing down his existing grain silos, and building larger ones so he can stop working and retire... and God calls this type of thinking evil and wicked, and that this man's silo will be burnt to the ground.

Think of the dollar as an overly large grain silo (of gold), and you will see God's condemnation of the current dollar system.

And, as the U.S. farmer suffered under the gold standard, you will see why our former system was not necessarily pleasing to God either.

Think how wealthy a nation could be if it had a 20-year supply of food all properly stored away? Think of the productivity gains that could be made if people didn't have to worry about where their next meal would come from. There could be bad crop years for 5-10 years in a row, and people would still have 10 years of food left!

Isn't grain in silos better than paper money in a bank? 8-)

2. No charging of interest on any loans is allowed, unless you are loaning money to a forigner (non-Jew). When a person makes a loan, they must be prepared to accept the possibility/risk of a total loss, with no return. (No collateral, such as land, could be used...)

Restricting the types of loans that could be made prevents inflation. Investing is still allowed, of course. Without the possibility of using money to make money through loans or bonds, money must be put to more dirrect, productive use to bring a return.

A no-interest, uncollatarilzed loan is not an attractive thing for investment purposes, unless you are trying to buy a person's friendship. 8-)

3. All debts and loans are to be completely forgiven every 50 years in the Jubilee year. So, when it's 1-2 years until the jubile year, those personal loans would probably be on the small side.

4. The people are to gain and retain private ownership of land, and the ownership of all land must be returned to the people every 50 years. If a parcel of land was sold, it is returned at the Jubile year. (50 year lease might be more accurate... with shorter leases when the Jubile year was close.)

There are more rules regarding land ownership and the Jubile
that I don't fully understand, for example, city land was exempt, and land could be 'redeemed' with a purchase price
or something, but there might have been a way to sell it permanantly if there were no heirs to work the land or other exemptions...

For example, all slaves were to be set free every 7 years, but if you wanted, you could volunteer to become a permanant slave if you really liked your master and thought that you would be better off staying with him, under that circumstance, you'd get your ear pierced.

Think about it: You own the land, you are debt free, and you have a 20 year supply of food. Your only expense that you need to take care of, for living, really, would be clothes!!!

And maybe oil... 8-)

5. Another aspect of this perfect monetary system is that you cannot withold from the worker his "daily wages". Think about it: if there is 7/10ths of an ounce of gold per person on the planet, (a relatively unchanging historical ratio?) it doesn't seem as if there is enough gold to pay everyone all at once at the end of two weeks. Well, maybe not at today's under-valuations... 8-)

6. There is the idea of inheritance as well. A man should be able to leave an inheritance for his grandchildren...

Hmmm... one of the best ways to leave money for your children today, and not worry about it being taxed away, is through the private ownership of gold coins.

Perhaps I can spend tomorrow or the next day rouding up the collection of scriptures that supports points 1-6 above...
ji
Credit is debt
In a letter to Thomas Jefferson in 1787, John Adams wrote, "All the
perplexities, and distress in America arise, not from defects of the
Constitution, not from want of honor or virtue, so much as from downright
ignorance of the nature of coin, credit, and circulation."

What was true then is even more true today.

If you write to the Secretary of the Treasury and ask where money comes
from you will get an answer similar to this: " The actual creation of money
always involves the extension of credit by private commercial banks." If you
write back and ask where the money comes from to pay the interest, you will
receive an answer like this: " It comes from the same place other money
comes from."

Credit (monetized debt) exist only in the mind. It is not a substance,
but an idea represented by bookkeeping entries and computer symbols.

A dollar is not money. It is the expression of money. A dollar is a unit of
measurement like an inch or a quart or a mile. The Coinage Act of 1792 fixed the dollar as a specific weight of silver in the form of a
coin and fixed the value of gold coin in relation to the dollar unit of
silver. If there are no gold and silver coins, there are no dollars of
anything.

Dollars cannot be money any more than quarts can be milk. A unit of
measurement cannot replace the "thing" for which it is the measure. However,
in our minds, this is exactly what has happened.

Under fractional reserve banking, banks lend money that did not exist
until they loaned it. Banks create money by monetizing debt-the debts of
government, business, and the people. Banks create money out of less than
nothing because a debt is a sum of money due. It is not possible to pay a
debt with a debt, but this is what the world is using as money!

Federal Reserve Notes are evidence of debts the US Government owes to
the owners of the Federal Reserve (a privately-owned corporation) the
payment of which is guaranteed by the collateral of all property and income
of US citizens.

When the US Government borrows money, the Treasury creates a bond,
which is a fancy word for an IOU and promises to pay a specified amount at a
specified interest on a specified date. This bond is evidence of debt.

This interest-bearing debt is the foundation for this nation's money
supply and its payment is guaranteed by the collateral of all property and
income of US citizens. The FED "buys" this debt by making a
bookkeeping entry for the amount and writing a check against no funds. In effect, the FED lends the US Government its own credit, our credit, and then charges interest on it.

Every Federal Reserve Note (FRN) created by the FED is debt for us, which the central bank collects interest on, in addition
to the interest from the bond created by the Treasury that put this
money machine in motion. Then the FED inflates the amount
of the bond in order to make even more loans and collect more interest on an
investment that costs NOTHING. Under fractional reserve banking, the amount
a bank can create is limited by the reserve ratio or fraction it is required
to maintain. For example, when the reserve ratio is ten to one, a bank can
create and loan ten FRN's for each one in reserve and charge interest on it.
The reserves of the FED is paper-nothing more than bookkeeping entries that
are a record of debt.

The absurdity of the situation is that if there were no debts, there
would be no money, since all paper currency and checkbook money is loaned
into circulation. In order to pay the interest, there must be another loan
because the banking system only creates the principle and not the interest.
In fact, the interest can never be paid because it is not possible to return
to the bank more FRN's than were created-making it inevitable that the FED
acquire title to all wealth in the nation.

The only source of inflation is the FED. Increasing the amount of
currency and checkbook money increases inflation. Creating new money reduces
the value of all money, resulting in higher prices.

Credit which is deferred payment, and debt, which is a sum of money
due, are the same thing, which is hidden by deceptive double-entry
bookkeeping where a debt becomes an asset by calling it a credit. Paper
money that redeems nothing only appears to have value because it can be
exchanged for things of value. When a piece of paper representing debt is
exchanged for wealth, someone has been robbed. FRN's expropriate wealth from
one person, then another, until the last person
who gets it will be stuck with it. What the first user gets for
nothing the last user will get nothing for.

The sole function of paper money that is not one hundred percent
redeemable in gold or silver coin is to get things without paying for them.
Those who issue and control bank credit as money get everthing for nothing.
Bank credit is a devise for confiscating wealth, where numbers of nothing are exchanged for things of substance and value. This theft occurs unnoticed because we accept pieces of paper with numbers on them in place of real money, not knowing the difference between the two.

When using wealth as a medium of exchange, government must receive
wealth from its citizens to pay for goods and services. When using credit,
government is independent of taxes and does not have to pay for anything,
which the illusion of taxes conceals from the people.

Though nothing is financed by taxes, consumption, the people's capacity
to use up goods and services is reduced. Subtracting credits from bank
accounts reduces consumption and eliminates previously created inflation.
Taxes regulate inflation.

The FED pumps money into the system and the IRS sucks it out. The tax
system reduces public allotment of credit in order to destroy some of the
bank created credit so that the bankers, and their government, can continue
to create more credit, and with this credit get unlimited goods and services
for nothing.


Aristotle
Jason Happy, I say this with a smile--
In response to your comment, "When crops are good, there is simply an expansion of money supply. When crops are bad, there is a contraction in the money supply."

What happens when people eat?
Solomon Weaver
Compliments to FOA
FOA (1/18/00; 6:57:14MDT - Msg ID:23098)

Thank you kind sir for the A+ grade on a couple of my posts yesterday...and for the answers re: Japan. An apple for the teacher, yes? (smile)

I view myself to be like Strad Master...a normal guy just out on a walk and he falls down into the middle of a goldbug site...and here is this guy patiently discussing the undercurrents of macroeconomics, those still and slowly moving waters...

Somehow, we all have to put it into our own words, and see the world from our own balcony (or porch). I think the greatest chance we all have is that as humans, we are quite apt to do unusual things...

More than ever before, collapse will be of our own doing. Perhaps what we need most is a very dramatic shift in our SHARED UNDERSTANDING of what global politics and economics really is. Perhaps, as the cat gets out of the bag, the politicians and power brokers will not get it back in...at least by the same hole it gets out of...

Poor old Solomon
lamprey_65
It's getting very interesting
http://www.itn.co.uk/Business/bus20000118/011805bu.htm"The Japanese car manufacturer Toyota has threatened to pull its business out of Britain unless the government signs up to the Euro."

Lamprey
Peter Asher
ORO (goldfan)
Thanks for the lightning fast response.

You said >>> obliges the seller to accept the banknote at some price.<<<

Could not the seller list his product for silver or gold, � or quarts of milk? I see the FRN as a purchasing right only to those things offered for them.

Re >>>Rather than the banknote providing you with a right, it is the medium by which the government imposes a legal tender law. <<<<

It may be "Imposed by government" but rights are! Or are we talking about inalienable or God given rights?

I'm not following ". When you make a purchase you create a debt until payment is made to settle it. The payment is tender. The legal standing is that a legal tender settles the debt in some quantity," or goldfan's " currency represents a promise to pay."

FRN's are not redeemable; the government doesn't owe us anything for them. It's just saying "You guys have agreed (Or accepted the necessity of) trading in this common currency. Work out the quantities among yourselves."


Re goldfan's "on the part of governments, a promise to tax." That would only be the third form of Fiat issue. Awhile back a listed 1) notes issued for product rendered, 2) notes issued in return for product to be rendered in the future, (Credit) and 3) notes issued as handouts, (Welfare.) The latter is the promise to tax.

With only the existence of the first form across the board and the second form issued only to facilitate production and the flow of goods needed to maintain flux, (and NO predatory activity allowed) a fiat system could operate benevolently. But, only in a much more ethically evolved society.

Peter Asher
Solomon Weaver (01/18/00; 21:32:10MDT - Msg ID:23164)
I trust your wife NEVER logs on to the Forum, 'cause if she reads Permafrost and then what you just said I'm afraid you are Toast!
canamami
Lease rates tumble again
Another CB is at it again. Whenever the lease rate drops (down about .25% for one-month, today), we learn later that another CB entered the fray. This becomes demoralizing.

When will the Asian CB's (or the ECB as per FOA), or big Saudi money, or anyone, finally go long big time for gold?
Peter Asher
Solomon

>>> The entire world's paper markets could explode overnight, and we would still have the same
factories and technologies there in the morning. <<<

Absolutely; but who would own them? And what form of exchange certificates would be created to get the wheels turning? This is where Fiat would be the only viable method. Everyone would have to have credit to buy food and warmth until they produced for exchange.

If only PM's were money, than as the old folk song says "Than the rich would live, and the poor would di-ie; all my trials lord, soon be over."
schippi
Gold Sectors Chart
http://www.SelectSectors.com/agpm70.gif FSAGX & FDPMX moving Up!
Peter Asher
canamami, maybe not this time
Gold's up another dollar tonight. I've had a real good feeling about the POG ever since the non arrival of Y2K only resulted in a 10 point drop. (Which we are now above)

Watch the bonds!! It only takes the yield as a vane, to tell which way the wind is blowing!
goldfan
TownCrier Gold and the Euro currencies
Sir TownCrier (01/18/00; 21:19:20MDT - Msg ID:23162)

Im most grateful for your extensive coutesies in my directon. You said:
>>>More for Sir Goldfan....
Think of the various legacy currencies (all eleven of them...French franc,
German mark, Italian lira, etc.) that have been fixed to the euro in the same way that you envision here in America the five "currencies" which are fixed to the dollar and better known as the Lincoln penny, the Jefferson nickel, the Roosevelt dime, the Washington quarter, and the Kennedy half-dollar. As you can see, the arbitrage opportunity between these fixed "currencies" against
the dollar would render the type of arbitrage opportunity you've described as rather improbable.

You pondered, "They have to eliminate the inidvidual currencies, which I don't believe they have plans to do?"

In my post to you and R Powell, you will see that the physical euro will be introduced starting January 2002, and the various
physical national currencies will be withdrawn, losing tender status by mid-year 2002.>>>>>

I remember a time years ago when the quarter (25cents) and the 50 cent piece had a lot of silver in them. Then the price of silver went way up. People bought, with paper dollars, all the 25 and 50 cent coins they could get their hands on, and sold them at a handsome profit to be melted down into silver. The upshot of this was that this "arbitraging" drove the more valuable currencies out of the fixed relation to the dollar, drove them right out of the country!!

I have an idea that the 6 month wbndow when the Euro starts to circulate while the other currencies still exist, will present similar opportunities for arbing as I described in my last post.

I wonder if there isn't a way in which this is being conducted today? After all, there seems to me to be no essential difference between electronic spots and paper dollars. Who is allowed to hold Euros? What's to stop them profiting like this right now?

Hope I'm not being tedious, but the debate is helping me understand what I think of money.And we will always need some currency, IMHO, gold being too precious to be carried around.

FWIW

Golddfan


ORO
Peter Asher - re - legal tender
The legal tender law essentially says that you MUST quote a ["fair"] dollar price for anything you offer for sale within the US.

The way around this is through barter.

The legal concept of a sale and a purchase is that of a contract. One party offers one item or set of items, the other offers another. Once an exchange ratio is agreed upon, you have a contract. When the contract has one side with a money, it is called a purchase and a sale. The obligation of the seller is delivery of product/service at the agreed quantity, form, quality, and location. The purchaser is indebted by the sum of money agreed upon.

Legal tender laws force the acceptance of FRNs to settle the debt generated in such trade. In the case of exchange for goods, in the event of court action on breach of contract, reparations that may be ordered by the court must be settled in either the equivalent to the goods/service contracted, or have a particular number of fiat dollars settle the claims in the case.

It all would not matter unless there had been a problem by which people were widely and persistently resistant to settlement in fiat currency in any form or quantity, or quoted widely differing prices for a transaction in fiat or gold (at other than normal conversion rates set on public exchanges). If it were a wide problem, the legal tender law would eventually get enforced.
Lafisrap
ORO (1/18/00; 11:16:00MDT - Msg ID:23119) Business of War

Off topic question: Who sold the Serbian army their armaments? Anyone know?

About gold, based on limited observations of the retail prices of 1-ounce American Gold Eagles on the Internet, the premium is now the lowest I have ever seen (as low as $13). My local coin dealers still have their 1-ounce American Gold Eagles priced at about $20 over spot. Local dealers are saying they have repurchased a flood of gold (Y2K sell backs) and are paying only $2 over spot for 1-ounce America Gold Eagles.

I was hoping for the spot price of gold to drop way back down again so I could get the best deal possible. It seems spot only went down around $275 or so on the last dip. Lucky me, toot toot, I bought around there. I am hoping for another dip so I can make another purchase.

Then I will be ready for the big runup. I sure need gold to go way up, not yet though.

Lafisrap

ORO
Parsifal - Serbs ammo
When combined by Tito, the Yugoslav military was #4 after Soviets, UK, and US through the 50s. Tito was constantly fearful of a Soviet takeover and propagandized the Soviets to give away arms production technology, Slovenia had a long history of arms production, along with the Czechs. This was the industrial region of the Austro-Hungarian Empire.
The Yougo (if you remember that piece of junk made in an imported Renault factory) was only a small bit of what they could make. In the 70s they also supplied anybody with a buck - including China, and occasionally managed a subcontract for the Soviets. Light and Medium Artillery was their specialty, if I remember right. They could produce NATO spec at a price.
TEX
What a nice surprise
I work late and check the Kitco chart as soon as I get home (1:00 am MDT). It sure has been a nice surprise the past few early mornings to see an upward trend on the chart. I just seem to sleep better. Nite all.
zguy
GOLD,GATA and GREENSPAN
http://www.worldnetdaily.com/bluesky_dougherty/20000119_xnjdo_gold_and_g.shtmlSen. Joseph Lieberman, has asked Treasury Secretary Lawrence Summers and Federal Reserve Chairman Alan Greenspan to answer a series of questions about national gold policy, in response to an inquiry from GATA. For the full Breaking Story from Wednesday January 19th's Edition of Worldnetdaily click on the link.
PERMAFROST
IMF/Dollar versus BIS/Euro--Myth or Reality?
I will here defend the hypothesis that such a slant on the current state of the global financial system is an illusion and lies at the heart of the disagreement between I and those who at least engage me on a rational basis.

The purported official reason to set up the Bank for International Settlements was to arrange for war reparations to be paid by Germany after WWI. What really ensued belies any such alleged innocuous purpose.

The BIS was jointly created in 1930 by Western banks from both sides of the Big Pond. The list included the Federal Reserve Bank of New York; the Morgan-affiliated First National Bank of New York; the Bank of England (BOE); the Reichsbank whose president was the Nazi Minister of Economics Hjalmar Horace Greeley Schacht (early upbringing in Brooklyn; had powerful Wall Street connections); the Bank of Italy; the Bank of France; and other central banks. In desecration of its ostensible purpose, the BIS turned out to be nothing but a financial pump designed to direct the flow of American and British funds into Hitler's warchest while maximizing profits for American Corporations including Standard Oil of New Jersey (shipped fuel to Germany through neutral Switzerland; this in 1942, when millions of Americans and British were suffering gas shortages); the Chase Bank that still continued doing millions of dollars' worth of business in Nazi-occupied Paris with full knowledge of the head office in Manhattan;
Ford, whose trucks were being built for German occupation troops with authorization from Dearborn, Michigan; ITT, who helped improve Hitler's communications systems and also the V-series flying bombs [the SCUDs forefather) that devastated London (they also built German Focke-Wulf bombers). All this was known by Washington and either sanctioned or deliberately ignored. A presidential edict, issued six days after December 7, 1941, and called the Trading With The Enemy Act (!) pursuant to the Executive Order No. 8389 actually set up legislation to permit trading with the enemy, namely Nazi Germany.

In May 1944, while young American soldiers were dying on Italian beacheads, the president of the BIS was an American by the name of Thomas Harrington McKittrick, a former chairman of the British-American Chamber of Commerce, whose staff and board members included Nazi Germans, Japanese and Italians. Of course, said board members counted among their ranks Montagu Norman and Sir Otto Niemeyer of the Bank of England--which incidentally infuriated the U.S. Secretary of the Treasury at the time, Henry Morgenthau. One of McKittrick's tasks was determining what to do with the gold that the Nazis had looted from the national banks of Austria, Holland, Belgium, and Czechoslovakia or otherwise melted down from the teeth fillings, spectacle frames, cigarette cases and lighters, and wedding rings of the murdered Jews, and sent to the BIS. Let's now find out what he (and the BIS) did with the gold and how they measured up against their official raison d'etre, war reparations for the allies.

When, after the war, Treasury's Orvis A. Schmidt asked
McKittrick where the Belgian gold was, the reply he got was, "...it is extremely important that word does not leak out. It is in the vaults of the Reichsbank." Schmidt then went to see the executives of the Swiss National Bank (partner in the BIS) about the gold the Nazis had looted from European countries and stolen from Jews they killed. The Swiss told him that a "trustworthy" official from the Reichsbank certified that none of the gold in question was looted. Why the Swiss connection? McKittrick had cut a deal with the Swiss to dispose of the gold in a way that would expose his criminal activities. (He and his partners had no intention of returning as war reparations the 378 million 1945 dollars-worth of stolen gold.) The Swiss National Bank, vowing that the American people would not receive it, camouflaged the yellow metal by disguising it as payments to the American Red Cross and the German legations in Switzerland. Translation: HID IT; EXPROPRIATED IT. In other words, the BIS did the OPPOSITE of what it was meant to do!

"General Robert C. Davis, head of the New York chapter of the American Red Cross, was also chairman of the part-Nazi network Transradio. As late as 1943, the German Legation in Berne was buying Standard Oil for its heating and automobiles, which were supplied and repaired by U.S. subsidiaries. Tons of Gold, thus laundered, poured into the Swiss National Bank in those last months of the war.
"In 1948, under great pressure from the Treasury, the Bank for International Settlements was compelled to hand over a mere 4 million in looted gold to the Allies."
---Charles Higham

McKittrick went on to become the vice-president of the Chase National Bank....

Perhaps now my dissent has become a more "palatable" proposition to those of you who dismissed my allegations of
half-truths and false and/or incomplete information being propounded on this forum.

The BIS is no knight in shining armour here to defend the fair maiden's (gold) honor. They are just as criminal, insidious and predatory, if not more so, than the IMF.

Consequently, the Euro that some of you allege that they support or are in the process of promoting is just as tainted as any other fiat currency, including the dollar.

IMHO, only a gold standad, one EVEN MORE STRINGENT than all those that came to pass before, will do us and our kids justice.

I'll have to post this without proof-reading, due to special circumstances. Pardon any error(s) that it may contain.

el St.One
Gold....Recent strength
Does anyone else see the recent move up in POG as a foreshadowing of the Brits ( Gold ) coming sale?

Hope this is the second leg up...........el
PERMAFROST
Solomon Weaver; Jason Happy; and to all...
Dear Solomon;

Well, I kiss both your cheeks though there seem to be tongues poking behind both of them. I appreciate your seductive prose which lends itself very well to aptly conveying your wise commentary--which, to my great relief, does not incessantly revolve around money and cloak and dagger games of the financial spheres.

[Solomom Weaver] "More than ever before, collapse will be of our own doing. Perhaps what we need most is a very dramatic shift in our SHARED UNDERSTANDING of what global politics and economics really is."
---A BIG YES!

You see, the promulgations of FOA and his acolytes to me sound like an offering of free training on how to beat them (the IMF, Alan Greenspan, financiers and speculators) at THEIR game. Aren't we all old enough to know that the casino always wins? that betting against the house leads one to ruin over time? Unlike them, I'm pressing the point that if you can't beat them, then you can't join them either.

Jason Happy,

Could you elaborate more on the scriptures, please? thanks!

Everyone else: I read what you wrote.
ss of nep
Canada's Federal Income Tax is unconstitutional
http://www.prolognet.qc.ca/clyde/tax.htm

Now if I could only implement this.

Business must be in on the scheme, as they deduct
tax at source before the employee gets paid.

So, how does one get the already paid Tax back
from Revenue Canada ??

Please print the article and pass it around to
the people you know.


Is there a lawyer out there who can comment in this ?




Cavan Man
PERMAFROST
Thanks for the last post. What are your sources/references?

I believe you make a very good point regarding fiat money; no question in my mind. Your contributions are valuable and needed here. Please exercise good manners when thought processing.

While we can continue to call for a pure standard, I don't see any possibility of success in that endeavor in my lifetime; perhaps my children. I shall educate them. You know; "teach, your children well"(CSNY)?

If the EURO is the only game (reserve currency alternative) in town then we've got to play. What's the alternative? Read Aristotle's post 23135 last night. In 1971 the US knew that a NEW monetary system was needed.
Cavan Man
PERMAFROST & USAGOLD 23152
MK said "gradualism". He's right. That's not a bad strategy. Observe how, here in the US, our freedoms are being diluted incrementally. It's working, unfortunately. IMHO "gradualism" is not too practical and, we should not underestimate the support for the metal from Euro/BIS. It's helped yes?
tedw
GATA and Worldnetdaily
http://www.usagold.comWorldnetdaily, the largest internet newsource, has done an
article on "Gold and Greenspan" which gives air to GATAS accusations of POG manipulation (see www.worldnetdaily.com).
Now is the perfect time to e-mail worldnetdaily with your comments about POG manipulation.Perhaps they can put some light on the Commodity and Futures Trading Commission and their seeming inability to oversee and insure a fair market.
"Price Fixing" a commodity in the US is illegal.

Or you could do nothing and look out your window and curse.
tedw
GATA and Worldnetdaily
http://www.usagold.comWorldnetdaily, the largest internet newsource, has done an
article on "Gold and Greenspan" which gives air to GATAS accusations of POG manipulation (see www.worldnetdaily.com).
Now is the perfect time to e-mail worldnetdaily with your comments about POG manipulation.Perhaps they can put some light on the Commodity and Futures Trading Commission and their seeming inability to oversee and insure a fair market.
"Price Fixing" a commodity in the US is illegal.

Or you could do nothing and look out your window and curse.
PERMAFROST
Erratum...
Msg. ID 23183, line 43 should read, "McKittrick had cut a deal with the Swiss to dispose of gold in a way that would NOT [omitted by mistake] expose his criminal activities."
Cavan Man
FOA and Noble Knights
A Relatively Happy Ending For The USD?Cavan Man's Modest Proposition

We begin with the following assumptions and facts:

1. Key US policy makers (not the pols) realize the precarious position of the USD and that its demise as world reserve currency is imminent.
2. Key US policy makers see the set up for the Euro and concede that currency's eventual rise to prominence at great cost to the current dollar regime.
3. Only claims against the dollar prior to 1971 are justified as contractual obligations to deliver gold at pre-1971 conversion rate. After 1971, the dollar is in default and there is not a darn thing anyone can do about that.
4. The US government must defend the US currency and with it, the country; its citizens and businesses. The US government is required to perform this function by its Constitution.
5. Gold's rise is inevitable. The day of reckoning is not far off.

Here's the proposition.....

1. US Dollars become US Eagles.(Press the spin button for John Q. Public)
2. Conversion rate is 1:1.
3. The new Eagles are not convertible (neither is the EURO)
4. To compete with the Euro, the US MUST put its 8000 tons plus into play. (hope they're in FTK). US marks its gold to market.
5. Gold is set free (we hope completely).
6. Any pre-1971 dollar obligations to OIL are finally settled at pre-1971 conversion rate. We maintain an important precedent of paying our vendors!
7. Asia forms a new monetary regime modeled on the Euro.
8. Central banking still with us but a currency's intrinsic value is measured against gold.

Of course, you still have many fundamental problems with the US economy and for the matter, many "dollar denominated" economies. Here are a few for starters; accumulated debt, current account deficits, trade imbalances, consumer debt, equity valuations etc. These problems will need to be resolved in order for the Dollar to compete effectively in a global market. There will be some tough years ahead and those who buy gold now will have a leg up on those who do not. Perhaps this is what AG meant when he said recently that the Euro will be seen as a great benefit to the US Dollar in ten years or so.

FOA and all: What are your thoughts for discussion?
PERMAFROST
Cavan Man re references
--DuBois, Josiah E., THE DEVIL'S CHRMISTS. Boston: Beacon Press, 1952.
--Blum, John Morton, FROM THE MORGENTHAU DIARIES. Boston: Houghton Mifflin, 1959-1967.
--Sutton, Antony C. WALL STREET AND THE RISE OF HITLER. Seal Beach, California: '76 Press, 1976.
--Various readings about The Nuremberg Military Tribunals

You can find out about the BIS and much more in a book that I personally recommend, with plenty of documentation and bibliography: TRADING WITH THE ENEMY by Charles Higham, Barnes and Nobles Books, 1995. I think he was a writer for the New York Times.
ORO
PERMAFROST - Defeating Fiat
The best thing one could do is hold gold silver and platinum.
Avoid participating in the demand for fiat. The main demand is for return of debts. Avoid having debts, and you will not be forced into selling your "stuff" to pay for it.
Own income producing property outright.
Do not keep mortgages on critical property if you do not have liquid holdings (no US bonds, cash, savings, or CDs beyond minimum needed) that can cover your mortgage.
Avoid personal credit like the plague.
In your business:
Give a discount for transactions using E-gold or gold coin.
Open a bullion banking business built on depository and billing services.
Build a competitor to E-gold that issues debit cards and gold electronic wallets.
Ask to be payed part or all of your pay in gold, particularly some form of E-gold.

PR gold ad nauseum.
Tell your buddies what banking is and how it works.
Tell them how fiat joins with banking to kill the value of the currency they hold and endanger their titles to liened property.
Tell them how much debt the system is producing, and that the Fed (or alternate local CB) is printing up money like mad to keep the system going because private lending is not growing quickly enough to supply the interest due on outstanding loans.
Tell them that there is a time lag from the time bonds and cash are printed till they start devaluing.
Tell them to use this lag to protect themselves.
Explain that the Euro is taking over the international dollar debt markets and forcing out the dollar.

Explain to people how the great American economy is built upon the import of items in exchange for paper dollars - that over half of the goods you buy came from abroad as components or final product. Tell people that they are cheating their foreign counterparts with every trip to the store, and are taking away the jobs of Americans at the same time.

I do not like the Euro, and hope it falls %ss backwards. However, the more quickly we transition out of the flailing international dollar system, the better. If the Euro does the job, let it, and focus your energy on your own actions.
PERMAFROST
Cavan Man, erratum again...
The first book is called THE DEVIL'S CHEMISTS and was written by a Treasury attorney who was present at the Nuremberg trials.

Re your comments the BIS/IMF/Euro/Dollar. They are owned and controlled by the same people. The BIS will not fight the IMF/Fed although they may jostle some in public to mislead the masses. They are in cahoots together. The Euro and the dollar are just different appellations for the same thing. The BIS by pretending to "protect" gold prices by selling them off-market [I thought a market was necessary to conduct business. And I guess the CBs are not part of the market but they damn sure influence the markets. Hmmm...] and the IMF by "revaluing" or selling-but-not-selling gold are essentially reverting to a "new" old trick: printing money not backed by debt but by the illusion that there is actually gold behind it. Gold in their hand is a monetary weapon not a "gyroscope" [quoting Salomon Weaver] that provides stability.

I think that unless the world actually starts using gold/silver coins as money peoples/nations will be at each
other's throats in short order.

PERMAFROST
ORO...
I agree. What I meant to say was A REAL GOLD STANDARD as in actual physical gold and silver coins replacing fiat as a medium of exchange. Thanks for urging me to clarify my position.

NO FIAT!
USAGOLD
Today's Gold Report: Giving Back Some of Yesterday's Gains
Market Report (1/20/00): Gold gave back some of yesterday's gains in
early New York trading. At one point gold was $5 higher surprising
traders. The yellow was well-supported in Asian trade overnight where
short-covering triggered gains above the New York close -- at one point
trading at the $290 level. Yesterday's rise was attributed to
"aggressive" short covering according to a Financial World News report
overnight. Overall the market has been supported by strong physical
buying in recent weeks. In London, gold seemed to find resistance at the
$290 level and began to inch back. Reuters quotes a Swiss dealer as
saying, "The recent move will likely restore confidence on the market
and generate additional buying. We expect gold to move higher and set
our target at $295.00." Other factors contributing to weakness in gold
this morning are a falling yen and oil retreating from the nine year
highs set yesterday. This rally in the dollar and correction in gold
appear weak at first glance. We'll see what the day brings.

That's it for today, my fellow goldmeisters. See you here tomorrow.
FOA
Last "overview" for a while
Hello TownCrier:
I read your "Golden View" about the Euroland Gold valuations in (TownCrier(01/18/00; 20:42:11MDT-MsgID:23158).
Do we see the beginnings of a new official gold market being traded through the BIS system. One could almost see where the gold is moving into the EMCBs and only being traded and valued in Euros. We have promoted this shift for some time and anticipate it to grow as Euro use in the
international community expands. Especially as the Swiss sales begin. This lack of CB bullion liquidity will eventually starve the London paper gold system, mostly a dollar settlement system for the maintenance of dollar gold prices. Again, it (Euroland agenda) was a process that was designed some time ago and implemented with the Washington Agreement. Indeed, the WA is not the end of this "changing of the rules".

Further:

True, they (BIS) move a lot of gold for CBs and always have. Only, this time (from 1990 to date) they have shifted their agenda in favour of the ECB system. A shift that will strengthen the Euro as it weakens the dollar. This entire evolution of BIS direction and support has taken Washington, Britain and most economic thinkers by surprise. Yet, over the last twenty years it was a very visible and logical move with the Continent coming closer and closer to a new common
currency. It's no secret that they (BIS) became ever more apart from political dollar support as this (Euro)new weapon was growing. We can trace this shift's beginnings from the Jamaica Accords (mid 70s)and the first creations of the EEU (European Economic Unit)(early 80s). Later (mid to late 80s) the BIS fully promoted the EMS (European Monetary system) and used it's stability as a selling point around the world. This new architecture is what drew in Arabia to become a member and now sees a new BIS office in Hong Kong (opened in 98??). China will be the next member and a big Euro / gold suporter.
The entire (current) process involves a gradual weakening of the gold market (the paper function of it, not the paper price) to match the Euro expansion (5 years per the WA timeline?). I expected the paper gold marketplace to fail sooner and fall into discount. But the market has yet to fully grasp the impact of these events and still bids contract gold at par. However, we look at the dramatic
speed of this change (Euro acceptance) and can see gold coming into severe stress much sooner now. At the rate that Euro financing (and use) is growing, they will be imploding the paper gold market much sooner as they must revalue gold faster.
We watch for the dollar to come into real stress when the LBMA has it's system tested. This is where the real currency transition begins to grow! Again, I do not offer our words as proof, watch for events to confirm. As Another said, "Time will prove all things"!

Also:

Our stance is and always has been that the world will be using paper digital currencies for the rest of our lifetime. I for one, have never heard any official voice his stance that we will move back into a gold standard. Their (Euroland) direction has always been to keep a reserve currency system and strengthen it with a free physical gold market trading in the background. In none of our meetings have we heard where a fear was expressed that the governments will lose control of digital currencies and give it (that control) back to gold. That is simply not going to happen, no matter how severe a down turn the loss of the American dollar system creates. Believe it.
This has been the fundamental thrust of this news. The dollar system is failing as we move into another stronger (relative to fiat currencies) money system. I support, use and promote the new Euro simply because it is and will create the next trend for the future. Not because it's a gold currency of extra hard value. This (Euro) future will see us all using digital currencies, for better or worse. Therefore, by logical extension if I must use a reserve currency of account, I move into one that has the best strategic ability to survive and denominate my assets. In addition, it's creators are restructuring the gold market to the physical bullion holders advantage. This is the only reason I "Walk In The Footsteps Of Giants". They created this bullion path and the world will follow in due time. Therefore, my position of Euro assets and physical gold. Mostly (because I am American), I lean to gold for this transition.

Further:

One can take the radical position that the world financial system is going to end without the dollar. You can also say that the Euro will fail as this process evolves. One can buy gold for these reasons only and still prosper, whether your grasp of politics leads you this conclusion or not. Our sole reason for writing is a private commission to share official directions and perceptions with the
average citizen of the world. Nothing else.
Still, stand alone logic and history promote that the world will lose the present system to paper inflation and move into another as it has done before. With this, gold will bankrupt (through extreme price devaluation, $10,000 - $30,000) the outgoing system as hyper inflation runs through it. In a broader view, all total dollar dependent economies (Canada, Mexico, Japan, etc.) will share this fate.
This view gives you no facts only our perceptions from the builders of the future. We offer only the events as they occur for our proof. Indeed, strong events are ahead on this gold trail we all walk.

------------------------------------------------------------
Al Fulchino (01/18/00; 20:58:12MDT - Msg ID:23160)
Aristotle
------------And like you, I see what is coming. And I see where FOA's thoughts regarding the euro and oil lead us. --------------------------------

Hello AL, as you have read all of our posts, one can see how oil is the swing power in this currency war. Their commodity has been used to back the outgoing dollar system for some time and in the process keep it alive. Their price in return was a "cheap gold market" and their percent of return will be a new stronger reserve currency and acceptance of physical gold as a real settlement option in international finance. We will all get a feel for this as the oil prices lead the US dollar, and it's world dependent Economy into a slowdown. At the same time, the entire Euro / gold market
changes will impact world perceptions about their values.

------------------------------------------------------------
Solomon Weaver (01/18/00; 21:46:49MDT - Msg ID:23168)
Compliments to FOA
FOA (1/18/00; 6:57:14MDT - Msg ID:23098)

--------More than ever before, collapse will be of our own doing. Perhaps what we need most is a very dramatic shift in our SHARED UNDERSTANDING of what global politics and economics really is. Perhaps, as the cat gets out of the bag, the politicians and power brokers will not get it
back in...at least by the same hole it gets out of. -----------------------------

Hello Solomon, add the above to my "overview" posts and we can see how the shift will affect Western investors the most. This is the segment that is most (mentally) unprepared for a true "marking to the market" of their paper dollar wealth. Again, they will lose nothing but their perception that their buying power was so great. It never was.

------------------------------------------------------------
lamprey_65 (01/18/00; 21:47:13MDT - Msg ID:23169)
It's getting very interesting
http://www.itn.co.uk/Business/bus20000118/011805bu.htm
"The Japanese car manufacturer Toyota has threatened to pull its business out of Britain unless thegovernment signs up to the Euro."-----------------------

Lamprey, I can just feel that dollar in my pocket that Michael will owe me. If Britain backs out though, my bet with USAGOLD may break me. (smile)

------------------------------------
canamami (01/18/00; 22:10:58MDT - Msg ID:23172)
Lease rates tumble again
--------------When will the Asian CB's (or the ECB as per FOA), or big Saudi money, or anyone, finally go long big time for gold?---------------------

Hello canamami, they already have, didn't you see it? No, you can't watch the paper contract markets, because they stopped buying those early last year. Also: Forget the current lease rate charts. It's so thin it doesn't reflect the real lending. Most of that has gone off-line. When they do come into the visible market again, it will be as before, in a big overflow that guns rates for the next crisis.

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

Thanks ALL Good Luck! I'll be after more info and will be gone for some time. FOA


Cavan Man
FOA Overviews
I'd like to nominate this series for the HOF here, especially this last one.
18KARAT
Brilliant Analysis of US Money Supply Growth.
http://www.ntrs.com/rd/rd35/pos2000/pos_econ_04jan.htmlI don't know if anyone has posted this link already,
but if you haven't seen it,
it contains a wonderful analysis of the causes
of the recent explosion in the U.S. money supply.

In brief it's the stock market not Y2K.
The article is entitled
'Is Greenspan "Spiking" the Punch?'
It's written by Paul Kasriel

There is also an interesting follow up article:

http://www.ntrs.com/rd/rd35/pos2000/pos_econ_13jan.html

Regards to all
18K
beesting
IMF/Dollar versus BIS/Euro debate @ Sir PERMAFROST
Thank you for your very enlightening history lesson on the formation of the BIS.
Lets jump ahead 55 years to Jan. 2000!

As one who strongly believes ownership of Gold equals SOVEREIGNTY,lets compare a system which is the lessor of the 2 evils offered.

The IMF/Dollar camp uses paper dollars, which history has shown lose purchasing power 100% of the time, in the long run. Progressive repressive taxation can be, and is being done, quite efficiently through the use of paper dollars, in many, many ways. In My Humble Opinion,most of the people of the world are in-slaved to the never ending debt burden of the IMF/PaperDollar faction.Do Americans enjoy a higher standard of living than most other countries?-Yes! But, people worldwide are realizing, King U.S./IMF dollar has enslaved them.
In my thinking the choice is quite simple, do I want myself and my future generations in-slaved to an unsurmountable debt burden, or do I want the chance of Soverneignty for them?
Again,Gold ownership = Soverneignty, for an individual, for a Family(Example; Royal Families),for a Country.

The BIS/Euro:
The BIS still values all its holdings in, what many here consider real money, Gold Francs( if my memory is correct March 1999 one BIS Gold Franc equaled $1.86 U.S. paper dollar)
History has shown us,in the long term, Gold retains its purchasing power,NO MATTER WHICH GOVERNMENT THINKS THEY OWN THE PEOPLE!!!
So, it would seem to me at this point in time, peering into the murk of the future, the BIS/Euro factions future seems more stable because of the open use of Gold in their money value-ation system.

Now, unfortunately IMHO the worlds masses have two seperate trains of thought.
First group; Let Big Brother, government do all the thinking and take care of all things, I'm too busy to worry about it...End product Socialism!

Second group lets label Libertarian;- An advocate of the doctrine of free will; one who upholds the principles of liberty.
IMHO the original U.S. was founded under this second principle but has unfortunately evolved into the first group. Paper currency, and the CONTROL of paper currency has hastened this social evolution.

As a side note, it seems Gold is extremely underpriced in todays world(early 1980's $800+per ounce)so, when our "mentor" FOA says,"were on the road", I take it to mean; Were on the road to Soverneignty, and more long term purchasing power,through "UNTAXED" Gold ownership.
As Sir Aristotle would say: Gold get you some!

Thank You for reading.....beesting.
goldfan
US money supply @18KARAT


Thanks 18KARAT for this!! (1/19/00; 9:25:56MDT - Msg ID:23199)
Brilliant Analysis of US Money Supply Growth.
http://www.ntrs.com/rd/rd35/pos2000/pos_econ_04jan.html

http://www.ntrs.com/rd/rd35/pos2000/pos_econ_13jan.html

Goldfan
TownCrier
HEADLINE: IMF sold, bought back 14 mln oz gold --Camdessus
http://biz.yahoo.com/rf/000119/ha.htmlIn a Lisbon interview, outging IMF Managing Director Michel Camdessus told the local press that the Fund's gold revaluation operation was now complete.
"We decided to make transactions with triple the amount of gold that we had originally thought -- five million ounces -- that is, 14 million ounces," saying that 91 countries in total had taken part. "With 91 countries, that means there are many poor countries that agreed to participate. We thus developed a wide-reaching operation in international solidarity."

The publically-stated official push for this gold operation was in the name of providing a greater, more timely debt reduction program for the Heavily Indepted Poor Countries. Camdessus said, "In the IMF, we decided to take an unprecedented step, which was to say: we have gold, so we will use it to finance this reduction."

The Tower wants you to realize that in the grand scheme of things, using gold to finance operations is not a stretch, or unprecedented at all. But it is indeed a huge leap, and an unprecedented turn in direction, for this modern-day IMF to take, given its mission under the 2nd Articles of Agreement. Recognize that the IMF is not a weak "Mom and Pop" operation, and yet they had to throw in the towel on gold...they couldn't maintain the fiction of the low values they carried on their books. Significant? Yes.
ORO
Kasriel
http://www.ntrs.com/Thanks 18k and goldfan

He does great work doesn't he?

He still won't touch the international monetary issue and how it dictates the expansion of M3. He does not touch on the fact that Japan's M3 is growing too, but their economy isn't. The money is carry traded into US and EU credit markets. This gives us the liquidity we need, without it adding directly to US M3. The Greenspan interest rate policy simply does not matter as long as the Japanese are willing to grow their lending at 0.5% to 1.8% interest rates. M2 growth has been detached from short term interest rates since 1992 - after decades of coinciding with it.
TownCrier
While we're on the subject of the IMF...
http://biz.yahoo.com/rf/000119/31.htmlHEADLINE: Koch-Weser gets qualified backing for IMF job

An Italian government insider said of the qualified backing for German Finance Ministry State Secretary Caio Koch-Weser's bid to replace the outgoing IMF Managing Director, "Actually, there's a lot of talk and reflection going on. The odds are, it won't be Koch-Weser, it won't be (IMF Deputy Director) Stanley Fischer, it won't be a French candidate, it won't be an Italian, but someone else from Europe of a higher standing (than Koch-Weser)." The Italian source added, "We certainly have nothing against Koch-Weser."

U.S. Treasury Secretary Lawrence Summers has hinted that he is unsure whether Koch-Weser has the necessary qualities of "stature, expertise, ability to command global support and commitment" to bring about IMF reform.
18KARAT
Re: ORO (1/19/00; 11:00:31MDT - Msg ID:23203) Kasriel
http://www.gold-eagle.com/asian_corner_99/chen050399.htmlOro, there was an interesting article,
written ages ago by Dr. Chih Kwan Chen
(see link)
on the impact of BOJ policy and the resulting Yen carry on the US sharemarket bubble.

Did you ever read it? I thought it summarized the situation rather well.
But you know I've never been able to settle in my mind
how much of the US share price bubble
is caused by the BOJ/Yen carry trade
and how much by a 'von Mises' type of currency looseness caused by the Fed.
Do they both contribute?
It really is a puzzle to me how stock prices can explode
in a time of relative CPI price stability.

It seems to me that the Austrian school can explain it
and also the BOJ/Yen carry theory can explain it.

Any comments?
18K
18KARAT
Correction to URL link to Dr. Chih Kwan Chen
http://pages.prodigy.net/ashino4112/articl01.htmThis is a fuller text of his article.
The previous link I posted was just a summary article.
CoBra(too)
IMF - Camdessus succession
Hello TC and thanks for the post on Caio Koch-Weser.
I particularily enjoyed Lawrence Summers comments, or is it audacity, to state his unhappy state of not being sure if the candidate (C.K-W) has the necessary quality (not qualification!) of stature, expertise, ability to command global support and commitment to bring about IMF reform.

These same questions should foremost be answered by the same
Larry Summers, Secretary of the US Treasury, who'se first real "market experience" propelled him to a top spot, out of his cozy -and as many feel inadequate economic academia - professoral and academic mainstream economic (mal-)practise.

Mr. Summers may well turn out to become "Rubin's Revenge" for lost years at the helm of the USS Debt-tanic.

Regards CB2

PS: As a rule I normally refrain from mockery against other
countries officials - but this one asked for it.
Skip
Y2K Comment
Yesterday I met a self-employed computer expert who claims that he was hired by Bank of America last year to help fix their Y2K bugs. He stated that a considerable amount of money was invested to fix these bugs, which is why BofA (and other banks) transitioned through the new year without any major problems. He further stated, "Had Bank of America NOT spent the money to fix their Y2K bugs, they would be in DEEP S**T by now!"

He also added that P/E ratios are so far out of line that they make the 1929 inflated stock market look small by comparison...especially for tech stocks and ".com" stocks. (Of course, that should be obvious to anyone with common sense!) His friends seem to believe that P/E ratios no longer have any significance on whether or not to purchase stocks, and he is now out of stocks and starting to invest in gold and silver.

--Skip

ORO
18 k Chen
I probably did read it.

The point is that it is a Von Mises bank cycle situation where the BOJ is pumping us up in the same way the Fed would have, had interest rates stayed at 3% from 93 onwards. Since the market will tend to preffer paying the lowest rate it can. The lowest rate available globally is in Japan. Second lowest is in gold. Both rates are unjustifiabley low as global rates. They are causing bubble.com to expand globally. Just as the Asian Tiger bubble was created by the Fed's "save America" 3% rates, so is ours being created by the BOJ.

The confusion is in the fact that Mises did not look at a modern capital market where both information and transactions cross the globe in microseconds. In the past, the kind of lending chain we have today could not have come about. The numbers on financial corporation's debt, now at $7 trillion tells the story of a chain of debt being created. The chain is sourced in the BOJ dictating interest rates in Japanese citizens lending to Japanese banks and their leverage of this money. The role of central bank to the world has been split between the BOJ and the Fed. BOJ issues credit, the Fed prints up the currency (electronic and paper).

goldfinger1
test
test
Ray Patten
More confusion in the oil industry...
http://pub3.ezboard.com/fdownstreamventruespetroleummarkets.showMessage?topicID=210.topic
This is a short one and can't copy cause of black background. This is just an example of what's going on.
Nobody is saying anything. They are only speaking with their money in the futures pit.
Broken Oak
1 DM gold coin priced @
240 Euro = $630+/- per troy ounce (at Euro/$ parity). Marked with private bank (Bundes Bank (sp?)) label yet denominated in 'old' currency? Sounds like a few messages here.

1) Selling to those in Germany who remember monetary mismanagement and do not trust the Euro plan since it is out of their direct control

2) Selling nostalgia

3) Commentary on the price they think gold should be at in US dollars, not what the current 'market' is at

4) Gearing used to purchase more gold at these low prices to mint more coins (less administrative costs

5) Fall back plan in case things "don't turn out like they are planned", ie - war with russia, collapse of monetary systems, etc
Al Fulchino
Ray and FOA
Ray, I cannot get the url to work...if u have the tome could u recheck...I am interested in what u have there.

FOA....Thank your for today's notes...they pretty much put most of your thoughts of the previous monthes in a nutshell.

Jason Happy
Bible quotes: Re: "perfect monetary system"
Aristotle, Permafrost, and everyone:

I made 6 points in my previous post that seem to me to be the main rules of the Bible's economic system, and here are a few of the verses that back up most of the points made previously.

Quotes taken online from the King James Version at http://www.stg.brown.edu/webs/bible_browser/pbform.shtml
where they list all scriptures in up to 7 different Bible translations, side by side.

1. I think the verses in this first section, taken as a whole, show grain as money/wealth, by definition. And, money is a weight of metal, the shekel.

[Prov 20:10] Divers weights, and divers measures, both of them are alike abomination to the LORD.
[Lev 19:35] Ye shall do no unrighteousness in judgment, in meteyard, in weight, or in measure.
[Deut 25:15] But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have: that thy days may be lengthened in the land which the LORD thy God giveth thee.

(Below, note the different fixed price of barley between Leviticus and 2 Kings... However, one is seed, the other is flour, one is a "homer", while the other is a "measure". Maybe it's 100 measures to a homer, I don't know... But, considering the first three verses, I don't think the following two instances of God fixing the price could be, in any way unjust, or a false measure.)

[Lev 27:16] And if a man shall sanctify unto the LORD some part of a field of his possession, then thy estimation shall be according to the seed thereof: an homer of barley seed shall be valued at fifty shekels of silver.

[2Kgs 6:25] And there was a great famine in Samaria: and, behold, they besieged it, until an ass's head was sold for fourscore pieces of silver, and the fourth part of a cab of dove's dung for five pieces of silver.
[2Kgs 7:1] Then Elisha said, Hear ye the word of the LORD; Thus saith the LORD, To morrow about this time shall a measure of fine flour be sold for a shekel, and two measures of barley for a shekel, in the gate of Samaria.
[2Kgs 7:16] And the people went out, and spoiled the tents of the Syrians. So a measure of fine flour was sold for a shekel, and two measures of barley for a shekel, according to the word of the LORD.
[2Kgs 7:18] And it came to pass as the man of God had spoken to the king, saying, Two measures of barley for a shekel, and a measure of fine flour for a shekel, shall be to morrow
about this time in the gate of Samaria:

From http://www.acm.ndsu.nodak.edu/%7Epettys/main/subject/measures/dry.htm
1 homer = 10 epahs
1/3 epah = 1 measure and/or 7 measures, depending on whether a measure was 1 quart or 7 quarts.
Thus, 1 homer = 30 measures and/or 210 measures

If, during the famine in 2 Kings, it was 210 measures to a homer, then the price fixed by God in 2 Kings for barley flour was about twice the price given by God in Leviticus for barley seed, which, under the circumstances, was still much less than the going rate... But also, given the fact that flour is typically priced higher than seed (grinding takes work) then these two cases of price fixing by God may be just about the same. For y2k, I bought an 80 lb. bag of unground wheat (seed/kernal) for $10.00. Ground wheat flour costs about $2.00 per one pound sack, or $3.50 for 5 pounds, or $7.50 for 25-50 pounds, at least twice as much...

And, if the price is similar in both cases, then it would take all that much more faith for the people to obey God in the case of Kings, during the famine, and it would also show great mercy, while also demonstrating the importance and truth of upholding normal standards.

[Lev 26:3] If ye walk in my statutes, and keep my commandments, and do them;
[Lev 26:4] Then I will give you rain in due season, and the land shall yield her increase, and the trees of the field shall yield their fruit.

[Deut 11:13] And it shall come to pass, if ye shall hearken diligently unto my commandments which I command you this day, to love the LORD your God, and to serve him with all your heart and with all your soul,
[Deut 11:14.17] That I will give you the rain of your land in his due season, the first rain and the latter rain, that thou mayest gather in thy corn, and thy wine, and thine oil.

[Deut 28:12.15] The LORD shall open unto thee his good treasure, the heaven to give the rain unto thy land in his season, and to bless all the work of thine hand: and thou shalt lend unto many nations, and thou shalt not borrow.

[Prov 11:26] He that withholdeth corn, the people shall curse him: but blessing shall be upon the head of him that selleth it.

[Prov 19:4.1] Wealth maketh many friends; but the poor is separated from his neighbour.

[Luke 12:16] And he spake a parable unto them, saying, The ground of a certain rich man brought forth plentifully:
[Luke 12:17] And he thought within himself, saying, What shall I do, because I have no room where to bestow my fruits?
[Luke 12:18.22] And he said, This will I do: I will pull down my barns, and build greater; and there will I bestow all my fruits and my goods.
[Luke 12:19] And I will say to my soul, Soul, thou hast much goods laid up for many years; take thine ease, eat, drink, and be merry.
[Luke 12:20] But God said unto him, Thou fool, this night thy soul shall be required of thee: then whose shall those things be, which thou hast provided?
[Luke 12:21] So is he that layeth up treasure for himself, and is not rich toward God.

The Tribulation cry: (in RSV penny = denarius, which was a day's wage, while a measure of wheat (one quart?) most theologians say is supposed to be a day's food.)
[Rev 6:6.15] And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.

-------------------------------
2. These next verses show that charging interest when lending money is forbidden, unless to a non-Jew.

[Exod 22:25.30] If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.

[Lev 25:36.4] Take thou no usury of him, or increase: but fear thy God; that thy brother may live with thee.
[Lev 25:37.9] Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase.
[Deut 23:19.6] Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury:
[Deut 23:20] Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury: that the LORD thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it.
RSV [Deut 23:20] To a foreigner you may lend upon interest...

[Pss 15:5.9] He that putteth not out his money to usury, nor taketh reward against the innocent. He that doeth these things shall never be moved.
[Prov 28:8.4] He that by usury and unjust gain increaseth his substance, he shall gather it for him that will pity the poor.

[Ezek 18:12] Hath oppressed the poor and needy, hath spoiled by violence, hath not restored the pledge, and hath lifted up his eyes to the idols, hath committed abomination,
[Ezek 18:13.5] Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live: he hath done all these abominations; he shall surely die; his blood shall be upon him.

Here is one story where, by usury, a small group of men end up owning everything.

[Neh 5:1] And there was a great cry of the people and of their wives against their brethren the Jews.
[Neh 5:2] For there were that said, We, our sons, and our daughters, are many: therefore we take up corn for them, that we may eat, and live.
[Neh 5:3] Some also there were that said, We have mortgaged our lands, vineyards, and houses, that we might buy corn, because of the dearth.
[Neh 5:4] There were also that said, We have borrowed money for the king's tribute, and that upon our lands and vineyards.
[Neh 5:5] Yet now our flesh is as the flesh of our brethren, our children as their children: and, lo, we bring into bondage our sons and our daughters to be servants, and some of our daughters are brought unto bondage already: neither is it in our power to redeem them; for other men have our lands and vineyards.
[Neh 5:6] And I was very angry when I heard their cry and these words.
[Neh 5:7.20] Then I consulted with myself, and I rebuked the nobles, and the rulers, and said unto them, Ye exact usury, every one of his brother. And I set a great assembly against them.
[Neh 5:8] And I said unto them, We after our ability have redeemed our brethren the Jews, which were sold unto the heathen; and will ye even sell your brethren? or shall they be sold unto us? Then held they their peace, and found nothing to answer.
[Neh 5:9] Also I said, It is not good that ye do: ought ye not to walk in the fear of our God because of the reproach of the heathen our enemies?
[Neh 5:10] I likewise, and my brethren, and my servants, might exact of them money and corn: I pray you, let us leave off this usury.
[Neh 5:11] Restore, I pray you, to them, even this day, their lands, their vineyards, their oliveyards, and their houses, also the hundredth part of the money, and of the corn, the wine, and the oil, that ye exact of them.
[Neh 5:12] Then said they, We will restore them, and will require nothing of them; so will we do as thou sayest. Then I called the priests, and took an oath of them, that they should do according to this promise.
[Neh 5:13] Also I shook my lap, and said, So God shake out every man from his house, and from his labour, that performeth not this promise, even thus be he shaken out, and emptied. And all the congregation said, Amen, and praised the LORD. And the people did according to this promise.

[Deut 24:10] When thou dost lend thy brother any thing, thou shalt not go into his house to fetch his pledge.
[Deut 24:11] Thou shalt stand abroad, and the man to whom thou dost lend shall bring out the pledge abroad unto thee.
[Deut 24:12] And if the man be poor, thou shalt not sleep with his pledge:

[Pss 112:5] A good man sheweth favour, and lendeth: he will guide his affairs with discretion.

[Prov 19:17] He that hath pity upon the poor lendeth unto the LORD; and that which he hath given will he pay him again.

[Prov 22:7] The rich ruleth over the poor, and the borrower is servant to the lender.

[1Cor 7:23] Ye are bought with a price; be not ye the servants of men.

[Luke 6:34.4] And if ye lend to them of whom ye hope to receive, what thank have ye? for sinners also lend to sinners, to receive as much again.
[Luke 6:35] But love ye your enemies, and do good, and lend, hoping for nothing again; and your reward shall be great, and ye shall be the children of the Highest: for he is kind unto the unthankful and to the evil.

-------------------------------
3. Debt forgiveness & slave release every 7 years,

[Deut 15:1] At the end of every seven years thou shalt make a release.
[Deut 15:2] And this is the manner of the release: Every creditor that lendeth ought unto his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the LORD's release.
[Deut 15:3] Of a foreigner thou mayest exact it again: but that which is thine with thy brother thine hand shall release;

-------------------------------
4. And every 50 years (after seven sevens, 49).
Just about ALL of Leviticus Chapter 25 concerns the jubilee, here are some highlights:

[Lev 25:10] And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof: it shall be a jubile unto you; and ye shall return every man unto his possession, and ye shall return every man unto his family.

[Lev 25:13] In the year of this jubile ye shall return every man unto his possession.
[Lev 25:14] And if thou sell ought unto thy neighbour, or buyest ought of thy neighbour's hand, ye shall not oppress one another:
[Lev 25:15] According to the number of years after the jubile thou shalt buy of thy neighbour, and according unto the number of years of the fruits he shall sell unto thee:
[Lev 25:16] According to the multitude of years thou shalt increase the price thereof, and according to the fewness of years thou shalt diminish the price of it: for according to the number of the years of the fruits doth he sell unto thee.
[Lev 25:17] Ye shall not therefore oppress one another; but thou shalt fear thy God:for I am the LORD your God.

[Lev 25:23] The land shall not be sold for ever: for the land is mine, for ye are strangers and sojourners with me.
[Lev 25:24] And in all the land of your possession ye shall grant a redemption for the land.

[Lev 25:29] And if a man sell a dwelling house in a walled city, then he may redeem it within a whole year after it is sold; within a full year may he redeem it.
[Lev 25:30] And if it be not redeemed within the space of a full year, then the house that is in the walled city shall be established for ever to him that bought it throughout his generations: it shall not go out in the jubile.
[Lev 25:31] But the houses of the villages which have no wall round about them shall be counted as the fields of the country: they may be redeemed, and they shall go out in the jubile.

[Lev 25:38] I am the LORD your God, which brought you forth out of the land of Egypt, to give you the land of Canaan, and to be your God.
[Lev 25:39] And if thy brother that dwelleth by thee be waxen poor, and be sold unto thee; thou shalt not compel him to serve as a bondservant:
[Lev 25:40] But as an hired servant, and as a sojourner, he shall be with thee, and shall serve thee unto the year of jubile.
[Lev 25:41] And then shall he depart from thee, both he and his children with him, and shall return unto his own family, and unto the possession of his fathers shall he return.
[Lev 25:42] For they are my servants, which I brought forth out of the land of Egypt: they shall not be sold as bondmen.

[Lev 27:16] And if a man shall sanctify unto the LORD some part of a field of his possession, then thy estimation shall be according to the seed thereof: an homer of barley seed shall be valued at fifty shekels of silver.
[Lev 27:17] If he sanctify his field from the year of jubile, according to thy estimation it shall stand.
[Lev 27:18] But if he sanctify his field after the jubile, then the priest shall reckon unto him the money according to the years that remain, even unto the year of the jubile, and it shall be abated from thy estimation.

(There was a provision for permanant slavery instead of being free at the jubilee... Slaves entered this permanant relationship voluntarily, and pierced their ears to show this bondage.)

[Deut 15:15] And thou shalt remember that thou wast a bondman in the land of Egypt, and the LORD thy God redeemed thee: therefore I command thee this thing to day.
[Deut 15:16] And it shall be, if he say unto thee, I will not go away from thee; because he loveth thee and thine house, because he is well with thee;
[Deut 15:17.12] Then thou shalt take an aul, and thrust it through his ear unto the door, and he shall be thy servant for ever. And also unto thy maidservant thou shalt do likewise.

Debt forgiveness is even a large part of the "Lord's Prayer" verses...

[Luke 11:2] And he said unto them, When ye pray, say, Our Father which art in heaven, Hallowed be thy name. Thy kingdom come. Thy will be done, as in heaven, so in earth.
[Luke 11:3] Give us day by day our daily bread.
[Luke 11:4] And forgive us our sins; for we also forgive every one that is indebted to us. And lead us not into temptation; but deliver us from evil.
[Mat 6:12] And forgive us our debts, as we forgive our debtors.
[Mark 11:25] And when ye stand praying, forgive, if ye have ought against any: that your Father also which is in heaven may forgive you your trespasses.
[Mark 11:26] But if ye do not forgive, neither will your Father which is in heaven forgive your trespasses.

-------------------------------
5. Paying wages daily, not every two weeks...

[Lev 19:13.11] Thou shalt not defraud thy neighbour, neither rob him: the wages of him that is hired shall not abide with thee all night until the morning.

I believe that if an employer wants to save himself the trouble of paying a daily wage, and wants to pay his workers every two weeks, he should pay up front, and not at the end... 8-) If employers had to pay up front, I don't think they would complain about the hassle of paying a daily wage... 8-)

[Mal 3:5.37] And I will come near to you to judgment; and I will be a swift witness against the sorcerers, and against the adulterers, and against false swearers, and against those that oppress the hireling in his wages, the widow, and the fatherless, and that turn aside the stranger from his
right, and fear not me, saith the LORD of hosts.

-------------------------------
6. The inheritance:
[Prov 13:22.3] A good man leaveth an inheritance to his children's children: and the wealth of the sinner is laid up for the just.

Well, this is still just a brief summary of what the Bible has to say on economics, but I think these are some of the key Bible rules for a perfect economic system:

1. Wheat, Barley, Silver & Gold are money.
2. No interest is to be charged on any loans, except to forigners.
3. National debt forgiveness and slavery release every 7 years.
4. National land and slavery release every 50 years.
5. Paying wages daily.
6. Saving for an inheritance for grandchildren is a good thing to do.

I'm sure "the powers that be" in today's world justify to themselves that they are following these guidelines...
1. Sure, we have a commodity exchange.
2. Who is my brother, really? Aren't we all "forigners" in this ungodly world?
3. Bankruptcy is wiped off of people's records after 7 years...
4. If people want cheap land, they can buy huge acreage outside the cities in the U.S. under government programs. Land in the cities is exempt, remember?
5. Well, we can't control what employers choose to do, it's custom.
6. We're thinking of abolishing the inheritance tax... but we allow people to buy gold coins if they want, and we can't track that...

Imagine a world where they REALLY followed the law...
-----------------------------
Aristotle, "what happens when people eat." 8-)

I guess the same thing that happens when people repay debt under today's system! 8-)
Speaking on this topic... not wanting to eat your wealth...

[Ecclesiastes 6:2] A man to whom God hath given riches, wealth, and honour, so that he wanteth nothing for his soul of all that he desireth, yet God giveth him not power to eat thereof, but a stranger eateth it: this is vanity, and it is an evil disease.

If you still don't think food can be money, read the Genesis account of the famine that drove the family of Isreal down into Egypt. Genesis 41-47, particlarly 47:13-22 (There are non-Biblical historical records of this famine in Egypt that mention how Joseph was the only one who had any grain to sell.)
rsjacksr
Au and Oil
upAu @ $290.40
Oil@ $29.68
Jason Happy
(No Subject)
When a scripture is listed with numbers following it, such as

[Deut 11:14.17]

This means Deuteronomy, Chapter 11, Verse 14, 17th word.

So, I was doing a word search on the 17th word of the verse, which helped me to find the scripture, in this case, "rain"

http://www.stg.brown.edu/webs/bible_browser/pbform.shtml

I just didn't want that unusual third number in a few of my verse listings to confuse anybody.
ORO
Ray Patten's url - how to access
http://pub3.ezboard.com/fdownstreamventurespetroleummarketsTo get the threads, Klick on subject list items.

Some stuff is interesting.
Al Fulchino
Oro....looks like some good info when u sort it out
thanks
Al Fulchino
Oro....looks like some good info when u sort it out
thanks
Mr Gresham
FOA #23197
Second Cavan Man's nomination -- and agree with Al that it certainly summarized the outlook for awhile, until some events give us more to chew on. We should keep #23197 in view as we go back and re-read other posts, to answer our remaining questions to our satisfaction.

Thanks, FOA, from one of the "average citizen(s) of the world", in this case, one who is going to have to protect and support a daughter at home until I'm at least 65. There goes "conventional" retirement savings! I'm counting on the "unconventional" coming through for me.

Please don't be gone too long. I'm sure you measure your effectiveness by many criteria, and you've been most generous with your time and patience. As a financial advisor myself, I find it hard to resist the impulse to help people in areas I know more about than they do, and it is only very recently that learning to take care of myself (and family) over the long term is taking precedence. I hope you are able to do both as well and I hope your work here will always be satisfying to you.

We have some homework items that I think can be discussed, or reviewed from prior months' of discussion, and I imagine ORO and others have statistics to contribute:

1) What IS the benefit, "seignorage" or other numeric estimate, of being the reserve currency? How fast can it be lost, and how much will the dollar/Euro rate tilt if the benefit swings the other way?

2) Just how DOES gold in the background support the Euro? What are some of the exchanges that have or may happen in settlement that are examples of this? How does "marking gold to market" affect the exchange value of the still-unbacked Euro?

3) How does the debt structure (burden?) behind the Euro differ from that attaching to the dollar? And, review and keep current on those stats about Euro grabbing about 50% of new world debt denomination. What does the default/devaluation of debt under recession scenarios do to the denominating currency?

4) How does Europe's political tradition (social welfare, competition/cooperation among governments, statist economics) bode for the currency, or are central bankers pretty much independent to work their wonders, allowing the politicians their Euro-stability-delimited budgets to play within? How strong are these "builders of the future," or have they merely avoided being the "fools of the recent past?"

5) Peering behind the only-recently-lifted veil of LBMA, how is its stability threatened by Euro actions, and why do big players (like GS?) not see and abandon it sooner? Or are their bets hedged elsewhere, and/or supported by public/Fed money refunded them in the back alleyway as they carry water for overall US dollar dominance?

6) How does oil swing the dollar's value so widely from just a shift in its clearing currency? Numbers, Sir Oro!?! (I'm sure it's just my lack of recall from months past.)

7) How much of a factor does psychology play, and the bandwagon effect, where dollar could drop below its "intrinsic" values in buyable goods and services locally, but people don't care 'cause they're escaping the sinking ship, at any price!

8) What IS gold's physical availability (us small buyers can't imagine big shipments not being made available while small purchases go through without a hitch.)? And again, why are big players (like Saudi princes) not ramping up their physical purchases (and the $288 price on upward) with regular Buy programs? Or are they already offering premiums? Or are unnamed national interests keeping a steady selling order lid on the price at, say, $2 over Spot?

In essence, I would like to see some sign that last Fall's jump was some of the big money players looking ahead (and likely to do so again) and not just world goldbugs, Y2k worriers, over-leveraged contract shorts and mines on the edge. It is really hard to believe that there would be such unity on high to delay buying in quantity, that the coming meltup would not produce defections among the Soros-types of the world, unless capped by a bigger entity sitting on POG with lots of OPM!

That's just off the top of my head, but they are probably the primary questions I carry while reading FOA, from someone who has not sat at those tables.

My one excursion into the library brought home Stephen Solomon's "The Confidence Game: How Central Bankers Run the World" which was a peek through the curtain that both impressed me, and overwhelmed me with new info, last May. I recommend it highly.

Time for a re-read of that, and find other books on EMU, BIS, Mundell's views, Euro planner's views, and such internal communications they've had as have been released for public viewing.

"Our sole reason for writing is a private commission to share official directions and perceptions with the
average citizen of the world. Nothing else."

I think that was a statement of integrity that says the world system doesn't always have to be about screwing the little guy. It's just a complicated real-world problem to transistion from one part of history to another, without making waves and stepping on toes. This one is probably being done about as well as a transition could be, and we are being permitted a view from the gallery. I feel greatly privileged.

I believe that if I really had wanted to challenge the credentials of FOA and Another, there would be research I could do, and questions I could ask of others, that would bring the extent of their knowledge to the point of clear understanding. However, I know that they are speaking of contending forces, about which no firm prediction of outcome (or exact timeline) can be made. AND, my investment program (and time available) do not require firm PROOF of their legitimacy. And, I am still NEW at this, just now able to put together what questions I'd want to research elsewhere.

In this case, my gut confirmation of them as beneficent advisors with an inside view suffices to make this an enjoyable inspiration and confirmation to my own actions. It also gives me an outlook that might enhance my future career and investment choices, and allow me to step more nimbly than I have during the past two decades.

I think that by the time FOA (or ANOTHER?) bring us more Overviews of the facts we may have recently seen, we will have learned to adopt more of that "insiders' view", and be able to converse more confidently with them. If we do not take up this opportunity, then we are surely fools.

(BTW, one of the markings of a great school of learning is how well the students discover and teach among themselves, and conspire eventually to make any "teacher" a "first among equals." This is the excitement that keeps me coming here every day.)






Black Blade
Au producer continues anti-hedge strategy with acquisitions
NEW YORK (Dow Jones)--South Africa's Randfontein Estates Ltd. (RNDEY, news, msgs) closed more than half its gold hedge book in a series of transactions Tuesday, a company release said Wednesday. The total amount of gold hedged by the mine through forward sales and call options was reduced by 55% to 1.2 million troy ounces, the release said. The move follows the takeover Monday of the company by Harmony Gold Mining Co. (HGMCY), South Africa's third largest gold miner. As reported earlier this week, Harmony's Chief Executive Officer Bernard Swanepoel said that in line wiith its no-hedge policy it would implement a strategy to wind down Randfontein's hedge book, which carried an exposure of $55 million.

The remaining long-term positions following Tuesday's restructuring represent less than 10% of the estimated gold production of the Harmony group over the next five years, the release said. The restructuring, voted by the new Randfontein Board, had a net cost of R46 million (US$7.6 million), the release said. The company would like to be positively exposed to upward movements in the gold price, Swanepoel said in the release. "The Board of Randfontein will therefore continue to monitor developments in the gold market with the view to further minimizing the effect of the hedge book as opportunities arise."
PH in LA
Second for Cavan Man's HOF nomination
There should be no doubt whatsoever that FOA's latest series of "overview" posts belong in a prominent place in the HOF. Such nominations do require a "third". Anyone?

FOA:
You will be missed!
TheStranger
The Kasriel Piece
18Karat - You get the blue ribbon today, Buddy. I thoroughly enjoyed reading Kasriel's analysis and getting some clarity on what I consider the question of the hour. I think it is apparent now that the Fed has made a very serious miscalculation. Much of the mass of liquidity they created to deal with a possible Yardeni recession went right through the stock market, raising prices along the way. Now, we are left with no recession, a dangerous increase in Broker loans and a Fed who can't possibly pull the money out as fast as it went in.

NO WONDER THE CRB ACHIEVED SUCH A SIGNIFICANT BREAKOUT TODAY. NO WONDER BONDS ARE STARTING TO INVERT. NO WONDER OIL IS GOING THROUGH THE ROOF. NO WONDER GOLD IS ON THE RISE. IT "IS" INFLATION, AND THERE IS NO SHORT-TERM FIX.

Check Mate!
Peter Asher
Steve and all
http://www.sightings.com/politics5/wakeup_people.htmThe law to take away all the guns and disarm the military, signed by JFK.

Graphic text, can not be posted!!
Peter Asher
House GOP Devises Debt Payment Plan
http://dailynews.yahoo.com/h/ap/20000119/pl/gop_budget_3.htmlWednesday January 19 4:04 AM ET

By DAVID ESPO Associated Press Writer

WASHINGTON (AP) - Speaker Dennis Hastert is ready to announce that House Republicans
will develop a long-term economic plan that envisions paying off the public debt by 2015.

GOP aides, speaking Tuesday night on condition of anonymity, said the Illinois Republican's
pledge anticipates setting aside all of the projected Social Security surplus as well as some
portion of projected general government surplus funds to eliminate the $3.7 trillion public debt
for the first since since 1835.-----
----
The total national debt now totals an estimated $5.76 trillion, of which $3.7 trillion is owed
the public in Treasury bills and savings bonds. The remaining $2 trillion is owed by the
government to Social Security and other trust funds.
Peter Asher
Long article with long URL
lastes on embedded, and 'powerdown'http://www.michaelhyatt.com/discuss/ubb/Forum14/HTML/002662.ht
Peter Asher
Latest
error correction
Peter Asher
Michael Hyatt's current statement
peterasher@earthlink.netThe URL below was for the Dec.28th statement. I recieved the current one by forwarded E-mail,I don't have the URL for that and it's much too long to post. I can pass it on though.

Chris Powell
News agencies report GATA's drive for answers
http://www.egroups.com/group/gata/341.html?Plus the latest "Midas" dispatch from
GATA Chairman Bill Murphy.
Long-Buddy-Go
Site address for message below.
http://www.usagold.comhttp://michaelhyatt.com/discuss/ubb/Forum14/HTML/
This will take you to the parent directory.
Canuck
Hello Stranger
It's been many weeks since we last spoke; glad to see you back. I followed the 'off-line' dialogue and I, perhaps we,
can thank MK, Canuck Gold and Number Six. Very happy to see
you back in the grove. I read your "Who am I" reference.

I 'overextended' myself for Y2K and have for the past 3 weeks been 'unwinding' that situation. I decided to lie low
and regroup, to reflect. I overreacted to Y2K, that was no fault but my own, fortunately not a serious matter.

I have spent more time being objective.

FOA made a statement recently regarding the pre-rollover liquidity injection by the FED and ascertained that perhaps
it was not totally (if not at all) Y2K induced. The Kasriel
piece, of which I follow to some degree, brings credence to
same.

Your recent post is very affirmative to Kasriel's theory.
A 'checkmate' brings an end to the game, yes? I watch, not react to the resignation of the king and I look forward to your next post.

Thanks, past and present.
Peter Asher
Long-Buddy-Go (01/19/2000; 20:49:16MDT - Msg ID:23230)
Thankyou
RossL
Peter Asher #23224
Peter Asher
Thanks Ross
Quite frankly I was hoping one of our 2nd Amendment enthusiasts would read it and give a book report.
koan
oil and crb
Stranger, you know I am your biggest fan. Regarding CRB - would not $29 oil be enough to cause the CRB to break out?
koan
PS
OIL - when I started posting many months ago and $11 oil I suggested the oil cartel could easily cause prices to go up and wondered why they found that such a hard concept. I think they figured that out and now we have high oil with all other things the result. High % rates, CRB, etc. I think it is that simple. As Freud once said sometimes a cigar is just a cigar.
schippi
Gold Sectors Chart
http://www.SelectSectors.com/agpm70.gif Gold Sectors FSAGX & FDPMX continue Up
TownCrier
The GOLDEN VIEW from The Tower
Federal Reserve Bank of Philadelphia President Edward Boehne apparently is utilizing the fact that his days are numbered (i.e. he is resigning from the central bank later this year,) to risk stirring up the ire of the stock markets. While speaking to a business group, he suggested (as reported by Reuters) that 'U.S. investors pouring money into a host of technology stocks are taking a big gamble in hopes that a few will reap tremendous gains.' He indicated that the wealth effect from rising stock values has become a significant factor driving consumer demand to levels that pose a risk of inflation, and that the market's performance reflected an unusual disparity between the shares influencing the indices compared with the broader market. "The large gains have been in the technology sector, which have P/E (price/earnings) ratios that are off the chart." In echoing the concern expressed by other Fed officials lately, Boehne saw the major risk to the economy coming from higher prices and wages brought about by demand putting excessive pressure on resources in short supply.

Meanwhile, on the other side of the ocean, Bank of Japan (BOJ) Governor Masaru Hayami revealed growing unease with the unprecedented policy of keeping short-term interest rates at zero percent. In a news conference he said, "The zero interest rate policy is unquestionably abnormal and it is certain that the side-effects are gradually increasing," although he didn't elaborate on what those might be. He certainly seemed to be floating some trial balloons that the efforts at curbing the yen may be at least partially relaxed into the future, saying "For Asian nations, a strong yen would be a positive factor." He said that it appeared that Japanese exporters were "becoming more resilient toward strength in the yen, while a higher yen has helped Japanese importers offset the negative effects of rising oil prices," as reported by Reuters. Hayami said that a currency should reflect economic fundamentals, while adding that it was important for the currency markets to move in a stable manner. He said that when the G7 meet this Saturday in Tokyo, he would assure the Group that the bank would maintain its current policy stance.

And as we continue our trip around the world, People's Bank of China governor Dai Xianglong will hold his annual news conference on Thursday, an event which many are looking toward for indications of the central bank's intentions on interest rates and bank reform. Bank reform in China has become a hot topic, designed to clean up bad debts as the large state-owned institutions are under pressure to "behave more like commercial banks and less like government cashiers." Reuters reports that a recent study by Standard Chartered Bank indicates, "Given the relatively weak performance of many domestic banks, the opening up of the banking market is set to make life more difficult for most of them." China's efforts toward freeing up their precious metals markets is certainly an integral part of this reform process. Can the West possibly contain gold prices if China's reforms actually fly? In a possible glimpse of things to come, the World Gold Council reported that an update to Gold Fields Mineral Services Gold 1999 survey indicated "Bar hoarding outside of Europe and North America is reported to have risen by 80% following the return of East Asian demand."

Turning to the day's gold market action, after a weak start in NY, spot prices climbed throughout the latter half of the day to end up 80� at $289.20. In COMEX derivative trade, February gold futures closed at $290.30, up 70�. Traders said there was some profit taking after the recent gains, and that there was some fine-tuning of positions ahead of next Tuesday's BOE auction.

NYMEX crude oil futures continued their relentless rise today on little news beyond the cold weather in the Northeast and refinery disruptions. February futures closed 69� higher at $29.54 per barrel.

And that's the view from here...after the close.
TEX
Hey TC.....burning that midnight oil!
Thinking about joining the night owls with that last post? Good night to you, sir!
SteveH
Peter
Read it. Too radical for my taste.

Just watched CNN. Talking guest says he sees no reason the fed needs to raise raise rates. Where do they get these people? Truly blind leading blind. Or worst, knowing knowingly misleading the blind.
Matrix
Financial times says check mate to Greenspan!

" Scepticism begins to enter the mainstream with this recent posting from the financial Times. The FT also agrees that it is indeed check mate for our pal Alan Greenspan"



The Financial times - 12 Jan 2000

US ECONOMY: Walking on troubled waters
Alan Greenspan will need to achieve wonders to secure a smooth slowdown of demand in the overheated US economy

Dear Mr Greenspan,

Congratulations on your renomination as chairman of the Federal Reserve. President Clinton's decision to offer you a fourth term was a foregone conclusion. John McCain, the Republican presidential candidate, captured the mood when he suggested that you should be chairman not just for life, but even in the afterlife. Given these expectations your decision to continue is brave: the reputation of a man deemed capable of walking on water is more likely to sink than to float.

Worse, you are likely to be blamed for events beyond your control. Today people seem to believe that central bankers can create prosperity. Foolish monetary policy, in the form of deflation or high inflation, does great damage. But sensible policy neither ensures fast growth nor eliminates recessions. You know this, which only makes your decision to continue braver. So what are the chances that, at some point, even your hallowed feet will become wet?

To answer this question it is necessary to begin with the roots of the euphoria. For it is quite explicable: an extraordinarily large number of things have gone well for the US - and been done well in and by the US - since the early 1980s.

The Soviet Union collapsed. So, at much the same time, did the growth of the previously all-conquering Japanese economy - a failure underlined by the subsequent crisis in South Korea, the developing country that modelled itself most closely on Japan. Paul Volcker, your predecessor, crushed inflation, while you managed the aftermaths of the stock market crash of 1987, the property crash of the late 1980s and the financial turmoil of the summer and autumn of 1998.

The economy was deregulated in the 1980s and fiscal policy was subsequently tightened in the 1990s. Next month the economy will have achieved its longest expansion on record. It has suffered only one year of mildly negative growth since 1982. Over the past four years of extraordinary resurgence the economy has expanded at an average rate of just over 4 per cent. In November 1999 unemployment was down to 4.1 per cent of the labour force, while year-on-year consumer price inflation was far from low, but at least tolerable, at 3.2 per cent.

Productivity growth has also accelerated, as you have often pointed out. Many observers now judge the underlying growth rate of the economy to have risen from between 2 and 2� per cent, to between 3 and 3� per cent. This improvement in underlying growth is connected to US dominance over today's technological revolutions. Technology, broadly defined, makes up 30 per cent of US stock market capitalisation - a value of over $3,000bn compared with a mere $350bn for the global mining industry.

Your country is on a remarkable winning streak, which does not mean it has avoided big mistakes. For believers in free enterprise US performance is immensely heartening. Yet the consequent euphoria can be overdone. Indeed, nothing is more likely. You yourself have hit on the reason in your notorious remark about "irrational exuberance".

Whatever the underlying improvements in real economic performance, the soaring stock market and rising real incomes are generating still bigger increases in real demand. This has, in turn, created large and ultimately unsustainable macro-economic imbalances. The big question is whether these will unwind smoothly.

Start with the stock market. Between its trough in 1981 and the end of last year the value of the S&P composite index, deflated by consumer prices, rose by 570 per cent. Yet the underlying real earnings of the companies (similarly deflated) included in the index rose by a mere 61 per cent. Meanwhile, the price-earnings ratio - the value placed on corporate earnings - quadrupled. This change in valuation is reflected in the jump in the ratio of the stock market's value to gross domestic product, from a 60-year average of 50 per cent to today's 150 per cent.

The worry must be that this soaring stock market threatens economic instability.

By extension the most powerful criticism of the Federal Reserve is that it is to blame for at least a part of the extraordinary rise.

An ingenious argument for this proposition is that the Fed's interventions have lulled investors into a false sense of security. By indicating that you will slow or halt a fall you may well have persuaded investors to assume more risk than they would otherwise have done.

The "equity risk premium" - the additional return on holding equities instead of bonds - has averaged around 7 percentage points over the long run. At today's valuations this premium may be as low as 1 to 2 per cent. A forthcoming paper argues that this fall - a counterpart of the market's rise - can be explained by the belief among investors that the Fed would seek to put a floor under the market about 25 per cent below its actual level.

Since monetary policy cannot determine real prices in the long term, you can do no such thing. But if investors believe that you can, then that might be sufficient to explain their insouciance over present valuations. If so, your repeated expressions of concern about the impact of panic on markets and your demonstrated willingness to intervene during market crashes have been sufficient, argue the authors, to create a market "bubble".

The soaring stock market has contributed, in turn, to today's symptoms of overheating: real domestic demand rising at around 5 per cent a year for the past four years, which is above almost anyone's view of the long-run trend; a current account deficit of 3.7 per cent of GDP last year, which is forecast by the Organisation for Economic Co-operation and Development to rise to more than 4 per cent this year and next; and an unprecedented private sector net financial deficit. Inflation remains under control, but this could merely reflect a temporary ability to combine a huge current account deficit with a strong dollar.

What the US needs to do, during your next term of office, is unwind the imbalances that have emerged in the present one, without precipitating a recession. You will have to slow the growth of domestic demand below that of potential output. You must also avoid a steep fall in the dollar and keep inflation under control. If you are to pull this off, you will need to avoid a destabilisingly large decline in the stock market. I am delighted that you will be the one attempting to pull this miracle off. If you cannot do so, nobody can. If you can, you do indeed walk on water.

Yours sincerely,
Martin Wolf
PERMAFROST
beesting (IMF/BIS issue); parting thoughts from FOA; Jason Happy...ORO!
First of all, I'd like to thank you, Jason, for the effort you put into shedding light on how the money issue relates to the Bible's teachings. I'll be sure to save the info.

beesting;

All "lesser of two evils" type arguments are based on a logical fallacy that consists of the CONFUSION and equivocation of two very dissimilar notions or factors: quality and quantity.
Just as having committed more or fewer crimes than one's neighbour does not make one any more or any less (biologically) human than him; that the Euro has not caused as much damage as the dollar (yet) doesn't mean it's a different sort of animal than the dollar. (And do not discount the possibility that it may turn out to be a "fully-metamorphosed" evolution of the already harmful-enough larva-dollar.)
In this case, it is not only advisable but NECESSARY, to throw the baby (the Euro) out with the water (the dollar). The alligator takes a chunk out of your posterior and you invite Godzilla home? I sure ain't coming over to your place for a beer!

It doesn't matter what the BIS values "its holdings in" or how it measures its wealth (you were talking about gold); THE ONLY TRUE AND RELEVANT FACT REMAINS THAT, JUST LIKE THE DOLLAR, THE EURO IS NOT REDEEMABLE IN ANY FORM OF WEALTH-GOLD.

As for your mentor, FOA, he states that:

"In none of our meetings have we heard where a fear was expressed that the governments will lose control of digital currencies and (give it) back to gold. That is simply not going to happen, no matter how severe a down turn the loss of the American dollar system creates. Believe it."

beesting, why should we believe your mentor? This guy is talking about NOT giving control back to gold which YOU YOURSELF equate with SOVEREIGNTY. He wants gold bridled and the Euro bewinged to monetary heaven and you want to put him in the HOF?
You're free to "Walk in the Footsteps of the Giants"--hopefully without a Foot in it!

Again, FOA Msg. ID 23197

"At the rate that Euro financing (and use) is growing [translation: higher velocity growth in this particular fiat currency's supply, whether it be in digital or paper form], they will be imploding the paper gold market soon, as they must revalue gold faster."
--This amounts to them (the Euro faction) DEVALUING their own currency BECAUSE the Euro IS NOT GOLD-BACKED (despite all the tacit insinuations to that effect by FOA and his clones) and bestowing renewed monetary credibility to institutionalized INFLATION. You can keep your mentor beesting; mine is in my heart...

ORO;

On closer reading of your comments of yesterday: transitioning by the Euro to greener pastures is not a possibility available to us because the Euro is not a bridge leading to honest money gold. It's a trap set up to ensnare us anew when the old one (the dollar) crumbles. This, the banker community, of which I suspect FOA to be a member of as evinced in his own allusions to be speaking down to us from "official" spheres, are trying to hide from us by advertising the Euro as the one lifeboat off of the dollar-Titanic.

Why not learn to swim (buy gold)? you will no longer spend your life jumping from one leaky boat to another (assuming you don't get drowned in the process) and the ocean you once feared will become your home--you will than have gained your freedom!
Black Blade
Meanwhile Rhodium up another $100 to $1275.00
http://www.kitco.com/gold.live.htmlAu down -$1.20, S&P up +2.70, but long bond down with yeild back up to 6.75%. Other than that, today earnings reports continue to be released, Philly FED index to be released, unemployment numbers, ECB leaves rates alone, etc......ho hum....
18KARAT
Re: ORO (01/19/00; 12:18:33MDT - Msg ID:23209)

Yes, thank you Oro. I take your point.
In a global market where fiat currencies are freely traded,
any central bank whose paper is accepted by everyone else,
can underwrite the inflation of global currency through the expansion of credit.

If despite this currency inflation, the Yen remains "strong"
due to a large current account surplus
(As a result of a strong domestic deflation,
triggered off by all the bad debts unwinding from the previous bubble)
then in effect, Japan is acting like an economic blood donor.

All the other capitalist nations connect themselves to the supply and grow fat,
while the donor wastes away.

Cavan Man
PERMAFROST aka Don Quixote
YO ho mate! We are all sailing aboard the "Titanic" that we daily refer to as planet Earth. We don't make the rules do we? However, it is fortunate to understand the rules, especially in advance; that knowledge helps us play the game. Remember, the fire was raging long before we arrived. Just try not to get burned right!

Your points are well taken and I share your view. However much I agree with you I know there is not a darn thing I can do about it that will effect meaningful global change. My family and I are adrift behind this Titanic, bobbing in its wake, trying to stay afloat. While we must remain tethered to the stern, we await an opportunity to "cut loose" and sail into a true Golden Age as He wills. When we can help another climb into a small vessel and sail beside us we do so. I suppose that is the best we can do.

Have you been to Hagia Sophia? Hope I spelled that right.
Regards..
Cavan Man
Trade Deficit
http://www.news.excite.com/news/r/000120/news-economy-tradeDollar exports strong. Can't wait for December numbers.

I recently attended the International Housewares Show. It was no surprise to find less US manufactured product displayed this year compared to last. Same for the Hardware Show and CES (Consumer Electronics Show).
Leigh
PERMAFROST
Good morning, PERMAFROST! Just wondering -- are you TZADEAK in disguise?
schippi
Vanguard Precious Metals Chart
18KARAT
Re: TheStranger (01/19/2000; 17:27:50MDT - Msg ID:23223)
The Kasriel Piece

That's not all, you know.
Its in the nature of speculative bubbles that in their end game
(to carry your chess analogy a little further),
they become black holes sucking in all available capital
which they absorb and then finally spit out as bad debts.

Hence it is a characteristic of a mania that market breadth collapses.
i.e. the advance-decline line diverges.
As wannabe speculators sell all their other shareholdings to "invest" in bubble superstocks.

It is a characteristic of a mania that bond prices are driven down,
as formerly conservative investors sell their bonds.
After all why hold a T-bond paying even 7%
if you believe you can get 20% forever in bubble stocks.
(Much less 100% per annum in the NASDAQ 100)

It is a characteristic of a mania that mortgages and home equity loans go through the roof.
As true believers mobilise all the collateral they have,
to plunge ever more deeply into the miracle market.

In the final crazy stages, just before the black hole chews you up,
even unsecured lines of credit are used to pour ever more capital down the black hole.
So sure is the believer, that his greatest danger is
that he will miss out on some of the potential profit if he is not 200% plus invested in the market.
Hence margin loans explode and credit card loans go through the roof.
Pawn your wedding ring to buy bubble.com stock?

The tragedy of it all is that so many of this generation,
are so sure that they are going to have a wonderful retirement of leisure and prosperity.
When in fact they are going to have only huge debts they will never repay in their lifetimes.
Poverty and bitterness in their old age.

18K
TheStranger
But It Ain't Just Oil, Koan
Thanks, koan. Industrial metals of all kinds have been in a bull market for a year now. In fact, copper hit a two-year high yesterday. Aluminum prices have been very strong. Steel prices are rising, etc. etc. etc. What had been missing was strength in the grains. But even grains were a big contributor to yesterday's breakout.

Inflation IS, after all, an increase in the supply of money. Providing that increase exceeds growth of the economy + productivity growth (which it lately has), rising prices become axiomatic. Oil is just the best example of this phenomenon in the current cycle. It is by no means the only example.

(By the way, koan, even if it were just oil, I wouldn't dismiss it's significance. Salt Lake City is host for the 2002 Winter Olympics. As such, they currently have the biggest road construction and reconstruction project underway in the United States. This month, contractors raised the price of asphalt 15%. This will wind up costing taxpayers and is just one small example of how pervasive oil prices are).

Canuck - thanks for the kind words. Yes "checkmate" was my way of saying that the Fed is now boxed in. Kasriel deserves great credit for this discovery. Adrian Van Eck is also making this point. To wit: Much of the money which evidently was created to protect against a y2k crisis, wound up cycling through the stock market. This was NOT the Fed's intention. Now, if they reduce the money stock, there won't be enough around when all those margin buyers want to sell.

There is no attractive option for the Fed at this juncture. So far they have depended on a combination of jawboning and anemic rate increases to forestall inflation. (Anyone who saw yesterday's housing starts numbers knows what I mean by "anemic" rate increases). Yet, any effort to rapidly reverse the monetary aggregates would burst the Wall Street bubble for sure. Ergo, checkmate. IN-FLOTS-EE-OWE-NAY!

I made the point last January (in this very forum) that it takes a year or more for monetary policy to show up in prices. We have experienced a reluctance on the part of corporate America to raise prices in response to rising costs. This is because of intellectual inertia. Management has been so lulled by years of disinflation that they have been slow to respond to the obvious. Perfect examples of this reluctance are companies like Purolator which declare a price hike but euphemistically call it a "fuel surcharge", Arco, which has not raised their refinery product prices sufficiently to offset the climbing cost of crude, and gold miners who have stayed too long at the hedging trough.

This mentality was everywhere, but it cannot last. Purolator's increase will be made permanent. Arco's finished refinery products prices will be higher this year, etc.

One last thought: This reluctance to recognize the return of inflation is what will restrain capacity increases for awhile. This restraint will compound the price increases which are coming.

USAGOLD
Today's Gold Market Report
Market Report (1/21/00): Gold's new year uptrend stalled a bit this
morning with the yellow starting the day much as it did yesterday --
down about $1.50. Yesterday, gold rallied as the New York trading
session advanced to finish up 80�. The Bank of England will hold its
fourth 25 ton auction on Monday (1/25/00). London dealers are quoted by
FWN as saying that they do not expect any surprises in the upcoming BOE
auction. However, that is what FWN reported just prior to the other four
auctions. In each case there were major surprises including the auction
being overbid five times and Gold Fields and Anglo mining compaines
entering aggressive bids to acquire additional physical metal to meet
their hedge book demands. So the current nonchalance should be taken
with a grain of salt. The Asian markets reported some profit taking and
Australian producer selling overnight. Of strong interest to gold owners
is the news from South Africa that Harmony had unwound Randfontein's
hedge book by 65%. Harmony recently acquired Randfontein. In dehedging
Randfontein, Harmony stated that it was positioning its new acquisition
to benefit from any price run-up. Harmony's move echoes a trend within
the gold mining industry to unwind hedges and re-position their firms to
take advantage of higher gold prices. The hedge book unwinding comes
amidst heavy stockholder pressure to rework strategies in a manner that
better serves the gold industry and stockholders.

That's it for today, my fellow goldmeisters. See you here tomorrow.
TheStranger
18KARAT
Obviously, I was writing when your post came up. Your vision is somewhat bleaker than my own, but maybe you are seeing farther down the road.
CoinGuy
Made in the U.S.A.
Cavan,

That label is getting harder and harder to find, I started looking about two years ago on every new item I purchased for myself. It seem about %90 of all the labels I glanced were "Made in China".

Back from vacation, tan, and freezing...Ahhh, the good old midwest.

Coinguy
Canuck Gold
Idealists, idealists, idealists
The most frustrating aspect of debates involving idealists is that, even though they make articulate, compelling and moral statements to support their cause, they generally suggest that others implement their visions. A socialist might say that there should be no poverty in the world, that poor people have suffered social injustices through no fault of their own, that if TPTB corrected these injustices, all would be right with the world. There would be no need for
prisons or welfare or hunger etc etc. Ask them how this can be brought about, and they come out with a string of suggestions that any thinking person can break down in minutes. However, that's not the point. They don't want to hear arguments against realizing their vision. It takes
education and collective will, they will say. If only everyone would come around to their way of thinking, everything would be right with the world. (I know this from practical experience because my wife is one of them.) I don't think there's anything wrong with their way of thinking as long as they can come up with a means of implementing their vision without taking away the
freedom and independence of people. It hasn't happened yet.

How does this relate to gold you may ask? Well, please bear with me as I try to draw a mental picture. This is not meant to insult the intelligence of those members of the forum who understand this already, but there are some who just don't get it.

About 140,000 metric tons of gold have been mined over the years, give or take a few thousand tons. Most of it has been manufactured into jewelery but that still leaves, let's be generous, around 50,000 tons in central banks and private storage. At 32,152 troy ounces to the ton, that's just over 1.6 billion ounces. In order for fiat currencies to go the way of the dodo, these 1.6 billion ounces would somehow have to replace them.

So let's look at the US. They have around 8000 tons, or 260 million ounces or so. If there were 1 trillion US dollars in circulation (there are a lot more, but who's counting?), replacing them with gold would require the price of gold to be worth US$3846 per ounce, give or take. Remember, in such a world, we couldn't have any more fractional banking. If there are 5 trillion US dollars in circulation, gold would have to be worth nearly 20 grand per. One could argue that the proportion of US dollars to all other currencies is high and that excess gold from other countries could be acquired to back the dollar. Unfortunately the US doesn't have anything that they could use to trade for it that anyone would want. (Apart from anything else, this demonstrates why the US dollar will take a severe hit in the not-too-distant future.)

So with an ounce of gold in my pocket, how do I pay for a loaf of bread and a quart of milk. Though it could be done using electronic gold instead of physical gold it wouldn't be practical to conduct every transaction electronically. What would happen if there was a power failure, that
lasted a day, a week? What about those countries that are too poor to implement electronic debit banking, never mind the cost of expanding it into every aspect of monetary life in those countries that aren't?

Instead of behaving like a petulant child, demanding that fiat currencies not be allowed to continue, it would be eminently more preferable for a practical solution to be proposed for their replacement. Suggestions, anyone?

CG
CoBra(too)
Re: USA Gold market report!
Dear MK,
Harmony cutting back Randfonteins hedgebook by 65% - that's more than a million ounzes and the market didn't even shrug (OK- it's miniscule in terms of LBMA's daily 37moz turnover), but it definitely means that at least (some)producers are rethinking their position - including ABX, having the gall to poll shareholders views on their hedging strategies... can't remember they've asked them before the fact of building their obscene short position, camouflaged as premium options strategy.
Anyway the Harmony cover of an equivalent of 30 tons of gold
may only be a drop in the ocean of 10.000 tons or more of physical sold via carry trades seems to be the peak of the iceberg only. With commodities all over explosively popping out of their long and traumatic slumber, how can the gold markets be contained for much longer?
In the meantime, I realize growing urgency among some of the major gold producers to take advantage of capital deprived and (starved) juniors, which is a telling story as how the ethics in this sector have deteriorated in view of the easy money made by collusion and (hollow)promises by their worst foes - the bullion banks(ters).
Best regards CB2
TownCrier
Fed adds reserves to the banking system
http://biz.yahoo.com/rf/000120/ys.htmlThe Fed added temporary reserves to the banking system with an overnight repurchase operation that totaled $2.51 billion dollars. The mix of collateral included Treasuries, agencies, and mortgage-backed securities. We're obviously past the point of possible public frenzy over Y2K and banking, and yet nothing has changed. With the exception of a few matched sales, the Fed is largely still adding to reserves with repos, and still taking the sub par collateral...mortgage-backed securities.
Gandalf the White
USAGOLD's BoE Auction day and date
Hail MK ! -- What year calendar are you looking at ? --
Is 1-25-00 a Monday ?
<;-)
CoBra(too)
Rarely seen a faster turnaround in markets -
What's up or rather down in USS of A?
TownCrier
Interesting additional press on the BOE gold auction next Tuesday...
In his morning report MK said, "London dealers are quoted by FWN as saying that they do not expect any surprises in the upcoming BOE auction. However, that is what FWN reported just prior to the other four auctions...So the current nonchalance should be taken with a grain of salt."

However, this was an interesting line that concluded a Reuters report on the same subject, after saying that traders weren't expecting anything tumultuous coming from the auction:
"Still, there is a chance for motion, given data on any other central bank sales just hours after the 1215 GMT release of auction results. Ashanti also faces another deadline on February 3, with talk it must buy back some gold."
TownCrier
Europe opposes any G7 reference to euro, saying official comments are counter-productive
http://biz.yahoo.com/rf/000120/fp.htmlWhile much of this article deals with what is and has been officially said and why, here is the key point to walk away with. After stating that Japan will likely press hard for cooperation toward a weaker yen when the Group of Seven nations meet in Tokyo Saturday, Reuters offered this:

"However, from the point of view of Washington, which would like to reduce its mammoth current account deficit, it would be important to signal that any dollar strength against the yen should preferably be offset by a weakening against the euro."

Methinks it is time to dig out the words of George Bernard Shaw from MK's "ABC's of Gold Investing"...from the Quotations chapter:
"You have to choose (as a voter) between trusting to the natural stability of gold and the natural stability and intelligence of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold." --G.B.S. (1856-1950)
TownCrier
Which side do you come down on?
http://biz.yahoo.com/rf/000120/7p.htmlHEADLINE: U.S. Stalls over Private Role in Crisis

Germany is upset that America is "dragging its feet" over making progress in international financial reforms in which the private sector will have to shoulder its share of the burdern. The problem stems from Washington recognizing that "Wall Street banks would end up shouldering the heaviest burden of any future private sector operations to rescue insolvent government borrowers." Perhaps that could have been better worded, indicating that while their gains have been privatizes, the losses must no longer be sociallized. The "rescue" operations have applied not to the nations, but rather to the banks that have found themselves to be holding non-performing loans.

On istituting these reforms, the German official said, "We want to push the pace."
beesting
Sir,PERMAFROST--my LAST discourse with you!
You may or may not have noticed the imaginary theme here at the USAGOLD round table is medieval times, with a list of rules & guidelines(set by the owner of the castle). In a previous post I asked you in a gentlemanly manner to read and give your defination of the rules & guidelines.You never responded, so I'll repost for you rule number one.
Prohibitions:
1. Personal attacks....
Your post this morning sir permafrost:
"(despite all the tacit insinuations to that effect by FOA and his clones)bla bla bla you can keep your mentor beesting,mine is in my heart...."

This seems like a personal attack to me, and it's not the first time it's happened,and it's not the worst case example!!

In the theme of the forum, I was restrained by other forum members(The Stranger is 6'6" & weighs 300 lbs.)from plunging my imaginary "DIRK" to the hilt..in your heart...to defend Sir FOA's Honor, which you, sir have tried your best to discredit many times.
Sir FOA has earned special honor and special recognition, over a long period of time posting here,because of his many long hours of well thought out answers and opinions.
IMHO there is a huge difference between constructive criticism and destructive criticism.
Yours sir permafrost, falls into the category of destructive, IMHO!

FYI, permafrost,there is a seductive lady, that just might be your type, who posts under "Chris" at:
http://www.kitcomm.com/cgi-bin/comments/gold/display_short.cgi#start
Check her out!

I apologize to M.K. for using all this space in a non-Gold related topic, but thats what happens when a new poster tries to divert attention away from the on-going topics, and focus all that concentrated attention on himself at some-one else's expense(FOA's), at all costs.(The Dennis Rodman syndrome).
Thank you for reading.....beesting.
TownCrier
China Central Bank to Keep Money Supply Growth Steady; Won't Devalue Yuan
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=05ec7704eb2f321c8698536793320ebcAt today's press conference, China's central bank Governor Dai Xianglong pledge to keep China's M1 restrained to a rate of expantion by 15-17%, even though many economists had been calling on the central bank to pump up the money supply faster to fuel economic growth and put a halt to falling prices--a condition which has been blamed for the slump in consumer spending. To this, Dai Xianglong said, "We have to consider both the need to expand domestic demand and the need for the stable and sound development of the banks. We can't expand money supply blindly." He also suggested that "with the economy and money supply expanding, it is inappropriate to describe the problems in China's economy as those that characterize deflation." You tell 'em, Dai.
CoBra(too)
@MK- cooling some MOET....
for the oncoming millenium of 1 million hits at your web site - awesome - and thanks for your efforts and kindness to
tolerate this "Sammelsurium" (pse ask Stranger for translation) of diverse and not so diverse minds.

Many happy returns of your success (and pls don't tell me it's premature)! It isn't- it's timing! Best CB2!

Stanley L
Test
Test
TownCrier
U.S. November Trade Deficit Widens to a Record $26.5 Billion
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=0d5cffa5089887f23312004078fce2d5While our level of imports rose by 1.4% in November to set a new record, as a small consolation, at least our exports reached a record high too, growing 0.7% to $82.9 billion. Mark Vitner, an economist at First Union Corp said "Demand appears to be reviving overseas." Check this out...Bloomberg reported that America's exports were led by gold, industrial supplies, and consumer and capital goods.

Again, overseas economies are gaining strength and reviving their demand for "things," while our exports were led by gold.

Kinda gives you an uneasy feeling, doesn't it? That is, unless you've already taken a healthy share of the available gold for yourself.
goldfan
18KARAT Your great metaphors
Thanks 18KARAT for your posts. I am totally delighted by theclear simple way you paint your thoghts as pictures,

for example, you said
its in the nature of speculative bubbles that in their end game
...
they become black holes sucking in all available capital..


Japan is acting like an economic blood donor....

Words like these really help me to get it!!

Goldfan
PH in LA
beesting's post (01/20/2000; 11:15:15MDT - Msg ID:23262)
Amen! Beesting!

Thanks for spelling out so clearly what should be obvious by now to all.
Jason Happy
To Canuck Gold
Canuck Gold, you raise age old questions that, I believe, are easily answered.

You asked, (1), "with an ounce of gold in my pocket, how do I pay for a loaf of bread and a quart of milk."

And indirectly bashed the current fiat method of visa/mastercard when you said

(2)"Though it could be done using electronic gold instead of physical gold it wouldn't be practical to conduct every transaction electronically. What would happen if there was a power failure, that lasted a day, a week?"

Since electronic methods of payment, visa/mastercard/discover/debitcards are working very well on the practacal/useful level, I don't see why you bash electronic transactions in an attempt to make fun of e-gold, which, should it be implemented, should work just as well as the current system. Now, the current system does not use electronic means for "every transaction"; so why do you suppose that a total gold system (no fiat) must do so? I just didn't follow your logic there, or I missed something.

To answer your original question, "with an ounce of gold in my pocket, how do I pay for a loaf of bread and a quart of milk" let me ask you; "with a stock certificate for AOL in your pocket, how do you pay for a loaf of bread and a quart of milk?"

The answer is simple, you do not use either the ounce or the certificate to buy such small items, each is too valuable for such a small transaction.

What to use for change/cash if fiat cash is not allowed? Is that the question?

Silver and copper coins worked well as a method for making change, why would these not work well in the future? Because the "silver is gone"?

To ensure people do not hoard silver coins, and to allow silver to come to market for the purpose of new coinage, a government simply needs to set the gold to silver exchange rate slightly in favor of using silver, as had been done in the past.

My question to you then, is why wouldn't this method be suitable for buying that quart of milk and loaf of bread, that, to me, you are needlessly agonizing over?

Other possible suggestions:

Take a 1/10 ounce gold coin or ounce of silver in to your local supermarket, and establish a line of credit which can be drawn on as needed for smaller purchases. This, also, was a method in times past.

Today, with the advent of smart cards, you could buy a smart card which contains 1/10 oz. of gold. Personally, I hate credit cards, and the idea of smart cards, which, I think will create a situation whereby the mark of the beast could easily be implemented...

Finally, your assumption that all current levels of credit (dollars) need to be squished back into gold is a false idea, that I used to hold myself about 6 months ago, in a way to justify to myself my gold purchases, and to justify a future upward valuation of gold. However, throughout history, when credit values become excessive and not based on reason, as exists today, there must be a collapse of these values. Gold could go to $20,000 per ounce, as you say, and the gold does not necessarily have to have any more increased purchasing power than it does today. In fact, if a collapse is particularly severe, & swift, and brings on a famine, a loaf of bread might cost that ounce of gold!

The idea that a rich person's $100 Billion purchasing power must be kept equal after a crash, is false. Does this imply that a gold standard would take away such a wealthy person's freedom? Maybe. Bill Gates has the freedom to sell his shares and buy gold at any time, doesn't he? Well, not really. There isn't enough gold in the world at today's prices...

Go Gold!

So, I ask you and the forum, what is wrong, specifically, with a total gold system replacing the current system, if it be additionally backed by Biblical principles as I outlined yesterday?

I see as one of the biggest problems being that the very people who stole the gold in the first place back in 1933, and foisted this current abomination of fiat-currency upon us all, would have an invaluable head start, so that even if we went to a gold standard, and even if their untold Billions of false dollar wealth were destroyed, and all the false dollar claims on land and property went along with it, they would still have an incredible head start in a total gold standard. They would probably set up banks of e-gold, and in a few short years, begin their debt conquest and fractional reserve fraud games all over again.

This worries me far more than how I would buy a loaf of bread with a gold coin in my pocket... Actually, even in this post y2k world I think it's prudent to have a small food supply on hand.

The other concern that has been bugging me lately, is how the U.S. got into $250 Billion of debt back in 1945, when gold was valued at $34 an ounce? Under such circumstances, the $250 Billion (needed to win WWII) would be equal to 228,707 Tons of Gold. In essence, somebody loaned us money that didn't exist!!!

Perhaps those people who hold bonds, believing that the U.S. will make good on a promise to repay should get what comes to them when it comes time to fling off the oppression of this fiat system... that is, the same thing that was loaned in the first place, phantom gold... or, in other words, nothing!
Hill Billy Mitchell
THE THIRD HORSMEN
The third horse of the Apocalypse:

I thought it advisable to direct some thoughts concerning the wherewithal of the Almighty to those who might be in search of the whole truth concerning the horsemen. I do hope that my post does not incite a riot from those quarters who think that God has nothing to do with markets and economics; however to leave out God from the equation is at best foolish and at worse financial suicide.

While perusing the writings of Joseph A. Siess and especially his exposition of the Revelation I happened upon what I consider to be most pertinent to our mutual interests. The following is a quote from THE APOCALYPSE by Seiss, Chapter 12, page 134. This book was a republication by Kregel Publications in 1987. The original publication was C. C. Cook in 1900 a full 29 years before the famous equities crash and the ensuing 10 years of pure dearth.

CONCERNING THE 3RD HORSE OF THE APOCALYPSE:

"The rider of this black horse carries a pair of balances in his hand. There is close and careful weighing: and things weighed are the common articles of food. John also 'heard as if a voice in the midst of the four Living ones, saying: A choenix(measure) of wheat for a denarius, and three choenixes of barley for a denarius.' When things are plentiful, exact weight or measure is not regarded. The Spirit as given to Christ, was given without measure. So also Joseph's gathering of the corn, and in David's gathering of copper for the temple. And when corn is abundant, it is sold by gross measure, and no attention is paid to a few hundred grains, one way or the other. But when it becomes high in price and scarce, then it is strictly weighed, and every ounce is taken into account. And, in numerous places in Scripture, the weighing out of the bread to be eaten, is given as one of the marks of great scarcity and want.(Lev.26:20, Ez. 4:10,16.)"

"But the picture is further shown to be one of scarcity, by the prices of provisions which John heard declared. People do not generally suppose that God has much to do with price-lists. They go up and down, and millions higgle over them every day, but no one thinks of anything Divine connected with them. But whether men realize it or not, price-lists are made in heaven. John hears the rates of corn and bread announced by the same heavenly powers by which these mystic horses are called to action. Whatever the weather, the crops, the quantities of money in the country, the extent of the speculation in the market, or other subordinate causes may have to do with it, the prime and all-controlling cause is the decree of the throne. It is God from whom we have our daily bread, and it is by His will that it is plentiful and cheap, or scarce, and costly."

"The prices here given, are judgment prices, indicative of extreme scarcity and distress. A choenix (measure) is about a pint and a half of our measure, and is the ordinary allowance of wheat to a man for one day's subsistence. A denarius was the ordinary wages for a full day's labour. And when a choenix of wheat costs a denarius, it is as much as a man can do to earn the bread he himself consumes, leaving nothing for his family or for his other wants. "

"But even at these ruinous rates, there is not wheat enough. People have to betake themselves to barley--the food of horses and beasts of burden. Yet the barley is as difficult of procurement as the wheat. In ordinary times a denarius would buy twenty-four choenixes of barley; but here a denarius will buy but three--the scanty allowance for a day's subsistence for a slave."

There is more on the subject but I withhold to see if this type of eternal truth has a place on this venerable site. It won't take much to silence me. Just a few negatives without encouragement will do it.

Hill Billy Mitchell
Jason Happy
Hill Billy Mitchell
I quoted that verse from Rev. just yesterday. I think it's very important, particularly when you consider how much easier it is today to implement the mark of the beast, meaning that it's certainly closer to fulfillment than it was in the past, although how far away, exactly, remains to be seen.

Some of the Biblical questions I'm wrestling with are:

What exactly is the role of gold and silver in the end time prophesies?

Some verses suggest it will be a haven, others suggest it will be useless.

Perhaps it will go through both stages, haven first, then uselessness when the antichrist gains control of the "gold of Egypt" as mentioned in Daniel, and enforces his mark of the beast as mentioned in Revelation.
Peter Asher
beesting
Way to go! And good entertaining writing in the process.
Skip
What's up with DROOY?
There's some talk on another gold forum about DROOY. Can anyone provide some intelligent information about the potential of this stock, and why we should consider the following? (1)Buying more, (2) selling some of what we have, or (3)holding?
Thanks,
Skip
Jason Happy
DURBAN DEEP INVESTMENT BONANZA
Skip, This report by vronsky is 6 months old, but it may answer some questions you have.

http://www.gold-eagle.com/gold_digest_99/vronsky060199.html
Skip
@Jason Happy
Thank you for your response regarding DROOY.
--Skip
Cavan Man
Gold
The riches of Heaven's pavement, trodden gold,
Showers on her kings barbaric pearl and gold,
A broad and ample road, whose dust is gold,
Time will run back and fetch the age of gold.

John Milton
Canuck Gold
Jason Happy (01/20/2000; 12:30:30MDT - Msg ID:23269)
A quick response. Yes, making change was my point. Personally, I would not want to carry actual gold, or silver and copper coins to make change, either. They weigh too much and can easily be counterfeited. I also don't think silver is stable enough to be used as a currency any more. The supply of silver is well below current demand. It's a commodity that fluctuates with supply due to industrial applications.

I wasn't making fun of e-gold. It could be used wherever a credit or debit card is currently used but it couldn't be used for everything. There has been an explosion of the use of debit cards in Canada, higher per capita than anywhere else, it was recently reported, but they cannot be used for every purchase. There will still be a need for non-electronic currency but none of your proposals fit the bill. I'm not thrilled with the idea of smart cards. I work in the computer industry and know there are too many smart people out there who can get around ANY security system. Something more practical and secure would have to be proposed. Outta time, more later.

CG
Leigh
Hill Billy Mitchell
Dear Hill Billy: Thanks for the information! Those verses were haunting me during my Y2K preps. It amazed me that I was able to buy excellent quality wheat, corn, and oats for next to nothing per 50-pound bag. Every time I thought about those Revelation verses I'd buy another bag!

Glad to see you back!
Journeyman
FOA's Overviews: A different interpretation: (Gold will rise

Sheesh! With PERMAFROST (MID#22242), Aristotle, Solomon
Weaver, Peter Asher, Goldfan, Oro, etc. it's hard to keep up
let alone say anything new. So I'll just try for a more
radical spin, a radical spin I believe is probable, however.

With all due respect to FOA -- I've learned a LOT from his
posts, and hope to learn a lot more -- once the scenario he
is suggesting gets up a head of steam, the end result,
particularly with the wired world of tomorrow (even the
wired world of today,) the results will rapidly evolve out
of the hands of those traditional elites who truly believe
they will remain in control.

"Our stance is and always has been that the world will
be using paper digital currencies for the rest of our
lifetime. I for one, have never heard any official
voice his stance that we will move back into a gold
standard." -FOA (1/19/00; 8:53:32MDT - Msg ID:23197)

The Soviet hierarchy had no concept that peristroika and
glassnost would lead to the dissolution of the Soviet Union
either. -J.

"Their (Euroland) direction has always been to keep a
reserve currency system and strengthen it with a free
physical gold market trading in the background." -FOA
(1/19/00; 8:53:32MDT - Msg ID:23197)

Of course! No banker or governmentalist wants the dicipline
of REDEEMABLE gold interfering with his profits or his
"social engineering" or his bureaucratic empire building.
They all want their cake and they want to eat it too. They
want to jump up and down and point to the gold they have and
loudly proclaim, in essence, "Look! We're rich - - - we
have all this gold. So when we print-up or electronically
create these inherently worthless monetary units, you can
trust us to keep the supply limited! Remember we have
gold!! Rah! Rah! Rah! We have gold!" Can you say
"non-sequitur?"

Should you ask one of them, "Will you redeem your monetary
units for that gold you like to flout," you would get an
incredulous stare, and if it was a stare from a rare
informed individual in an uncharacteristically honest mood,
"Do you think we're crazy! If we let all that gold that we
have locked up in our vaults out into 'the peoples'' hands,
why, gold would become a major competitor to our inherently
worthless monetary units! We couldn't harvest the
seigniorage (profit) from creating them nor could we profit
by 'inflating' the money supply!"

In none of our meetings have we heard where a fear was
expressed that the governments will lose control of
digital currencies and give it (that control) back to
gold. That is simply not going to happen, no matter how
severe a down turn the loss of the American dollar
system creates. Believe it." -FOA (1/19/00; 8:53:32MDT
- Msg ID:23197)

Call me Pollyanna but . . . Things are NOT going to be under
government or Central Bank control, especially in the
digital age. Governments will not "give control back to
gold," -- gold will _take_ control back. Once gold tokens
begin to circulate on the internet as REDEEMABLE E-tokens
(and they will -- ASK me), the genie is out of the bottle
and the camel has it's nose in the banker's tent. What do
you want YOUR savings denominated in, irredeemable,
depreciating E-dollars, irredeemable soon-to-depreciate E-
euros, or REDEEMABLE E-gold?

When you trade with "foreigners" (either buying or selling,)
do you want to have to translate prices from a foreign
currency into your own? Do you want to have to include
foreign exchange costs in every cross-border transaction and
deal with constantly varying exchange rates that effectively
change prices from day to day and even hour to hour?

Once people can see gold in competition with fiat, fiat
pleads "nolo contendre" (no contest.) In the classic 1790s
French inflation for instance, the French "Congress" (called
the "National Convention") passed measure after measure in
the vain attempt to protect their brand of fiat paper
currency, called "assignats," against competition from
"specie," that is from gold and silver money:

"To reach the climax of ferocity, the Convention
decreed, in May 1794, that the death penalty should be
inflicted on any person convicted of 'having asked,
before a bargain was concluded, in what money
[assignats or specie] payment was to be made.' The
great finance minister, Cambon, soon saw that the worst
enemies of his policy were gold and silver. Therefore
it was that, under his lead, the Convention closed the
Exchange and finally, on November 13, 1793, under
terrifying penalties, suppressed all commerce in the
precious metals." -Andrew Dickson White, Fiat Money
Inflation In France, (Irvington-on-Hudson, New York:
The Foundation for Economic Education, INC. 1959), p.
78 & 79

This is the power of gold which modern banksters and
governmentalists -- AND FOA -- have apparently forgotten.

Consider that what's actually being done in the case of the
Euro folks "marking their gold to market" every few weeks
and what the IMF calls "revaluing their gold" is really in
both cases, "marking their currencies to gold." As long as
this isn't recognized, as long as we and the world continue
to conceptually assume the dollar, euro, yen, etc. are the
standards against which trade value is measured, they can
get away with such semantic perversions.

Once the various currency blocks begin to use gold for
settlement, they're caught between a rock and the gold spot
-- the true value of their fiat E-currencies versus gold
will be available for all to see. As soon as this is more
in the open, with exchange rates quoted in gold, and first
cross-border prices and later internal prices quoted in
gold, the jig will begin to rise (the jig has to rise before
it can be "up".) Gold will once again serve it's "barometer
function," demonstrating the depreciation of fiat
currencies. Combine this with availability of internet
REDEEMABLE E-gold, and soon the fiat jig _will _be up!

How soon? Well, I broke my crystal ball awhile back, and
haven't been moved to replace it. But these days, things
often happen a lot more quickly than expected.

Regards,
Journeyman

ADDENDUM: As Oro remarked a few months ago, ~"Be careful
when you go out with another's girlfriend," referring to the
fact that a large percentage of gold is held by Central
Banks. This brings up the possibility of the old problem
the bankers continually face: Two tiered gold prices; the
"official" doctored price (like the $42 per oz. fiction the
IMF was attempting to protect until the recent "revaluing")
and the free market price. The threat to dump all this gold
could also be a spoiler hanging over the head of E-gold --
but maybe the need in international settlements use
precludes or at least tempers this kind of behavior? Oro?
TownCrier? Aristotle?

Additionally, this circumstance should make it clear that we
TRUE goldmeisters should LOVE the gold carry trade and gold
leasing -- anything that would pry more gold out of the
hands of the Central Bankers. Instead, we constantly rail
against it because it temporarily decreases the price in
dollars. Well, the Washington Agreement has probably made
that a moot point.

DISCLAIMER: "Prediction is very difficult, especially of the
future." -Yogi Berra
goldfan
Journeyman Gold will take control
Sir Journeyman this is a most provocative statement. Also most intriguing. Thanks and I'll let you know what more I think about it when I've taken some time to do that. I have the utmost respect for all here who share their views... I personally don't take kindly to being told what to think, but I try to keep an open mind even when tempted to shut the hatch..

Just this minute, looking at DOW and NASDAQ charts, the choppiness of the past few days, and seeing the jump in CRB the past few days, today's breakdown below 60 in FNM...my impression is of a seachange in the tone. the charts look like there has been a change in the fractal dimension, the sort of change that would signal a chaotic breakdown?

If it happpens, you read it here first!!If it doesn't,oh well, bad call..

Be nice to have some fractal analysis data, don't know where to look for it.

FWIW

Goldfan


Jason Happy
Encryption
Canuck Gold, all computer scientists agree that 128 bit encryption is totally uncrackable today, but why settle? 256 bit encryption is available. Why else is the government so afraid of 128 bit encryption?

It made big news this last year when 64 bit encryption was cracked in about a day using some of the top code cracking techniques and fastest computers. 64 bit encryption has 72 quadrillion combinations. 128 bit is not simply twice as tough to crack... it has 72 quad x 72 quad combinations, or 10 to the 43th power.

Let's assume that if it takes a year of computer time, a code is, "uncrackable" for all practable purposes. Using the best known code cracking computers and techniques, it would take 72 quadrillion days to crack 128 bit encryption... not possible. Yes, computers are getting faster, according to moore's law, doubling in power/speed every 18 months. Well, it will take 64 doublings in speed before they can crack 128 bit encryption in a day... so, that will be 64 x 18 months, or 96 years of moore's law continuing it's pace before 128 bit encryption will be crackable, assuming, of course, that the code cracking software in use cannot also be improved upon...

Hey, I don't like to get into arguments like this, we are both on the same side, right? We both want something better that what we have today? Believe me, encryption is safe, and it will work. It already is working, in case you have not noticed, and have never ordered anything online. Find one of your computer buddies who can crack 128 bit encryption, and they will for sure win a nobel prize or more! Better use 256 bit encryption just to be safe... 8-)

Unfortunately, I believe this argument will ultimately be used to advance & implement the mark of the beast, an obviously electronic money system.
Cavan Man
J'man
Good PostWhere to find out all about E gold?

Thanks,,,,,
Twice Discipled
(No Subject)
www.e-gold.comTimely discussion, I have spent the past two days reading and re-reading e-gold's web site trying to decide if it is appealing to me.

If you have pros and/or cons, please share them.
goldfan
Fractal Market Analysis- FMA
http://oara.org/mpc/fma/fmarev4.htmFractal Market Analysis: Applying Chaos Theory to Investment & Economics

by Edgar E. Peters
Reviewed by Michael P. Corning

entrepreneur n. 1. one who cannot leave well enough alone.
Edgar E. Peters wasn't satisfied with the Efficient Market Hypothesis.

. With the publication of his first book, Chaos and Order in Capital Markets, John Wiley & Sons, New York, 1991, he went public with his concerns about its underlying assumptions and with its empirical shortcomings. That book, a manifesto really, was followed last year by Fractal Market Analysis: Applying Chaos Theory to Investment & Economics. Where his first book broke ground, FMA has laid the foundation of a new conceptual infrastructure of capital markets.

(Selected clips from the review, selected by goldfan):

This new structure is based on a premise different from the EMH: liquidity instead of efficiency.

Peters postulates that markets consist in many investors using different investment horizons who diversify each other because they respond to the same information in different ways resulting in market stability or liquidity. Markets break down when long term investors leave the market or act like short term traders.
....

In Chaos: Making a New Science, James Gleick writes, "The most passionate advocates of the new science go so far as to say that twentieth century science will be remembered for just three things: relativity, quantum mechanics, and chaos." Each of these sciences is primarily interested in understanding reality at a characteristic scale: quantum mechanics works at subatomic dimensions, relativity at the galactic scale where speeds approach the upper limit of light, and chaos theory at the scale of everyday life.

Chaos theory, however, includes a subdomain, fractal analysis, which, in a way, is the study of scale itself. Whereas the former sciences take scale for granted, fractal analysis does not.

This is the first lesson from chaos theory; it informs the essence of the FMH. For the reader, failure to understand the significance of scale in capital markets subverts an understanding of liquidity, and therefore risk, while it also makes the journey through the subsequent statistical terrain of the book all the more tortuous.
......

In place of efficiency, FMA postulates a new criterion: liquidity. For Peters this is the sine qua non of capital markets.

....

In fact, Mexico is an excellent example of how FMH works in the real world: Long term investors left that market, in part, because they lost faith in fundamental political data. This left only the technical market data which is stochastic and highly volatile--especially in the supercharged atmosphere of a political/economic crisis. Investors who dismiss the importance of fundamental data can only justify their bias by saying, for a trader, the information is not very useful (unless the quality of that data causes many more investors to join the trading frenzy). On the other hand, when a trader experiences a six sigma event which will cause insolvency in a few hours, they are grateful when an investor steps up and buys because the price change represented only a .15 sigma event to them. Fundamental data also accounts for the confidence the long term investor has which tends to keep them in the market despite the market's volatility. Not very useful, unless it's not there.

....


Further, and more to the point with respect to FMA, ignorance of the nature of volatility and its relation to persistence has long term deleterious consequences: "...it is possible that we may be over or under estimating our risk and return potential from investing versus speculating." We are investing to the extent our choices are based on wisdom and understanding and we are speculating if, like the ancient Greeks who gave us the term, our choices are based on stochastikos, mere stochastic guesses.

FMA has a very great deal to say about the nature of volatility and its relations to persistence. It therefore has a very great deal to say about risk. Failure to apprehend this understanding does not mean you are a bad planner, I just wouldn't want to be your client.




We risk making two types of errors when faced with a new and provocative world view. Type I: we too quickly appropriate a new idea or theory. Type II: we too quickly dismiss a new idea or theory.

With Type I errors we agree without understanding; with Type II: we disagree without appreciating. The former is foolishness, the latter is insolent. With Type I errors we are not fully utilizing our critical faculties; with Type II errors we are forgetting our intuition. (emphasis due to goldfan)

In a very real sense, Peters book is about hubris, a lesson immediately missed by readers who come to it like greedy acolytes. The lessons of this book are not "Read it and reap." but "Read it and leap."
Michael P. Corning is the Quality Assurance Officer at Chuck Jones & Associates, Inc., Portland, Oregon. The opinions expressed in this review are his and not necessarily those of Chuck Jones & Associates, Inc.

FWIW.... the essence of chaos is so much volatility that you can't make predictions any more, and just have to get out 'til things calm down. This is also called stress...
Unless you know where your gold is.

Nothing is good as gold.

Goldfan
dragonfly
a new twist??
http://zolatimes.com/V4.2/rand.html#dmtMan o Man as we used to say as kids, this forum is RED HOT
(or at least GOLDEN HOT) with ideas. Thank you all. I will try to post now and then whenever I can get away from reading.

Check out the above link. Comments?

See ya, dragonfly
dragonfly
(No Subject)
goldfan
Journeyman and gold money
Sir J. I have no desire to rain on your parade but...just to share my thourghts. I'd of course be happy to use gold everyday in my trading. It would bring a kind of immediate pleasure to the transactions thae would be like what I experience when with my friends I trade my craft stuff I've made, for their knowledge or work. I hate getting paid by cheque, currency is much better, barter better still. Barter for gold would be just great. If the barter were for electronic spots backed by gold, well to me that would be like a credit card, not even as good as a crisp new banknote.Egold is better technically than fiat paper because it is convertible to gold. But only if the people at the other end are in business that day! So trust is involved as much as in paper.

I don't know anybody who would understand gold as something they could carry in their pocket. Too risky, they would say. Today, I could't stay alive, if all I had to spend was gold. I'd have to cash it in first.

I think it will be a long time before we get enough trouble before people are sufficietly scared, to start using gold every day. It didn't happen in Brazil, or in Mexico, or Ecuador, or Russia, Did it happen in Thailand? Maybe, I don't know...

I guess it is important for us to be able to get how your ideas could come about, otherwise we have no plan for the day after the day of reckoning...

I hope you know your thoughts are always taken seriously here, and your enthusiasm is contagious!!
FWIW

Goldfan
Zenidea
Au
I have woken up again, crawled to my computer and put the drip in my arm for sustenance enough to read the previous nights posts before breakfast. :). Good morning from this professional USAGOLD lurker. To throw the cat amonst the pigeons . How about an oil based fortified gold and or otherwise silver leaf paper currency?. Thats not heavy, and who amongst you would complain if it became so?. Would that stop the fox being the jury at a gooses trial ?. comments people ?
Knowlegde is invisable nature
.
RossL
Twice Discipled
http://www.e-gold.com/e-gold.asp?cid=100339
I've had an account at e-gold for a long time. I'm still waiting for the idea to gain critical mass... Widespread use isn't here yet, but the directory list is getting longer.
Brujo
DROOY
Skip, I have followed and own Durban. When the price of gold went up they were hedged 11% of production. Don't know the time frame. They have a plan to unwind it. The rumors are of 30-50% hedge for several yrs. I bot more in Dec,99
Cavan Man
E-Gold
Nice concept. Effectively speaking, I hold a ledger entry more or less. Where's the beef? Gold nearby is the beef. Hope I don't offend anybody; guess I'm old fashioned.

PS: I have been approached by a number of different concept type businesses all originating in Florida over the last five years; probably a coincidence.
Peter Asher
Goldfan
Seachange
Yes I've felt it since gold moved strongly Monday when Comex was out of action.

Pull up http://www.quote.com/quotecom/livecharts/default.asp?symbols= and click on NYA.X, Then W for weekly. That's the broadest average and seems to be in "Glide mode" out of fuel but still with enough momentum to be on a controlled decent. Once the velocity falls below stalling speed you get the tailspin. There maybe a double meaning here in terms of "Equity flight"

While investors are still able to exit with substantial portions of their worth intact, bonds, CD's, Money markets and some commodities may compete for shifted dollars. However, when all paper appears shakey, then Gold is a no-brainer!

goldfan
Peter Asher (01/20/2000; 18:58:45MDT - Msg ID:23292)
Thanks for the quoteccom url. Loks like the way they used to immitate weightlessness by putting the B52 or whatever into a parabola at the top, everything starts to come loose and float around, just like in orbit. Called a flight to quality...gold?

I'm interested in a chart showing volatility of selected indices and stocks (volatility=daily or weekly high minus low, as % of close maybe volume weighted?) Any ideas?

Goldfan
Peter Asher
Damned if we do and damned if we don't!

My take on a Gold Standard is simply that if circumstances were brought about to where it did exist, it would be legislated out of existence. A collapse of fiat money into an economic paradigm where only PM's were accepted for purchase, would find PMs in too few hands to order soldiers to enforce the laws of property that are in place.

That aside, what FOA and I and our "Camp" has been saying is that modern society cannot function only on a "Specie" currency, the complexities require the liquidity of "Assignats" regardless.

Another thing is that, just because the Gold Standard is the anathema of Government and welfare does not mean that it's existence will eliminate repression and the handing out of other peoples money. The power-structure can find away around any form of monetary system that anyone can come up with!!

That is not to say we can't get ethics in on our civilization, I'm just saying that monetary policy per se cannot achieve that. Bobby Kennedy said that Truth, justice and freedom would be brought about by people acting accordingly and all those actions spreading outward like overlapping ripples in water, spread from the casting of individual stones.

So, adopt a life style of fair exchange, home school your kids, vote, run for office. Become powerful economically and beat them at their own game with campaign funds. Flourish and prosper and expand the viewpoints we share here.

Fiat money is record keeping. Of course it can be corrupted. But, just because the "Corrupt seek power" that doesn't mean they will automatically get it!

As for that Gold standard it's here right now! ---- A while back Julia-Yellowbird asked how to keep her fiat money from being devalued. I answered, "Don't store any value in it." You want a gold standard, just put your fiat money into gold and cash out back into fiat only when and as needed. (That's what Aristotle does)

This may be as good as it gets for a gold standard. Absent total price control, any form of PM standard can see prices of goods and services move back and forth against the value of whatever the money is. Beyond the Gold, get some timberland. 7% annual growth biologically plus keeping pace with inflation plus consumption increasing while more and more gets taken out of production. And, you can live or camp out on it.

The current game of the MOU's is the "Soma" of infinite capital-gain for the masses.

Empirically impossible, of course!

Bonedaddy
As the moon eclipses....
We live in a time when most men pretend that paper can be money. And to them it is. It's rather like Nietzsche declaring the death of God. To Nietzsche God was dead! That was a hundred years ago. Who's dead now?
There are ten thousand prophets of profit daily preaching that the way to monitary enlightnment is through the new paradigm. Shamless men,these. The other day I heard that Jim Bakker, sans Tammy Faye, is back in the biz of savin' souls. He's got himself a former pro athelete as a side kick. Why don't they leave the scriptures alone and just hawk internet stocks? It's really the same thing.
All these preachers on CNBC and Jimmy Bakker are selling the same kind of false hope.
When the price of oil triples, everything that we eat, wear, sit on, ride, or otherwise rely upon is impacted. Gold will rise eventually. Let us bide our time. I'll just sit back tonight and watch the eclipse and drink an ice water toast to ol' Freddy Nietzsche.
Peter Asher
Goldfan
Good analogyGuess the zero gravity is the zero value.

Don't know any other charts. You idea there might even be a new one, but I don't know if any of us could create it.
Solomon Weaver
PERMAFROST AND HIS LADY GOLD
PERMAFROST (01/20/2000; 06:13:29MDT - Msg ID:23242)

All "lesser of two evils" type arguments are based on a logical fallacy that consists of the CONFUSION and equivocation of two very dissimilar notions or factors: quality and quantity.

�.that the Euro has not caused as much damage as the dollar (yet) doesn't mean it's a different sort of animal than the dollar. (And do not discount the possibility that it may turn out to be a "fully-metamorphosed" evolution of the already harmful-enough larva-dollar.)
In this case, it is not only advisable but NECESSARY, to throw the baby (the Euro) out with the water (the dollar).
It doesn't matter what the BIS values "its holdings in" or how it measures its wealth (you were talking about gold); THE ONLY TRUE AND RELEVANT FACT REMAINS THAT, JUST LIKE THE DOLLAR, THE EURO IS NOT REDEEMABLE IN ANY FORM OF WEALTH-GOLD.
"In none of our meetings have we heard where a fear was expressed that the governments will lose control of digital currencies and (give it) back to gold. That is simply not going to happen, no matter how severe a down turn the loss of the American dollar system creates. Believe it."

beesting, why should we believe your mentor? This guy (FOA) is talking about NOT giving control back to gold which YOU YOURSELF equate with SOVEREIGNTY.

Hail Sir Permafrost

I see you have left your frothing cup of mead still on the table as you strike with your sword on the meat platter�.I commend you highly dear knight for your great fervor in defending the honour of your lady GOLD. (Perhaps ye be a maid in the guise of a man, but methinks not).

For we all know that your lady has never spoken an untruth�.even as the folk have scorned and ridiculed her.

But remember kind sir, your lady is but one form of wealth. The great knights and ladies at this table have loves of their own to defend, and the common man dreams only of his crops and a fat year so he can buy butter for his bread. See ye not that wealth is created ever and anew by that which each of us cherish?? Perhaps Sir FOA is enamoured of his Euro. Perhaps under her shining young skin and supple body lie already the seeds of sloth and decadence which will one day land her in the same plight as lady dollar, who reeks of the stench of gluttony and oozes oily layers of debt ridden decay from her pores.

Just as the sun rises and sets, the Euro will go the path of the dollar, one day�in the meantime, she will be the queen of a world which will continue to advance in technology, communication.

We spoke the otherday of the need for a SHARED UNDERSTANDING of what politics and economics really is. FOA appears to sit among the elite of today's world�those with established wealth and hidden influence. Beesting is on the other end, enthralled by the concept of INIDIVIDUAL SOVEREIGNTY. What a great miracle that the truth of you lady gold can be used in the hands of both the rich and the much lesser rich!!!!

Sir Permafrost, you are ahead of your time, I think. You see, politics and economics is (really) about creating a divine framework (in the sense of being in harmony with our inner spirit and our creator) in which humans will be able to share the rewards of eachother's labours in honesty and goodwill. At the current time, however, even given the dramatic changes since WWII, most people are not able to reach this understanding�to most, politics is about power and economics is about greed. For the masses and where they stand today, I wonder if they are really ready for gold.

I do not agree with FOA that the dollar will be replaced by the Euro. I think that the emergence of the Euro is going to punish the world for allowing the dollar to go where it did. Americans will have a period of great instability and apparent loss of wealth where Europeans will feel alive and fresh at the helm of a great new human endeavor. Much of the dollar denominated debt will be defaulted upon, much will be rewritten as Euro debt. But America is still a great country. With a dramatically weakened dollar, America will have a massive advantage in exporting. America is in many ways a third world nation. Europe is not. America is impulsive and targets impossible visions. Europe is stalwart and methodical. These two great energies are both great friends and yet enemies�their competing impulses are going to engage in the great gentlemanly battle of redefining politics and economics together. There will be two great fiats�which will trade against eachother�and each against gold�..and something will have to happen in Asia as well�something beyond the yen. And all will continue to think politics is power and economics is greed. And yet, the supercomputers of next century will draw these three fiats into a spinning dance, evermore in unison�always with lady gold trading in the background�.

There will be a great creation of wealth, immense regions developed along the lines of a more sustainable ecological model. Millions of new homes and businesses which use much less oil and produce more comfort or value. Just like it is knowledge which turns silica sand into the microchip, we and our fiat currencies with create the intellectual properties which will drive humanity into vast new realms of abundance which allow us to fulfill the needs of many with even less resources as we use today. And all this while, gold will trade in the background.

Perhaps you think me a fool, or insane�..but what you must perceive dear Permafrost is that the ability of humans to innovate and improve will grow our economies at a much higher rate than we can take new gold from the ground. (And in truth, kind sir you must truly admit that all the effort it takes to take gold out of the ground leads to no absolute real gain in wealth � it only makes the "manufacturing" of money more difficult than clicking on the "create funds icon" on a banker's screen.) I will injure the pride of all on this forum when I declare that the value of gold is only a convention created by humans�only by convention does gold have more value than composted banana peels. BUT, this is a very STRONG convention, rooted deeply in human history, and since we are still all FOOLS, we are not able to get our politics and economics away from power and greed, and so we still have a period where we must still use money to exploit eachother, to create debt traps allowing theft by statute.

Gold for many years will continue to trade in the background�it will trade against our foolishness�and those who hold it may not profit in all cycles�.but they will be hedged against foolishness.

So, once again, we fools here should have the right to our fun as we dream about what politics and economics may become, and yet debate what they are today.

Poor old Solomon
Peter Asher
Hey Bonedaddy
While your relaxing, how 'bought some mellow Gershwin.
Winter time,
and the Markets are falling.
Indexes jumping,
Pulling back from the highs
Thought you was rich, yeah,
And your stocks were good looking,
Well here comes the crash babe.
Your sure gonna cry!

One of these mornings,
Your gonna wake up shrieking.
As the prices fall,
All the way from the sky.
But till that moment, babe,
There is nothing gon' harm you.
With Big Allen Greenspan,
Sta,a,anding by!
JAS
any comments on GSR 'see BLOOMBERG
http://quote.bloomberg.com/pgcgi.cgi?T=athome/athome_news.ht&STORYNUM='T=athome/athome_news.ht|s=73876409'also fourth quarter Interim just released, will post this link as well.
JAS
Here it is
Ray Patten
An interesting Bloomberg site to watch...
http://quote.bloomberg.com/news2.cgi?T=energy_refout.ht&s=73830972
This site just lists today's 25 oil refinery and pipeline outages. Of today's 25, 16 are reported to be unanticipated. Let's watch this site together.
Peter Asher
Solomon

I was with you almost all the way until you got to the banana peels. For rings, necklaces or statues they're a rotten idea.
Cavan Man
Solomon Weaver 23297
What a fine piece of writing. What an even handed sense of fairness. Wisdom; let us attend.

This one for the HOF? Anybody agree?

PS: peterasher 23294....I'm a little younger than you I think but I remember Bobby in the context of the times very well. Congratulations on a very fine expression of sentiment. I second that emotion!
Peter Asher
Solomon
Seriously though, that was a great post. I don't think Permo is ahead of his time though, that attitude is something that mankind is hopefully rising above, not headed toward. ---- Maybe we need to 86 the Mead.

I trust you forgot about Gold as a beautiful artifact for a moment, and about it's imperishability etc.

Re your >>> all the effort it takes to take gold out of the ground leads to no absolute real gain in wealth � it only makes the "manufacturing" of money more difficult than clicking on the "create funds icon" <<<
I concur, I have more than once posted about the productivity needed to create the expense of making money into a metallic standard. If it would work, than that would be a justifiable cost of economic policing. But as I just said earlier ---- that's not the real problem.
Peter Asher
Caven Man
Thankyou

About Solomon's post, I agree with it's HOF potential, but I would like to see a rewrite on Gold as a decomposing banana peel.
Al Fulchino
The Stranger
In your opinion, based on your history in the investment field and whatever other resources go into your thoughts, do you have a view or though as to what:

a) POG and Silver should be now?

b) where the prices of these metals are headed in the next
two to three years?
c) what the Fed rate will be in the next 2-3 years?

Any time you can spend on this would be wonderful. If you can't, no problem. I am curious to the numbers you would apply as likely or even possibilities. TIA
Solomon Weaver
gold and banana peels
Peter

Of course I agree that gold has visible merits above bananas..it was mostly for rhetorical value..

On the other hand, we could concieve of a strange society which saw banana trees as holy (like the Hindu cow) and wore composted bananas in vials on their necks as a sign of beauty and wealth...gold however, coming from the earth with no life and no smell, and no ability to innoculate a banana compost, would be considered worthless.

Much more of our "human nature" than we believe is convention.

Poor old Solomon
Peter Asher
Solomon
You are a talented debater.

I both agree and disagree with what you just said.

My applause goes out to you in the form of the sound of one hand clapping!
Bonedaddy
Hey Peter, thanks for the poetry!
even your shadow must be cool The first time I ever heard Summertime was at the Orpheum Theater in Memphis, 10-O-C. It was Doc Watson singing. I've always loved the tune, but never realized it was Gershwin. Next trip to the music store, it's Gershwin.
Got a bonus in the back yard. Just before the eclipse was full, a meteor! Did anyone else see that? You couldn't have heard the same coyote, but he was right on cue. The eclipsed moon looked GOLDEN through my scope. (That scope sits atop an HBAR Match Target, Steve H.) As I sipped the ice-water toast to Freddy, imagining how good it would feel to he and many others, I felt a twinge of guilt. (There, but for the grace of God, go I.)
Did you ever stop to wonder how many people have NEVER felt the weight of an ounce of GOLD in their hand? No mystery why so many don't know money as anything other than paper or electrons. I wonder, does the eclipse signify the rapid passing away of some phase of life? Hmmm.....
Solomon Weaver
And what is that sound??
Your love of gold blinds you to the truth???

I suppose I could rewrite the part about the bananas...but really what the main punchline of the debate was is this again...

"Gold for many years will continue to trade in the background�it will trade against our foolishness�and those who hold it may not profit in all cycles�.but they will be hedged against foolishness."

----

While on the topic of conventions...it is common here at the Round Table to refer to the POG (price usually denominated in dollars). Is it not odd that we need that price? Even Sir Permafrost who sees the demise of fiats will still need some yardstick to mark them with.

There is another "price" which we might consider...I call it the PONOG (Price of Not Owning Gold). Those who want to understand gold wealth need to keep both the POG and the PONOG in mind.

Poor old Solomon
Bill
OFF TOPIC " Canadian Sulute to America"
EM I recieved today.... thought interesting<< America: The Good Neighbor Widespread, but only partial news coverage was
given recently to a remarkable editorial broadcast from Toronto by Gordon
Sinclair, a Canadian television commentator. What follows is the full text of
his trenchant remarks as printed in the congressional Record:
This Canadian thinks it is time to speak up for the Americans as the most
generous and possibly the least appreciated people on all the earth.
Germany, Japan and, to a lesser extent, Britain and Italy were lifted out of
the debris of war by the Americans who poured in billions of dollars and
forgave other billions in debts. None of these countries is today paying even
the interest on its remaining debts to the United States.
When the franc was in danger of collapsing in 1956, it was the Americans who
propped it up, and their reward was to be insulted and swindled on the
streets of Paris. I was there. I saw it.
When distant cities are hit by earthquakes, it is the United States
that hurries in to help. This spring, 59 American communities were
flattened by tornadoes. Nobody helped.
The Marshall Plan and the Truman Policy pumped billions of dollars
into discouraged countries. Now newspapers in those countries are
writingabout the decadent, war-mongering Americans. I'd like to see just one
of those countries that is gloating over the erosion of the United
States Dollar build its own airplane.
Does any other country in the world have a plane to equal the Boeing Jumbo
Jet, the Lockheed Tri-Star, or the Douglas 10? If so, why don't they fly
them? Why do all the International lines except Russia fly American Planes?
Why does no other land on earth even consider putting a man or woman on the
moon? You talk about Japanese technocracy, and you get radios. You talk about
German technocracy, and you get automobiles. You talk about American
technocracy, and you find men on the moon - - not once, but several times -
and safely home again.
You talk about scandals, and the Americans put theirs right in the
store window for everybody to look at. Even their draft-dodgers are
not pursued and hounded. They are here on our streets, and most of
them,unless they are breaking Canadian laws, are getting American
dollars from ma and pa at home to spend here.
When the railways of France, Germany and India were breaking down through
age, it was the Americans who rebuilt them. When the Pennsylvania Railroad
and the New York Central went broke, nobody loaned them an old caboose.
Both are still broke.
I can name you 5,000 times when the Americans raced to the help of
other people in trouble. Can you name me even one time when someone else raced
to the Americans in trouble? I don't think there was outside help even during
the San Francisco earthquake. Our neighbors have faced it alone, and I'm one
Canadian who is damned tired of hearing them get kicked around. They will come
out of this thing with their flag high. And when they do, they are entitled
to thumb their nose at the lands that are gloating over their present
troubles. I hope Canada is not one of those.
------=_NextPart_000_0047_01BF5F80.F23D00C0--
Peter Asher
Bonedaddy
You said: "Did you ever stop to wonder how many people have NEVER felt the weight of an ounce of GOLD in their hand?"

Do you suppose most of them are westerners?? (Or banana worshipers?)
------
Glad you liked the lyrics. They work best if you actually sing them. BTW Summertime is part of the score for the musical "Porgy and Bess." (I think, been awhile)
Peter Asher
Bill!
That was great. As Paul Harvey says, "The rest of the story."
SHIFTY
cavan man / e-gold/tax man?
I looked on e-gold site and did not see any thing about income tax. If the price of gold was to double would you need to pay taxes?
Peter Asher
Solomon
It's not a biggie!It's just that, well you know ---- that yellow metal is ah --- sort of a religious Icon around here,
Peter Asher
Shifty
Bite your tongue!You may of just blown the cover on a loop-hole.

Actually, the IRS heavies could decide that every withdrawal from gold back to cash had a profit or loss. Could be an accounting nightmare. Probably best as LIFO
SHIFTY
delete
How do we delete?
SHIFTY
Peter Asher
That's True. We need a Holiday to celebrate!
Peter Asher
This just in by E-mail
http://www.eGroups.com/group/freedomseek/1473.html?
Big refinery prob at one THE biggest refinery in the Western Hemisphere.
greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
A reported refinery prob got the oil complex rocking and rolling again
today. NYMEX crude moonshot another 65 cents with the heating oil up
over 3 cents/ gal and the gasoline up about 2.75 cents (after Friday's
3.5 cent gain).
But the big news is the magnitude of this Venezuelan refinery problem.
There's only 2 refineries in this hemisphere over 500,000 barrels a day-
one is St Croix (Virgin Islands) and this one in Venezuela. It has a
catalytic cracker with a mechanical problem that was earlier reported to
be out of service for as much as 3 weeks. Around the NYMEX close there
was a Bridge news story (private $ service, can't link in) that says the
Venz are Force Majeuring buyers (meaning 'Act of God'contractual clause
~we ain't delivering) and the cat cracker may be down through FEB. Cat
crackers take the light ends off the crude distillation column and crack
the larger hydrocarbon molecules with a catalyst to boost octanes. They
are the most important units for volume gasoline productions.
This is big stuff. This one refinery probably accountued for a third of
our US gasoline imports (but lets keep this in perspective, the US
produces about 8 million barrels a day of gasoline and imports
300-400,000 barrels / day).
More info at your trusty petro forum here:
Croaked Cat Cracker Story
-- Downstreamer (downstrea-@bigfoot.com), January 18, 2000
Answers
SHIFTY
(No Subject)
The more I think about it if I had 24 oz and the price of gold doubled I would still have my 24 oz gold. Their currency just lost value. Why should I pay $ because their currency lost it buying power?
Peter Asher
Shifty
I could answer that but I am not going to do anything that would help the enemy.

peterasher@earthlink.net
Peter Asher
Shifty
The Golden light of the Sun is longest and strongest on Summer solstice.
Journeyman
"Gold Will Rise Again" followup

Cavan Man --- it seems Twice Discipled & RossL gave a link
to one of the earliest apparently legit E-gold sites. There
are a few other similar enterprises, I'll list some links &
info in a followup post in a day or two.

Good to see ya back!!

How could this happen?? @Goldfan

It's ALWAYS in order to ask how something could happen,
especially something seemingly revolutionary. But remember,
to the people living in pre 1933 USA, NOT using gold backed
currency was perceived not only as revolutionary, but as
unimaginable. Incidentally, remember they mostly didn't
carry gold either -- instead they trustingly carried and
used paper dollar bonds, Federal Reserve Notes, "redeemable
in gold on demand" at any near-by bank.

By the way that post, "Gold Will Rise Again," gained most of
its strength as I actually began putting it together. At
this point, I find myself believing its logic. I need some
time to put together more details butressing its thrust.
I'll try to be back with them in a day or two.

Goldfan, excellent work in putting together that Fractal
Analysis -FMA post!

Regards, J.
ORO
Von Mises great tome is now online
http://www.mises.org/humanaction.asp
Ludvig Von Mises' huge work "Human Action" is now available in full text online.

Chapter XVII. Indirect Exchange deals with monetary issues.

The wording and phrasing are hoch Deutch and difficult. Translation is not great.

The book is a phenomenal education in economics, thinking, and the realities of life.

Short and to the point criticisms of Marx, Keynes, Friedman (the basis of his theory, not him, since he was still a treasury afficionado when this was written - if you forgot, he invented tax witholding), Mill, Ricardo, and many others.

He calls Marx' economics a non-economics. Quantity theory of money he calls a circular argument. Mises hates economic statistics and shoots down the concept of "aggregate" anything as meaningless without understanding of the human motives involved. And on he goes.

THIS IS THE MOST HIGHLY RECOMMENDED READING I CAN IMAGINE.

and it is FREE
Peter Asher
Shifty (Mail call)
You said>>>> Why should I pay $ because their currency lost it buying power? <<<

In regard to diminished purchasing power, that may occur only in gold or in many things. If the economy really tanks, you could have deflation AND a higher POG.
SHIFTY
peter asher
thank you
ORO
Von Mises great tome is now online
http://www.mises.org/humanaction.asp
Ludvig Von Mises' CHAPTER XXXI. Currency and Credit Manipulation - deals with monetary issues in context of fiat currencies.

Many here will find a clear and thorough view in this chapter.

I reiterate:

THIS IS MY HIGHEST RECOMMENDATION FOR READING.

and it is FREE
Peter Asher
ORO
Re >>>Mises ---- Quantity theory of money he calls a circular argument. Mises hates economic statistics and shoots down the concept of "aggregate" anything as meaningless without understanding of the human motives involved. <<<

Is that the same as my contention that it is not the quantity of the Money Supply but what people do with it, (As in consume versus tool up) that will be the determinant of inflation or even deflation.
Jason Happy
Gold and the American people... Allow me introduce you to each other...
Bill, thank you for that American tribute... I have never thought of history that way...

As far as people not knowing about gold... It's completely true. When I bought my first gold coins, a couple months later, I began to take a one ounce gold coin with me out to the bars at night, and show it to people; sort of a conversation piece and as a way to teach. I must have passed it through at least 50 hands, maybe 100 in less than a month, and each person was surprisingly mesmerized, never having seen a gold coin before. People loved to touch the coin, feel the coin, hold the coin, and every one held it reverently, and with respect.

Except for my friend, who was wealthy beyond compare... so I trusted him more than most, thinking he would have the means to replace it in case of accident, and he was more cavalier than most... and when he was drunk, he began flipping the coin in the air while we were on a deck outdoors... and just before I was going to say "drop it you buy it"... oops, in a second, the coin was gone. $300 down the drain.

But it was probably worth it to show the coin to as many people as I did. Maybe, once I have the income I once had, I'll grab another gold coin, and start showing it to random strangers that I meet in the bars...
TownCrier
The GOLDEN VIEW from The Tower
Lots of exciting construction is taking place in The Tower, so the news for the Round Table has suffered a bit. We hope to wrap up these projects ASAP. In the meantime...

At this late hour, as we reflect upon the day's events while gazing up at the Earth's shadow cast upon the Moon, the most significant news was that the U.S. trade deficit numbers for November set a new record. Our trading partners took 109.4 billion of our dollars for their goods and services, and only managed to spend $82.9 billion on the goods and services that we had available to offer them...letting us make up this net deficit with $26.5 billion in cash. OK, so what did our partners want from us, as they spent that $82.9 billion income? Gold. Bloomberg reported that gold led the list of products that our trade partners were willing to walk away with. We think you might consider that to be a kind of validation of the existance of a "floating" gold standard...dollars are being converted to gold at these ridiculously low prices. Are you also taking advantage of this same opportunity that's being seized by our overseas friends?

The gut instinct here in The Tower says to prepare yourself for some interesting time ahead in the gold markets. Suddenly today the press offered up out of the clear blue sky a number of the typical anti-gold propaganda articles of the type we haven't seen for several months. Could this be a sign that conditions are growing tight, and the influential parties are striving to beat down any pressure from domestic interest in the metal? That's how it appears from here.

Producer selling in Australia was said to depress prices overnight, and spot prices were last quoted in NY at$288.00, down $1.20, while February futures last traded on COMEX were off $1 at $289.30.

Crude reached a new 9-year spot-contract high at $29.95 prior to a late session selldown. The expiring February crude futures ended the day with a gain of 12� at $29.66 per barrel. News of refinery problems and sub-zero temperatures in the Northeastern United States help bolster the entire energy sector.

And that's the view from here...after the close.
ORO
Peter Asher - aggregates - an example
http://www.usagold.com/GermanNightmare.html
The short history given in this article shows that the quantity of currency is not the only issue. There is a buildup of quantity long before its value erodes. It may even appreciate for a while as great quantities are dumped into the markets. Japan was still in deflation last year, prices are falling, and GDP is stagnant at negative nominal values, but money supply is growing steadilly at 4% over this whole period since 1992.


There is also the point of debt driven currency demand falling apart when the currency is in deflation - the quantity is falling. We know that this must bring about significant debt repudiation. As the contraction of money supply continues, the debt which created the demand falls away. Without the demand for the currency to satisfy defaulted debt obligations the value of the currency falls. Only the prices of assets normally bought with credit stop rising.

See Mises' treatment of the credit cycle in Chapter XX. Interest, Credit Expansion, and the Trade Cycle

http://www.mises.org/humanaction.asp
Peter Asher
Thanks ORO
Glad I stayed up or the answer, but, my eyelids just slammed shut!
TownCrier
Hall of Fame Nominations
During this recent (and thankfully temporary) flurry of activity here in The Tower, we've managed to notice a number of HOF nominations but are unsure of the current status. As a quick reminder, a qualifying post must receive at least 3 "seconds" to the original nomination. Our (perhaps incomplete?) records show that a nomination for an ORO post currently has two seconds, as does a post by FOA. Some nominations for some other posts were not seen to receive seconds. Can anyone confirm or correct this account?

This Hall of Fame was created for your use, benefit, and enjoyment. And while The Tower will incorporate the posts that you properly select, we continue to rely upon and appreciate your collective assistance in monitoring the status of the nominations and alerting The Tower to the posts that accumulate the requisite "seconds."

Have we missed a qualifier, anyone? Be sure to let the ol' TownCrier know.
PERMAFROST
Always a pleasure to read you, Solomon Weaver...To all as well...
Msg. ID 23297

"...only by convention does gold have more value than composted banana peels."

--That's Aristotle (the real one) talking, my friend. Man is the measure of the universe? According to whom? How do you know that? and who is this hypothetical "he" who's doing the knowing?
--Closer to Forum mental processes: What is the rational basis for rational itself? Where is the scientific proof for science, or how can science itself be scientifically proven? ASK these questions and your ANSWER will that CONVENTION it is not! The answer is "it's the sound of one hand clapping." [This last bit may result in my due assasination by Zen Masters for dissemination of information not approved for general abuse. :o)] We can't even say that the concept of CONVENTION is based on the nonrational--that itself would constitute a rational or positive assertion, which is proscribed by categorical non-recourse to that which cannot be ascertained or even imagined; specifically, ALL concepts, including those of "the rational" and "the nonrational". Actually, "we can't even say that We can't even say that we can't even say that the concept of CONVENTION is based on the nonrational" is the best that we can do to intimate What the case really is, as it pertains to ALL matters of concern, indeed!

GOD, or the Absolute, is the nonrational "basis" of all concepts and this particular manifestation we speak of as the universe. The latter includes man, gold and banana peels.

--LEIGH: I'm not TZADEAK.

--JASON HAPPY: regardless of what you may think of me, I am indebted and grateful to you for the essays you posted yesterday! THANK YOU SO MUCH FOR SHARING THE INSIGHT!

--JOURNEYMAN: I hope you won't get offended if I proffer my compliments and gratitude for MSG. ID 23279.

--CANUCK GOLD: Jason Happy gave you the solution. You refused.

--CAVAN MAN: Je suis le coup d'�p�e
Dans l'eau trouble des id�es...

--BEESTING: FOA has discredited HIMSELF. Just as you yourself did by standing by a man who's betrayed you.

I did the best I could here on this Forum. I will not post again unless solicited or have something new to say. Listen to JASON HAPPY. Good-bye, ladies and gentlemen...
ss of nep
Senator Jesse Helms
Bonedaddy
Jason, the weight of GOLD?
Jason, you said, "I must have passed it through at least 50 hands, maybe 100 in less than a month, and each person was surprisingly mesmerized, never having seen a gold coin before. People loved to touch the coin, feel the coin, hold the coin, and every one held it reverently, and with respect." Jason, I oo have observed this reaction in people on several occasions. It is enjoyable to watch, no?
GOLD is "legendary" money. There is a certainty about it, and a sense of honesty to it, that appeals to almost everyone you meet.
I showed a 20 Franc piece to an aquaintance not long ago. He displayed almost exactly the behavior you described. "Where can you buy these, he asked?" I put him in touch with Centennial and a few weeks later he was beaming that his gold had arrived and he now felt that he really owned money. Later, he confessed that he always wanted to own gold, but didn't know how easy it was to actually get it. I believe this "inertia" is caused by the payroll deduction approach to investing that so many of my generation have been conditioned to accept. Gold ownership opens eyes. Never again will I willingly allow value to be deducted from my paycheck and deposited somewhere electronically to be held until I reach 60 years old. I'm still shaking my head that I was gullible enough to go along with that one for so many years. Oh well, live and learn. (Die, and forget it all.)
Cavan Man
Wisdom of (poor) Solomon
From last night and a deserving thought for the day IMHO:

"Politics and economics is really about creating a Divine framework in which humans will be able to share the rewards of each others labors in honesty and goodwill".

Solomon Weaver 23297
PERMAFROST
Erratum Msg. ID 23297
Line 7 should read, "...and your ANSWER will be that CONVENTION it is not!"
18KARAT
goldfan, TheStranger
Re: goldfan (01/20/2000; 11:55:42MDT - Msg ID:23267)
great metaphors
Thank you goldfan for your generous comments.
I'm pleased that my metaphors work for you.
Of course, I use them because that is how I come to understand it myself.


Re: TheStranger (01/20/2000; 09:22:43MDT - Msg ID:23252)
I'm not sure that it is my vision that is bleak, Stranger.
But rather, that the history of previous bubbles is so bleak
for those that get bewitched by them.

When you think about it though:
No-one knows that bleak history better than AG.
Furthermore, despite his protestations,
no-one spotted the current bubble earlier than he did.
Makes you wonder what his agenda really is?

Oh well, who is John Galt?

18K

PERMAFROST
False real alert...
Sorry, Forum; the error was in Msg. ID 23334.
RossL
Human Action
http://laissezfaire.org/lf6356.cfm
For anyone considering the recommendation of ORO to read Human Action, the Ludwig von Mises classic, the above link is to a companion glossary that I found invaluable. Unfortunately, it's not free.
Cavan Man
PERMAFROST
I'll bet your countenance is not as frosty as exhibited here. Hang in there (w/US). All social, political and economic discourse requires checking and balancing.

Cavan Man
FOA,PERMAFROST & Wisdom expressed here
I recall reading an anecdote about Beethoven. The details are fuzzy but here goes...

In a public debut of one of his (now) most famous symphonies (that could be any one of them), he was asked by a critic what his intention was in composing such an odd and unconventional piece of symphonic music. You see, contemporary audiences were initially shocked by his compositions as they were radical departures from the accepted and current form of the time.

His reply: (not exact quote) "My music is not for this age but for those who follow".

Perhaps Stradmaster can help out with this reference.

Hipplebeck
U S treasuries
I just learned something today.
European traders use the 10 year note more than the 30 year bond. The 10 year has a higher yield now than the 30 year.
It looks like Europeans are dumping the U S treasuries
Canuck Gold
Jason Happy (01/20/00; 15:48:49MDT - Msg ID:23281)
I intended responding earlier but other priorities got in the way. I guess PERMAFROST (what an appropriate handle) thinks responses should occur almost real-time but some people have more important things to do than spend all their time glued to a computer screen.

You picked up on the least significant aspect of my posts yesterday when you defended the integrity of the latest encryption techniques. One might suspect you have a vested interest. I didn't say anything about encryption in my post. I used the word 'security' which encompasses a whole lot more than electronic security. I already conceded that e-gold could be used where credit/debit/smart cards are used now. That is not relevant to the issue of physical money and the form it will take, a form which does not require an electronic interface. Yesterday, you suggested depositing funds at the local supermarket. Does that apply to every business you deal with? I just want to buy a loaf of bread and a quart of milk from a generic grocery store on the way home from work, and the poor owner can't afford to accomodate these new-fangled electronic money transfer doodads. How do I pay for it and how does he make change without filling my pockets with so many coins that they wear a hole in my pocket before I get home?

CG
jinx44
Journeyman---your 23279

Your discourse stimulated me into looking at the euro situation again. I am more in Permafrosts’ camp than FOAs’ on the matter of the “almighty euro” and how it will help the common man. I believe it is another dirty fiat plot by the PTB’s, but nevertheless, one that poor folks like us can use to our advantage for awhile�"until the euro goes the way of the $US in a few decades. The PTB’s would never create an honest money that is of primary benefit to their tax slaves. They create fiat to further their own political interests and the financial interests of their corporate “johns”. If there is any real benefit to common folks, it is by happenstance. I see the euro as a new dollar that will have advantage over the old dollar for several decades or more. That being said, I don’t trust it any more than a new yen or new rouble. It’s efficacy to me is in its’ vaporous link to gold. When global statistics are used to show the amount of gold extant in the world, it might be more appropriate to take the amount held by CB’s and subtract it from the total to arrive at a true figure. IMO, CB’s will never allow their gold to flow to the public under any circumstances. The ECB is marking to market but what does that really mean? They are sustaining and encouraging a shortage of gold by raising its’ fiat value. As the price rises in fiat, there is bound to be dishoarding by the public and some of that free market gold is bound to get bought and forever locked up in CB vaults. This creates the shortage and the perception of increased demand. With an ever rising gold price, the CB’s can raise their amounts of circulating fiat for a long time to come. There is still no real gold backing to it and the inflationary consequences are the same as with the dollar. People are fooled into thinking that the euro somehow represents a gold standard when it is just another 1933 confiscation that takes place over decades and through the market, rather than overnight through legal theft. During that time, the only people who have a modicum of insulation from the continuation of inflationary governmental theft are those who hold the real thing�"physical gold, today. As soon as the price of gold really takes off, we will be back to the same fiat situation that we are currently caught in. Once gold is $US3000 or Euro1000 or more, there will be no catching up. The window is right now and it will probably not be open much longer. With this, I agree with FOA�"this is the opportunity of a lifetime. The euro will turn out to be another scam in the long run, just like the dollar.
Stanley L
test
test
TownCrier
Special message for MK
your e-mail has something you are looking for...
Aristotle
I've just now read Canuck Gold (01/20/2000; 09:49:02MDT - Msg ID:23254)
Great post, Mister! You concluded with--"Instead of behaving like a petulant child, demanding that fiat currencies not be allowed to continue, it would be eminently more preferable for a practical solution to be proposed for their replacement. Suggestions, anyone?"

As I promised to Cavan Man a couple days ago, I'm putting the wraps on exactly the kind of post you're looking for. Thanks for assuring me of an audience that would fill at least two seats.

Gold. Get you some. ---Aristotle
Jason Happy
Canuck Gold?
I am so confused by what you are saying...

If, in today's world, the local 7-11 or quick stop doesn't accept any demomination larger than a $20 bill, why do you insist that under a gold standard, the "poor local grocer on your way home" must somehow be able to make change for a $300 coin? Would you demand a bum on the street to make change for a $300 coin? I think you would end up using the appropriate demomination for whatever purpose you'd have in mind to begin with.

If the historic ratio of silver to gold is used, 15:1, you'd end up with 14 one ounce silver coins when you broke a gold coin, is that what scares you?

That's what 1/10th ounce gold coins are for.

If you broke a $30 coin, under the 15:1 ratio, you'd end up with one and a half ounces of silver as change.

But, we ARE talking about what life might be like under a gold standard, and in that case, personally, I believe that gold would probably be valued higher, maybe worth $1000 an ounce. So a 1/10th ounce coin would be like a $100 bill today.

But I also believe that silver should be worth much more than it is today, perhaps even rising in value to more than 10:1 with gold. After all, so much has been consumed by industry in electronics, switches, photo negatives, and such. Silver went from the stable 15:1 exchange rate to about 50:1 after the world stopped using it as money. If this monetary demand was restored, so would its value be restored.

And in that case, if gold is $100 per 1/10 ounce, silver would be $100 an ounce. So much for worrying about a pocket full of silver in change!

If you buy a "bag of silver" today, also called "junk silver" which is $1000 face value of 90% silver, pre 1965 coin, which consists of either dimes, quarters or half dollars, it would cost about $4000 if silver is trading at about $5.20 and the premium for these coins is low, like it should be. This "bag of silver" usually comes in either 2 or 4 actual canvas bags, and weighs about 50 pounds. Invest the 4 grand today, and you'll probably never be short of change in case the world turns...

And if silver ever reaches my fantasy figure of $100 an ounce, that 4 grand investment would appreciate about 19 times to $77,000 for you.

Hi Ho, Go silver!
USAGOLD
Today's Market Report: Yellow on the Mend
Ed. Note: I would like to thank Towncrier for putting together today's report. As you can see, he's very good at it. I'm immersed in the next News & Views, buried in statistics, reports, newsletter, books, etc. Oh boy......He will be doing Monday's as well.

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

Gold is staging a recovery early on in New
York after last night's mild selloff overseas. Profit taking after
Wednesday's 3-week high, and fine tuning of positions ahead of Tuesday's
25 tonne gold auction by the Bank of England were cited as reasons for
gold trading sideways to slightly lower overseas basing in the $287.50
area. FWN reports that some traders have closed out their positions
"because they fear the auction could trigger a big price move in either
direction." With physical demand remaining strong, coupled with the
economic realities of the day, we see the stronger case arguing for
prices to move in the upward direction.

We find it very notable that while the U.S. trade deficit widened to a
new record of $26.5 billion in data released yesterday for the month of
November, the leading U.S. export sought by our trading partners who
were wallowing in the 109.4 billion dollars we paid them for our imports
was......wait for it......that's right--gold. We are reminded that this
is very much like the days of the international gold standard prior to
August 1971, which saw our trading partners actively redeeming their
positive balance of trade payments at the fixed rate of $35 per ounce of
gold. The only difference is that today they are "redeeming" these paper
dollars at the prevailing market rates, now nearly ten times higher than
those days.

Welcome to the "new" gold standard. It's there for those who want
it...and we highly recommend your participation. With East Asian
economies on the rebound, Gold Field Mineral Services reported in their
1999 survey updated this week that demand for gold bars outside of
Europe and North America has risen by 80 percent.

As we go to fetch this over to the server, the 30-year bond is pushing
6.75%, while March crude futures are surging, up 98� in early action as
cold weather continues to nip the U.S. Northeast.

That's it for today, fellow goldmeisters. Warm wishes for your weekend.

--------- Written by Randy Strauss
goldfan
Fannie Mae under stress
http://quote.yahoo.com/q?s=fnm&d=bLook at this chart!! I see a major change in fractal dimension. Don't yet know how to calculate it. But maybe I'll find out. Is this breakdown time or what?

Goldfan
Jason Happy
Bonedaddy...
It's amazing how ignorant people are about gold, too. When I handed my U.S. gold eagle to people, and ask them to guess how much it's worth, people have no idea. People guess from $1000 to $20. Or say stuff like, "I thought gold ownership is illegal." or "We're not supposed to own gold because there's not enough of it, right?" or, "What's going on, why do you have it, are we returning to a gold standard?" or my favorite, "If it's worth $300, why does it say $50 on it? Gold's worth only $50 an ounce, right?"

But despite people's ignorance, it is a fantastic conversation piece, and can be used to educate people, which is needed so desperately. Just don't hand your coin to someone who is drunk. Man, was that stupid. He ended up reimbursing me though, so it worked out ok...

PERMAFROST, uh, you're welcome? And thanks for the support!

Aristotle, Cavan Man and I have been discussing the practical aspect and application of a gold standard; he doesn't seem to think it can be applied I guess. I can't wait to read what you have to say.
Cavan Man
Congressional Medal of Honor
http://www.army.mil/cmh-pg/moh1.htmOff topic.

Last night someone made an excellent post defending the USA against its many detractors. At this site you will learn of individual, heroic deeds by Americans in defense of liberty and justice for all (the old fashioned way).
Canuck Gold
Physical Non-fiat currency
Jason, your last post was all over the map. Maybe I should make my point in the form of questions for you to answer.

1. Do you REALLY believe that the value of silver in the future will be stable enough to be used as currency?

2. Do you REALLY believe that gold will be worth $300 per ounce in relation to its current purchasing power?

3. If a loaf of bread and a quart of milk cost $3.68 in dollars that no longer exist, what form of currency could be used, no matter what you hypothesize it could be worth per ounce, to exchange for those goods AND make change that doesn't involve carrying around a pocket full of coins? Remember, whatever you choose for your currency has to satisfy the needs of the whole population of the US.

4. Do you really believe there is enough gold and silver in the world to enable them to be used as currency throughout the whole world?

5. Do you really believe that any future currency could avoid using the convenience and lightness of paper.

6. What would you used to denote a $10, $5, $1, a quarter, a dime, a nickel, a penny?

CG
Leigh
Town Crier, Al Fulchino
Town Crier: How is it that we're exporting our gold to foreigners? I thought that ended in 1971!

Al: How are things going at the gas station this week? Are you having to change prices often? Our family may be coming up to Boston for a day or two sometime before we move, if you and your wife would like to get together with us for lunch or dinner!
TownCrier
To Lady Leigh:
"How is it that we're exporting our gold to foreigners? I thought that ended in 1971!"

In 1971 it stopped flowing from our Treasury, and the exchange rate was no longer fixed at $35 per ounce. The dollar had ceased to be effectively a "warehouse receipt" for gold in the Treasury. Today, gold exports flow from our mines, and from the households that are selling their gold, perhaps to pursue numbers in the stock market. The exchange rate for this dollar/gold transaction is established on the gold markets. The market influence of the abundance of gold derivatives has been a gift for all those that seek to make these dollar redemptions for physical gold on the open market. This gold is available for export. Is that clearer?
Leigh
Town Crier
Yes, it's much clearer. Thank you!
Jason Happy
(No Subject)
Canuck Gold

1. Yes; silver can, and will, (and IS), be used as money once again, and I believe it will, someday. Whether or not we have to wait for the Lord Jesus Christ to issue the world wide order... who knows, maybe mankind will get it together before then.

2. Gold at $300? I believe it will probably be worth more; be able to buy more than it does today. However, as gold goes up, so do other commodity prices. And, so would wages and costs for mining it...

3. I have already answered this bread/milk/change question in two posts; in 3 different ways already. To recap; A. Silver coin. B. Local terms of credit. C. A standardized form of electronic debits as occur today with visa/mc
debit cards.

4. Yes. Why don't you believe so? Given the facts that there are more ounces of gold per person today than there has ever been in the past, why not? .7 ounce of gold per person, 4 ounces of silver are the figures I have
read. What proof do you have that this not sufficient metal?

5. Yes. People could avoid paper, but for practical reasons, probably not. But, if people DO use paper, I would hope and pray that it would be backed by 100% gold/silver/platinum/palladium reserves somewhere.
But even this entire process is sketchy, since paper can be burnt up, or blown away, and the wearhouse would never be able to determine which notes were destroyed, and which were not. Really, the system is entirely unnecessary, since gold can be hammered paper thin. Asians use such paper thin gold, where they make change for the smallest items
by cutting out tiny squares on a sheet of gold, thin like paper.

6. If a dollar is 1/20 of an ounce of gold, by definition, then 1/10 ounce gold would be $2.

$20 - one ounce gold coin
$10 - 1/2 ounce gold coin
$5 - 1/4 ounce gold coin
$2 - 1/10 ounce gold coin
$1 - one ounce silver coin (note the 10:1 ratio here in this example)
.50 - silver 1/2 dollar
quarter - silver quarter
dime - silver dime
nickle - silver/copper composite
penny - copper coin

Believe it or not, a very similar system was actually in place, and in use in the United States for over 100 years.

But, you are not happy with this somehow, I assume. What if gold was $2000 an ounce? Well, multiply the whole scale by 100 then. There should be no reason for anyone to make change for anything less than a $1.00 if gold were $2000 an ounce--at a stable price. Even today, the pennies and nickles are useless. Every price, everywhere, today, for the sake of efficiency, should be rounded off to the nearest dime. After all, our money was once 15 times as valuable, and the smallest bit of change was the penny.

The only reason why we have nickles and pennies today is because of sales tax. Oregon does not use pennies, because there is no sales tax there. Prices are rounded to $59.95 instead of the $59.99. And people pay $59.95 instead of the
$64.78 with 8% sales tax.
Jason Happy
oops
Bad math below... it is a 20:1 ratio of silver to gold in the change example below, not 10:1
CoBra(too)
"The Barbars Are Coming" by prof. Ziegler - a Swiss economist
linking todays robber capitalism to organized crime in his new book, speaking in Vienna while being honoured by the Bruno Kreisky price in economic and social journalism. The good profesor, having been elected to the Swiss Parliament for several sojourns didn't leave much leeway to the behavior of the Swiss Banks during WWII and went on to state that the intransparency in dealings of international
major banks,only directed to maximise profits in shortest possible time frames, are effecting the symbiotic allegiance of corrupting capital to robber capital.
- So what's capital? (Was Karl Marx right after all - a synonim for corruption?!)

Talking about the Euro, a shining new currency, adopted by 11 Nations and still counting, spanning almost 400 million people, which have given up their national souvereignity to an overwhelming beauracracy? In view of the problems of CDU/CSU in Germany, where the erruption of past corruption is shaking monuments of the size of Kohl and his former cconservative party allegiance. Or the sad show of Austria, being unable to form a new majority governement after 120 days after the Oct. elections. If thats the state of democracy in Europe, I personally will have to scale back my hope and believe in a common cause in politics, economy and
purpose, which doesn't bode well for the common currency.

On another topic and in the hope I'll be forgiven by Ned Davis Research to quote "Brave New World Versus The Old Time Religion" ... much of the world is changing rapidly today. Business could be likened to a spoerts match where truly exceptionaal companies (my take-read Time Mag. on their take of being taken over by AOL) are able to surf on top of the waves of "Creative Destruction", as opposed to being drowned by them, are reaping exceptional awards and substantial economic profit.
Then the great financial writer, John Lisco, scorns the unfaithful - as us?, who don't worship at the Church of American Internet Technology - and accuses us of being victims of 'linear thinking' and follows: "With each passing day, creativity overtakes capital as the principal elixir of growth. And creativity, of course, shares few of the consraints that limit the availability of capital and physical goods. Greenspan once noted that during the second half of the 20th. century the U.S. tripled the real value of output with no increase in the weight of materials produced".

Even if new paradigm thinkers are correct-the problem of overvaluation and overconfidence reminds me of historical Tulipmanias. When all markets sell at historical high waater measures - the NASDAQ at 200 times earnings - the braave new world may have already (over) -anticipated 2050 (Sci Fi)and as one analyst, Joseph Toms notes that U.S. technology and Internet sectors are valued at more than the combined economies of of Japan, Australia, Singapore, Korea, Thailand, Malaysia an the Philippines - I don't get it!- Do YOU?
The Barbars have arrived - go GOLD
CB2


18KARAT
Re: goldfan (01/20/00; 17:32:56MDT - Msg ID:23284)


Fractal Market Analysis: Applying Chaos Theory to Investment & Economics
by Edgar E. Peters

goldfan, I read this book a few months ago.
I thought it was excellent from the theoretical point of view.
But unfortunately I can't say I found much of use in it
for an investor looking for practical information.
With the possible exception of options traders
who might find the information on volatility directly useful
in developing post Black-Scholes option pricing models.

A warning to those who might think of getting it:
This book assumes a fairly high level of math sophistication.
It helps in understanding it if you have a good working knowledge
of CAPM, probability theory, linear algebra including fourier analysis,
time-series forcasting methodologies including Box-Jenkins....
In other words the usual stuff you find
in academic works devoted to financial market theory.

Note however that the book does not require prior knowledge of fractal theory
as it introduces that subject beautifully.
It is one of the nicest and most comprehensible introductions to fractals in general
and in relation to markets that I have seen.

Strongly recommended - 18K

By the way, I saw his earlier book in a bookstore,
while I was trying to track down this one,
and it seemed much less mathematical.
Though I haven't read it.
Jason Happy
Random thought
If the U.S. government pays 6% a year on a bond, while increasing the money supply 10% a year, aren't they really just charging you 4% per year in storage costs for your phantom gold (bond)?

Wouldn't you rather have the real gold and be charged 1% a year in storage costs?

I'm not affiliated with e-gold.com, just thinking about their terms, 1%, which still seems way too high to me. I emailed them yesterday, and the CEO told me that for large ammounts, they are willing to negotiate downward on storage costs, and he said that as they grow, they are getting more efficient and are lowering costs.
Al Fulchino
Leigh
Good to see you posting again Leigh:

you wrote:

Al: How are things going at the gas stations this week? Are you having to change prices often? Our family may be coming up to Boston for a day or two sometime before we move, if you and your wife would like to get together with us for lunch or dinner!


Odd thing. I only received a two cent increase so far this week, my first increase in about 4 weeks. Between the three locations, it is rare that a new load isn't arriving, so I am not behind in my prices. We are posting 1.359 and 1.379 for regular. Midgrade 1.439 and 1.459. Super 1.499
Our Fed and state taxes are almost 40 cts per gallon. The unbranded competition in my area has, however, have posted 4 and 6 cent increases.

I am going on a smowmobile trip up at Rangely Maine next week with my brother. When are you coming up to Boston?
Canuck Gold
Jason Happy (01/21/2000; 11:30:28MDT - Msg ID:23359)
Well, according to your figures, the US, with 8,000 tons of gold reserves, will be able to have the grand total of 5.15 billion dollars in circulation in the form of gold, which will give each citizen the princely sum of $18. Mind you, they wouldn't stay in circulation for more than a nanosecond because they'd be melted down and sold on the black market. I think your proposal needs some work.

CG
Jason Happy
Canuck Gold
You missed the point entirely.

There is about 6 Trillion of m1, m2 & m3 monies, 15 Trillion
in the Stock market, 6 Trillion of US debt, 20+ Trillion of public debt, while the U.S. holds over 8000 tons of gold.

Clearly there is more water (dollars) than will fit into the cup (gold). This is why a crash is inevitable.

Are you assuming a transition back to honesty from dishonesty, lies and fraud will be a painless one? Are you assuming I can somehow suggest a solution that will result in the deletion of all forms of paper and electronic dollars and get the world to convert to gold, while somehow maintaining all the purchasing power of all those fruadulent claims? I am suggesting no such thing.

Nor did I ever come close to suggesting that an ounce of gold be sold for $20 of todays fiat dollars. I said a dollar is, by definition, 1/20 of an ounce.

When the fiat paper goes bye-bye, as it always has throughout history, it goes up in smoke, vanishing, buying nothing, zero, not a single 1/2000th of an ounce of gold for all the paper claims you can gather.

6000 years of monetary history proves that these current paper tickets (Fed Reserve Note dollars) will, one day, vanish and disappear as completely as a fart in the wind. It's just a matter of time.

If you wanted to legislate the crash, and divvy up the 8000 tonnes of gold, you could divide the 290 million ounces of gold up into the 6 million million (trillion) dollars, which would allocate it at a rate of about just over $20,000 per ounce. Of course, that's an orderly distribution. Trust me, the dollar demise will be disorderly, and some people will get less gold than that, or, conversely, will end up paying more dollars than that to convert their fart wind money to something real.
Canuck Gold
Jason Happy
Finally we're starting to get somewhere but we still have a long way to go because we still don't have a physical monetary system. Again, using your figures, if 1 ounce of gold is worth $20,000 of today's money, then 1 ounce of silver is worth $1000 in today's money. How do I pay for a loaf of bread and a quart of milk worth $3.68 in today's money and what do I get as change?

CG
Leigh
Al
Al: Probably not for a couple of weeks. We're just starting to house-hunt in another state, and we won't have time for sight-seeing trips until that's over with. If you don't mind asking MK for my e-mail address, we can plan it off-line.
TheStranger
Mr. Fulchino's Question
"Al Fulchino (01/20/2000; 21:21:58MDT - Msg ID:23306)
The Stranger
In your opinion, based on your history in the investment field and whatever other resources go into your thoughts, do you have
a view or though as to what:

a) POG and Silver should be now?

b) where the prices of these metals are headed in the next
two to three years?
c) what the Fed rate will be in the next 2-3 years?"

Al, thanks for asking. IT IS IMPORTANT TO UNDERSTAND THAT RISING COMMODITY PRICES, INCLUDING OIL, BTW, ARE NO MORE A CAUSE OF INFLATION THAN ARE FALLING BOND PRICES. BOTH, RATHER, ARE INFLATION'S CHILDREN.

So, with this concept in mind, what you are really asking me is, "what will monetary policy be like over the next 2-3 years?" Obviously, I don't know. But because there is a fairly long lead-time between Fed policy and general price behavior, a careful student should be able to recognize important changes developing in PMs and interest rates as they evolve.

Right now, the recent inflation is already well-entrenched. Bonds have been falling for over a year, most commodities have been out-performing most stocks for a year. Before this cycle is over, however, I would expect public enthusiasm for inflation beneficiaries, like gold and silver, to be way overdone. I don't think there is any danger of that happening overnight.

As to what the dollar prices of gold and silver ought to be today, the flip answer is, "whatever people are willing to pay." But most people are way behind the curve much of the time. Today, even many conservatives have acquired an implicit faith in Alan Greenspan which may be hard-earned, but, alas, it is no longer well-deserved. As the months go by, I believe we will all see what I mean.

******

Correction for beesting: Make that 6'4". Thanks.
TownCrier
Decisions, decisions...
http://quote.bloomberg.com/pgcgi.cgi?T=markets_newsfeat99.ht=&ptitle=EMU%20Top%20Stories&touch=1&s=45d07d339f7fce6699f9e89b225205c5HEADLINE: U.K. Banks Will Only Have a 'Narrow Window' to Prepare for Euro
Malcolm Levitt, the European Union adviser at Barclays Bank Plc. said timing is crucial for the banks to properly prepare to handle the euro and for customers to get used to it to prevent dissatisfaction. Timing it all around elections makes for a narrow window...the banks need about three years to convert from sterling to euros. "Our aim all along has been to get from the government a precise entry date or at least sufficient certainty about the likelihood of entry."
Jason Happy
Canuck Gold
Yes, we are getting somewhere...

The real problem is that the question really is:

How do you honor (pay in gold) a collection of fruadulent claims (dollars). Typically, you don't. The frauds get nothing. The problem is that all the people have been forced, or accepted the fraud, (paper dollars).

The problem is in assuming that if gold is at $20,000 of today's dollars, gold therefore must have the purchasing power of $20,000 of today's dollars. That's the confusion that entangles us as users of fiat dollars.

In fact, if you even tried to declare a national bank holiday, and give (sell) people an ounce of gold for $20,000 just to be fair, you would have no takers.

Also, distributing gold in this way leaves out those people who have made loans in dollars, and expect a return, but have none.

You really need to divide the gold up between the people holding dollars, and bonds, and bank loans... so that's 32 trillin to divide, not the 6 trillion...

Typically, the way creditors and debtors are put on the same plane is that governments end up monetizing their debt, so everyone's a holder of dollars, and nobody holds bonds anymore. Then, everyone is left to fend for themself as the value of the currency drops rapidly to zero.

The payoff of $18 in gold you suggested (just under an ounce) is really quite better than watching all savings drop to zero. Something is better than nothing, right? Also, $18 real dollars in gold is quite a lot. In 1899, a man's suit cost $1.50--as you can see from old newspaper ads.

The saying, "an ounce of gold buys a man's suit throughout history" is a anti gold propaganda myth. Back in 1899, less than 1/10th of an ounce bought a men's suit. And given advances in productivity and tayloring, you'd expect to get a men's suit for even less today...
TownCrier
Fed adds $969 million in permanent reserves to banking system via coupon pass
http://biz.yahoo.com/rf/000121/xf.htmlThe Federal Reserve today confirmed that it performed an outright purchase of U.S. Treasury securities dated from June 2003 to February 2007 to add $969 million to the banking system.
Jason Happy
(No Subject)
Let's suppose that all dollar purchasing power vanishes to zero, while
gold's and all precious metal's purchasing power doubles. That means gold (distributed at well
over one ounce for $20,000) buys $580 worth of today's goods, and all
former dollars have vanished.

That will entail a lot of capital destruction. There would be only
1/50 of the ammount of money in the world after such a destruction.

So, using today's figures, the milk and bread at $3.68.
Today, a silver quarter is bought for $1.00. If the real money
(silver) has twice the purchasing power, the silver quarter would
buy you $2.00, and a dime is about .80 cents, while a penny is 8 cents, of today's
purchasing power in today's values.

So, the bread and milk purchase of $3.68 would cost two silver quarters
valued at $4.00, and you'd get 4 copper pennies in change. Surprisingly,
it works out to exactly $3.68, but obviously prices would be rounded
off to the 8 cent mark in today's prices, or, goods would be priced
in the "new real money terms" so, since you paid 50 cents and got
4 back, the price for the milk and bread would really be 46 "cents."
RossL
Irony
The Irony OF It All
Such irony. In exchange for imported goods, the USA exports $billions worth of gold instead of sending them paper obligations. The press reports this as a "good" number that reduces the trade deficit, as if the gold was only a commodity. However, it doesn't reduce the trade deficit in real money, only paper money! Because gold is money, the REAL trade deficit is much higher.
ORO
Aristotle - Returning to gold - and musings on banking's situation
The biggest point on a return to gold would be geopolitical. It requires that no nation or group of allies be sufficiently powerful and dominant to exact tribute from the rest. This condition was met in the pre WWI period. It is now plain that the power of the US has diminished with the split of motives in control of NATO following the dissolution of the Soviets. Now Europe (France backed by Germany), the US, China, and Russia, are all balanced in power and can do each other no harm without exaction of heavy retribution. Many more nations are going to join in this club, India and Pakistan are on the cusp. If South Africa can avoid the flight of its white population, then it too can join this club. Brazil and Argentina seem not to be working in this direction. I would hope they would, so that the world would be the more obviously dangerous with a wider multilateral "MAD" making the scale of "safe" warfare in which governments can engage that much smaller.

The next issue is Mogg-Davidson's return on violence diminishing. The ability to capture, seize, and control productive assets has already diminished. Barring an all out attempt by all governments to join hands in Interpol like global asset grabs (intergovernmental cooperation rising to dominate international relations rather than competition among them), there would be a tendency for governments to compete for business. Their business being a protection racket, they would compete in offering the best property rights protection, including a solid trade settlement and financial system - all at the lowest cost.
Indeed, since the advent of computer banking some 40 years ago, we reached a point where financial flows had gone beyond the ability of any one government to control in 1968. The response of governments was to entice these financial flows into their realms by the offer of higher real interest rates, better protection from bank credit instability (which is failing right now), and diminution of government expense in the countries with the highest awareness of the new situation - namely the US and UK (remember Maggie?). It is so that the rise of government regulation and expenditure from the death of Victoria onwards through the 60s was abruptly halted and reversed. The EU has avoided the additional loosening of the government stranglehold, but has made it clear that governments will cease dictating many of the factors over which they have retained power.

However, there is a certain retrenchment arising from the need to fund the operations where returns on violence remain high - commercial espionage and the drug trade. These are replacing, in the US, government's ability to seize all assets indiscriminately through tax and currency inflation, with a covert seizure mechanism in the form of "terrorist", "drug" and "racketeering" laws and operations that can take all of a person's property without appearing to threaten everybody's property in the way taxation and currency inflation do. As long as only a small number of people are affected and the issues remain quiet, there would not be widespread fear of these actions and productive assets and activity would remain within the government's reach for later seizure of the whole, or for the partial confiscation by taxation in slow annual tributes.

The first signs of a major government's retrenchment from the prevailing power dissolution and disaggregation trend - towards more control - would be cause for mass migration away from currencies and into physical and electronic forms of gold. In this light, the 256 bit encryption technology available internationally (from non-US sources) without "back doors" to which government holds keys, is closing the current violence "market" opportunity in corporate and financial espionage and reducing the ability of governments to effect total seizures in confiscatory practices of the "war on drugs", "counter-terrorism", and "racketeering" (obviously the last two things, governments can not claim to do since it is they who do the overwhelming majority of terrorist actions and racketeering). Attempts to practice these on a greater scale will, as I claimed above, push people of means into anonymous gold based finance, untraceable and not seizable.

================================

The nature of credit money is such that it languishes into nothingness upon challange through the twin brothers of inflation and deflation. That is the reason for the current financial structure being as it is, considering the background of the political situation. The well prepared surviving banks flourish in deflationary conditions. However, governments don't. The appearance of massive global currency inflation has been a sign of a move of banking from its centuries old alliance with government to a less friendly relationship where the credit markets hold both government and banking in check, interposing a forced action on this coupling, where the credit based currency must expand or the bankers will fail, as they have no means remaining for them to keep solvent in the event of a deflation.

As a notable indication of a possible break of banking's alliance with government, I point out two items - the first is that the French nationalized the Paris bank of the Rothchilds after Pompidou (a Rothchild banker) left office.
The result was that the wide ranging operation of the Paris bank, rather than falling under control of the French government, disappeared into the new bank operations of Rothchild in Switzerland.
During this same time, the US banking industry was beset by a long process of deregulation that slowly erroded the advantages of the great banking famillies. I can only guess at the causes of the break; perhaps it has to do with the realization of the government bureaucracies that the looting of the US gold in the late 60s would eliminate the government's ability to control finance at all. European bankers faced a brazen attempt at takeover by the governments. Though a balance seems to have been restored, the relationships have, perhaps, changed in nature and may be different in Europe and the US. The US seems to have retained more of the symbiotic relationship than has Europe. European banks make their fortunes in the dollar arena, repeatedly lending to emerging markets and then taking them into receivership. The London banking world actually seems to be threatened by the ECB gold maneuver, as are the NY banks, which seem to have been lured into a trap. They are now only able to loot their depositors and investors after having missed out on the Asian crissis, in which EU banks were thrown the bones of Asian Tigers to chew on, leaving little for US banks.

So, has the spirit of the Creature from Jeckyl Island given up its corporeal body, soon to expire, and moved to gold in the attempts of its progenitors to save what can be saved from the deadly storm brewing? Or is this a final part of their grand plan? Right now, I can't tell.
Either way, the Euro seems to stand in their way on all counts - pilfering EU gold reserves - continuing with the pillage of Asia and South America through the dollar - or transfering the financial world to a direct circulating gold standard where they have the gold. In the attempt to pillage the gold from the EU CBs, the Anglo (NWO) bankers may have been forced to face an unwilling group of governments, that have no intention of allowing them further exclusive privellege. Now they face a possible withdrawal of government support in the future, on top of the potential evaporation of their franchise as any tech savvy financier can create upstart banking operations outside the established banker's ability to control through government. Will the Anglo banker's world collapse? I don't know. Could it? Are the bureacratic EU/Swiss banks that have taken over the international dollar operations truly seperate from the NY-London axis?

==============================

There is in the structure of the Euro a "cover all bases" approach whereby it is indifferent to the timing of the transition to free gold markets as the reserves allow inflation of the Euro by either the rise of gold or of the dollar against the Euro. Since the Euro is limited by balance of payments and money supply and demand dynamics from falling inexorably against the dollar, they are now forced to raise the price of gold at an accelerating speed so that deficit financing can continue without bond issuance or taxation.

The question that comes about in the Euro concept is whether Greenspan's Gold bond concept is at play here - essentially saying that by maneuvering monetary and fiscal policy so that the interest rates on government gold bonds and dollar bonds converge to equality, one can get to the point of a return to a gold standard.

In this Euro variation on the concept, there seems to be an avoidance of the preservation of the debt aspect. The Euro appears to me to answer the question of what to do with the overhang of global debt levels with the answer of cash inflation. Namely, gold values need to rise till they satisfy the needed cash levels necessary for closure of debt without the generation of new debt.

The above is in clear opposition to the traditional Anglo bank concepts that revolve around the elimination of the possibility of cash. As Hein repeatedly calculates, the bank tends to gain in its joint venture of pillage with government when all money is debt. Banks have much less power, or none at all, in a cash world, where they merely allocate capital rather than have the ability to create money. In a cash currency world, nothing in the bank other than reserves has legal standing as cash. Every other form of bank asset is a debt or an equity, not a cash position.

Forever ago, I came up with the summary of the central banker's choices:
Due to the wild growth of debt, central banks, the Federal Reserve Bank of the United States chief among them, continuously face the tough choice between four options:

1. Create cash - Inflate currency to pay down debt
2. Let debt continue to grow, and let future bankers handle it.
3. Keep money tight and allow the debtors and their bankers to go under
4. Reprice gold to provide full backing to the currency (a.k.a. the debt), so that debts may be repayed with cash.

Central banks may decide to wait till the markets fall apart on their own, as has been the case in the emerging market economies since 1994.

The Euro allows both options 1 and 4 above, and is by far better for financial stability than any of the options alone. I see why FOA's folks think this is the way to go.

RossL
Jason

I took a Sovereign in to work once to show it to some co-workers. It was a 1920's era King Sovereign in BU condition. Absolutely nobody at work knew what it was!!!
Al Fulchino
The Stranger
Thanks for taking time.

You wrote:

Al, thanks for asking. IT IS IMPORTANT TO UNDERSTAND THAT RISING COMMODITY PRICES, INCLUDING OIL, BTW, ARE NO MORE A CAUSE OF INFLATION THAN ARE FALLING BOND PRICES. BOTH, RATHER, ARE INFLATION'S CHILDREN.

AF: Priceless....inflation's children!!! And Greenspan lived a 1000 years and begat many Washington's and Lincoln's
and Franklin's etc and they in turn begat Rising Oil Prices, Higher Commodity Prices and Falling Bond Prices. :)
It seems to me that he should have chosen gold(God) over the printing press (the apple). Sorry could not resist.


you also wrote:

So, with this concept in mind, what you are really asking me is, "what will monetary policy be like over the next 2-3 years?" Obviously, I don't know. But because there is a fairly long lead-time between Fed policy and general price behavior, a careful student should be able to recognize important changes developing in PMs and interest rates as they evolve.

AF: Based on the lead time needed for NOW , what would the correct price be as of today? If you have an idea, that is. I am looking to see if there is a price different from the current market price in your view. I understand that people may jump on the bandwagon and add fuel to the rises.

Thank you




Al Fulchino
Leigh
Leigh, let me know when you are up the area. We can then talk further.

Best to you.
Ulysses
usa gold
http://usagold.comRe: export of gold from U.S. Who is selling it? Also, when do you think the American people will start demanding that the Social Security surplus be returned to them?
Canuck Gold
Jason Happy
With the purchasing power of an ounce of gold in a world without dollars at the equivalent of $580 of today's dollars, that would make available an average of $530 or so in gold currency for each US citizen. With only that small amount of money in circulation, those coins will be moving around so fast that they'll be eroded to nothing in no time, considering how soft gold is. Do you seriously believe that amount of cash would be sufficient to maintain normal economic activities?

CG
Al Fulchino
Canuck and Jason
I am enjoying your back and forth, but hasn't the argument already been settled?
Afterall, entire economies have already operated on precious metals. And to setlle the fractionalization of the metals, weren't they just mixed with appropriate percentage of preciousness and also a base metal?

Jason Happy
Canuck Gold...
Averages are a funny thing.

The 6 Trillion of $$$ currently in circulation is $20,000 per person
in the U.S. yet, 1/2 of the people in the US have less than $1000
in their bank accounts today.

Your allegation that monetary velocity will erode the coinage so as
to make the prospect of using gold coins unthinkable is not true. US Eagles have about
91% gold, so that they will stand up to the abuse of circulation,
just like any other coin. Also, if you are holding a coin with
$300 or $500 value, typically, people don't purposefully scratch them or
treat them with neglect. Further, gold coins were in use, sucessfully,
in the United States for over 100 years without this being
a terrible problem. A concern yes, but not unworkable. This is
why coins have ridges on the edges, to prevent shaving and such.

Your other question is a good one. Is that ammount of cash sufficient
to maintain normal economic activities.

Other questions might be:

1. Would a society without any debt at all be more or less prosperous?
2. Would a society that would be able to reap 100% of their economic
efforts (since there are no debt payments) be better off or worse?
3. Have societies in the past flourished or floundered when there was
no debt?
4. Specifically, did the colonies flourish or flounder when they
settled this great land, and were under no debt obligations?
5. How, exactly, did the United States rise to such world prominance
in such a short time?
6. When, exactly, did the decline of relative prosperity in the
United States begin, and why?
7. Does there need to be enough gold to enable large enough fortunes
to exist for a person to have enough money to be able to employ a
100,000 men for 40 years (x a million)? (100 Billion dollars)
8. Is a valuation of 100 Billion dollars rational for an internet
company that is little more than a telephone book (yahoo.com)?
9. Does a society need 100 Billion pre-existing fiat dollars
in order for there to be a webpage/directory type website?
If not, then does a society need that much gold for that reason? No.

And, in response to your question above...
1. Is debt normal?
2. Is borrowing money for a home normal?
3. Are taxes normal?
4. Is it viable, long-term, to tax a service enonomy?
5. If I do yardwork at my neighbor's house 50 times a year, and
I'm paid $100 each time, and I get a massage after each time, and
I pay my neighbor back that same $100, and we both honestly report
an income increase of $5000 on our taxes, (and given the fact that
neither yard work nor massages is deductable) is it rational to
expect us each to pay an additional $2500 on our tax returns, given
that we are both rich and in the 50% tax bracket, and that these are
merely side business that we do for fun? If so, where does the $5000
come from? Did it ever exist to begin with?
6. Was there income tax before 1913, the date of the creation of
the Federal Reserve?
7. Could we maintain a trade deficit on a gold standard?

My answer is that under a pure gold standard, there would be no debt,
and no taxes, no trade deficit, and as such,
the amount of money would be not only sufficient, but more than enough
to stimulate economic growth and prosperity to record levels.

Al Fulchino, thanks! 8-)
TheStranger
What Should The Price Of Gold Be Now?
Al - I don't know, but the following thoughts occur to me:

To one who understands the difference between money and currency (i.e. Aristotle) - there can be no reasonable dollar price for gold until the dollar is, in fact, backed by gold.

On the other hand, to one who knows the price of everything and the value of nothing, $290 may be a fair price.

But, to a dilettante like me, who merely expects a regression to the historical mean - I suppose $500.00 and rising sounds about right.



Jason Happy
What do we need for honest money?
Here's the other "real question"...

How do you convince a nation of people to all simultaneously agree to a bankruptcy payout whereby a (possible and uncertain) $600 worth of one ounce gold purchasing power is better than $20,000 worth of (certain & workable today) fiat money purchasing power.

It's impossible. Society will not voluntarily agree to a mass bankruptcy and give up the buying power of their fiat money to support an honest system of gold.

So, everyone will probably continue to hold on to the funny money and keep marching to the sound of the music, while the chairs (gold) keep getting taken away.

But, the rules of this musical chair game are a bit different. We can sit down whenever we want to; we don't have to wait for the music to stop before we grab a chair! We can get it now. And cheap!

But, on an individual level, you can escape the system and
can take that $20,000 worth of purchasing power in fiat money, and buy not one ounce (YOUR FAIR SHARE), but about 63 ounces!!!, that might, one day, give you $40,000 worth of purchasing power.

Think of it, you only need to convince 1 in 63 people to cash out and the whole fiat system is done for, while at the same time, likely giving a 100% increase in the wealth of those tiny few. How's that for a fragile system!

In fact, the numbers are less that that even. If we got 1/100 people to cash out and buy gold, the system might fall apart! No wonder the anti-gold propaganda must contine so strongly!!!

Unfortunately, only 1 in 1000 in the U.S. owns gold, so we have a bit of work to do if we want honest money.
Al Fulchino
The Stranger
There is a bit of The Philosopher and The Pragmatist in you.

Thank you for the 500 dollar number. I get a fair amount of answers in the 500-600 dollar number from people who appreciate gold as money. And I also always get a sense that they are trying to be conservative.

Thanks again.
lamprey_65
A metal-based monetary system
Although I also have pondered the topic of a return to a metal-based monetary system, please view these opinions as more thinking out loud than a well developed idea.

It seems to me that a strong case can be made that silver, rather than gold or even platinum, should be used as the MAIN metal in metallic-based monetary system.

In addition, historically, whenever a precious metal(s) forms the basis of such a system, government always tries to place a value on the metal itself, and this valuation eventually destroys the system. Example: the U.S. quit using silver in coinage during the 1960's because they could no longer hide the fact that the dollar/silver valuation ratio could not be continued (Either devalue the dollar or devalue silver...the latter was not possible, the former politically impossible) -- at least that is my understanding of the events.

Why not stop the charade of having a "dollar" or "euro" valuation based on government decree? (Interesting that "pound" is a weight measurement as well as a monetary value). Let the amount of silver itself form the currency. If you want to call a 1 ounce silver coin a "dollar" (or a 1 dollar bill backed by one ounce of silver) fine, as long as the term dollar is only defined as being one ounce (or any other weight measurement) of silver - (like the term "pound" suggests). Otherwise, .999 silver is legal for all payment - it is up to the receiver of payment to decide whether a silver round or a government coin or a silver nugget is to be used. (Most would only take the coins and rounds from known mines, of course). The ramifications are huge...governments no longer control money in its entirety -- can that work? I don't know.

I say that silver makes more sense only because there is much more of it. True gold coinage for daily exchange is not realistic because of its scarcity.

One problem - how do you pay a mining company for silver (they are mining money!) under this system in order for a government to mint coinage? Maybe pay them in gold? Tough questions...

Feedback welcome.

Lamprey
lamprey_65
Addendum
I should have distinguished between metal-backed and metal- based. I am suggesting a metal-based instead of the failed metal backed - in the coinage aspect, anyway.

Lamprey
Jason Happy
For lamprey_65
I don't think you have to pay people for mining silver. As long as the mining company is spending less silver in their operations than they are receiving from the mine, they are doing well, right?

What I don't understand, is why mines have to show a dollar profit? After all, don't they have to pay a tax on the dollar profit? Why don't they instead aim for a zero dollar profit, and hold on to all the excess gold and silver that they can? And/or pay out all the excess gold and silver as a divident to the shareholders? This way, the "profit" of excess gold and silver escapes taxation...

Of course, I'm not naive, there are laws that prevent such honesty...
Cavan Man
ORO 23375
Sir:

I read all your posts. After this last one, I am sitting here enjoying the best of JT; just finished "Steamroller".
I have a question for you. What kind of world do you envision in five years; in ten? Thanks.....
TheStranger
The Problem isn't in Riyadh
Lawrence Kudlow manages to get mentioned here at the Forum once in awhile. So, it was with interest today that I heard this famous disinflationist being asked about oil prices on CNBC. Perhaps seeing his forecasts coming apart at the seems, Kudlow responded by advocating some sort of hardline political response to Opec. If anybody can recognize the tendency to blame politics for our investment miscues it ought to be some of us goldbugs. Nonetheless, I am sorry Larry. The problem is not in Riyadh. It is in Washington.
lamprey_65
Oil: Where's the Jawboning?
If OPEC is truly behind the current oil price spike - where is the jawboning we heard last year from Washington about releasing strategic reserves? Could it be that the problem really is refinery problems (embedded chips?) and the release of reserves would not help in the current environment?

Lamprey
Jeff
Maintenance Downtime
Tonight, around 9pm mountain central time, the server the forum is hosted on is going to be upgraded to a faster machine. In order to accomplish this with as little downtime as possible, the USA Gold site will be down for about an hour. There will be no loss of messages resulting from the upgrade. -Jeff
Al Fulchino
Stranger
LOL I saw the interview... and had the same observation! He DID turn around the issue to politics!!! Very astute, even if I am complimenting myself too hahahaha
Al Fulchino
Repost from other forum before this one goes down for renovations
Just saw this from GE...interesting read FWIW

Untitled
(AuContraire) Jan 21, 21:41

Y2k Related Web Posts by Roleigh Martin

[The following is from an "oil industry insider" who chooses not to be identified. Although we usually do not post anonymous items, I have been corresponding with this person for awhile and the reports seem credible. Further, the comments on oil are being confirmed by other sources now hitting the media. After the lack of any dramatic Y2k events, I asked "What happened with oil? The response is below in two parts. NK]

Further updates since my last response...

More refineries are going up. The latest came out to newswires about noon Tuesday... The 2nd largest refinery in the western hemisphere blew out its cat-cracker unit. Latest wire story indications are that it will be out for 20 to 35 days. This is a MAJOR event. In all likelihood it won't get back up near what is estimated, most never do.

We've still got refineries down that were supposed to be back up on Jan 6th from rollover problems that never got reported in the media and were never classified as Y2k related but they were.

Latest on Venzuela situation is that they've just declared a Force Majeuvre (sic?) [act of God type of event for which they are allowed to renege on contracts as an event out of their control] Now the latest on the Force declaration is that it covers not only that refinery but all gasoline production period as well as all crude oil!

Now how can just one refinery blow-out do damage to all else? IF this is indeed true...then all of Venzuela oil ops are experiencing Y2K related matters. Oh, early wire stories said the refinery blast was due to mechanical problems, later revised to systems problems. A fancy PR way of dodging that 4-letter word = Y2K (I know its 3 letters but its treated as if it were 4).

In addition to that, we've got a Pennzoil refinery in Louisiana that also blew up late Tue afternoon just before the 6pm local news. TV CBS affiliate reporting major explosion destroying the Naptha processing section of the plant.

We've got a BP Amoco plant still down plus a Modiva NJ plant still down. I've also got word from an eyewitness that oil tankers coming to NJ/NYC ports are being stopped and inspected for some sort of problems with tainted oil. I've no details but one fellow on TB2000 has been giving daily harbor reports from his backyard vantage point overlooking the ports and listening to harbor radio conversations. He's been a great and reliable source and not giving us hyped stories. IF it's a dull day he states it. Things seemed to have been going well until the last couple of days...though the first week of Jan was dead with no ships coming in. One ship apparently had probs last week and kept going around in circles.

Overall, from what I see/hear things seem to be deteriorating in oil. Pipeline problems are still popping up. We just got late word of a big pipeline blowout in Brazil, Rio de Janeiro. No details yet. There is a wire story on it somewhere.

Meanwhile Crude oil continues to climb as does gasoline on the NY Mercantile Exchange. The big boys are buying up everything in sight. They KNOW something. I just don't know what but it appears to be Y2k.

I can't remember if I commented or not on natural gas, but there are more reports of pipeline problems. I heard one whole field was cutoff the other day. Don't know if its back online now or not.

One commodity trading house firm is indicating Y2k is the problem with oil refineries, no word on oil wells though.


TownCrier
Sir lamprey_65
lamprey_65 (01/21/00; 18:31:21MDT - Msg ID:23391) "Oil: Where's the Jawboning? If OPEC is truly behind the current oil price spike - where is the jawboning we heard last year from Washington about releasing strategic reserves?"

It may very well be that that political chess piece has been taken from the table in one fashion or another. We reported here at the Round Table about 3-5 weeks ago that Bill Richardson came out and expressly announced that the U.S. would NOT be dipping into its strategic reserve. I can't comment any further on the gamesmanship surrounding that announcement.
TownCrier
Sir Ulysses
Ulysses (01/21/00; 14:27:23MDT - Msg ID:23379) "Re: export of gold from U.S. Who is selling it?"

Miners, refiners, households that liquidate their gold holdings to the open market, you name it. For every American seller who isn't paired with an American buyer, you've got yourself an example of a gold export.

The various mining companies' forward sales and gold loans...even those arranged years ago...with overseas counterparties and bullion banks would be significant components of the overall export totals.
dragonfly
Adventure
There was a sailor named Dumas who single-handedly sailed the 40th parallel South during WWII. His trip came to mind as a metaphor of the journey we are taking on this golden path. He left Argentina undoubtedly excited, possibly somewhat apprehensive, mixed emotions regarding all the possibilities but above all the will to embark � come what may. He lashed himself below to survive 40 foot waves near the Cape of Good Hope (or maybe Cape Horn � it's been years since reading ) as his little boat flipped over and over. Then in the middle of the South Pacific, thousands of miles from land, he experienced the doldrums for a month straight. No clouds, no breeze, no waves. Talk about a freaky situation. He almost lost his mind because of the sensory deprivation of a "blue-out" wherein the sky and the ocean merged with exactly the same color. He recalls that seagoing birds would stop and land and he would chat with them and feed them and they helped him hang on. (I suppose the nights were spectacular but don't know if he mentioned them). Warships from both sides hailed him and let him be. Must have been an amusing sight. So I think this adventure we are involved with has many similarities to Dumas� journey. The stormy seas and the doldrums, the fortitude and mental strength, the camaraderie of stray birds. It might have been difficult to bring that little boat in to home port after such a long time alone through such hardships. I wonder. I guess we'll know soon enough.
See y�all.
Solomon Weaver
take delivery
NY heating oil wholesale barges hit all time record

NEW YORK, Jan 21 (Reuters) - Wholesale heating oil prices for barges in New York hit a record all time high of $1.10 to $1.37 per gallon on Friday, according to the Journal of Commerce.

The new price, effective on January 21, overtook the last record high of $1.06 to $1.08 on October 10, 1990 during the Gulf War, said the business paper, which tracks the wholesale prices on a daily basis and is widely used by heating oil retailers.

Prices have surged from a range of 79 to 80 cents just a week ago, and have almost doubled from a year ago when they were at 40 to 48 cents, it said.
--------

The above is just a snippet....I live in Central NY and have seen the prices already in my oil deliveries this winter.

PLEASE TAKE NOTE HERE FOLKS...the press says it is OPEC...but on an extraordinary basis, Russian heating oil is being sent to USA....THE HEATING OIL MARKET (AS WELL AS THE BROADER FUEL OIL MARKET) is heating up very fast. THIS IS A CLASSIC "TAKE DELIVERY MARKET" and folks are beginning to panic. Notice how quickly oil has moved off the map of history.....Notice the desperate calls to tap the Strategic Oil Reserve...

Notice the psychology here, because it is the same that will hit the physical gold markets when people suddenly realize that gold is much more scarce than oil.

----------

By the way, quite glad we put in a wood stove for y2k, and cut up a lot of old snags on our property....Last year I was averaging 12 gallons of oil/day, and not even heating 1/3 of the house....now we are even warmer at about 7 gallons per day (just that hauling firewood has become a chore). Word of advise...do not attend a woodstove wearing one of those newfangled polymer fleece sweaters (like I got for Christmas) They melt before you can say Jack Sprat...and Jack's wife ain't gonna be happy when she sees it.

Poor old Solomon
Solomon Weaver
Welcome dragonfly
Glad to see you flitter in with such a nice story.

There is only one thing nowadays which is even less popular than owing gold...

To look inside on the sea of nothingness and learn to find solace there....

No wonder we gold owners feel so lonely...we are just next to the truth.

Poor old Solomon
TownCrier
The GOLDEN VIEW from The Tower
Here's a quick post of the facts to get in under the wire of Jeff's scheduled upgrade.

Traders on both sides of the Atlantic said gold trading was subdued in advance of Tuesday's gold auction by the Bank of England...their forth offering of 25 tonnes since July. Prices climbed in NY nonetheless, with spot gold last quoted at $288.60, up 60�, and the February futures traded through COMEX were up 40� to $289.70. In a Reuters survey of 22 analysts in London, New York, Sydney, Johannesburg and Tokyo, the majority expectation was for "gold to move into a higher range with sporadic periods of volatility," and an expectation that more "transparency and regularity in official sector activity" would help to reduce the market participants sensitivities to any official actions.

Today we saw 900 ounces withdrawn from COMEX Registered gold inventory. Hey driver, bring that truck around this way...

The torch has now been passed from the expired February NYMEX crude futures to the March contract, which had been trading at a discount to the spot issue (so don't be shocked when you see the lower price per barrel despite the gain in price.) On the continuing cold weather in the U.S. Northeast, and the meeting of OPEC oil ministers from Iran, Algeria and Libya in Tripoli to discuss extention of the production cuts and compliance improvement, March crude climbed 23� to $28.20 per barrel.

And that's the view from here...after the close.
Solomon Weaver
Lamprey on Silver Coin
http://www.gold-eagle.com/research/butlerndx.htmlLamprey, you said:
I say that silver makes more sense only because there is much more of it. True gold coinage for daily exchange is not realistic because of its scarcity.

-------

Lamprey

The above link is the index for a series of articles written over the last two years by Ted Butler on Silver.

If you spend a few hours reading through them, I think you will begin to see that at the time being, Silver is more rare than gold.

The reason I say this....the above ground reserves of gold are on the order of 25-30 years of physical demand (at current demand levels). The above ground reserves of silver can hardly satisfy more than a year of demand. Butler predicts that based on normal demand for the future (this means no new demand for commemortive coin and jewelry, and particularly no new demand to create monetary reserve assets), that the physical silver market is going to have some very tight years.

There is only one scenario where I could see silver reserves created. Since most silver mines are in the USA and South America (i.e. countries with massive dollar denominated debt) if the Americas were to default on the massive multi-trillion dollar debt, it is possible that the world would be willing to convert the debts in a falling dollar to be paid back in silver...

As an investment, I think that silver (in the short run) may be a lot better than gold. For those who are willing to use "a little bit" of leverage even more so....but all of the arguments of FOA related to the inherant leverage in the physical metal when he speaks of gold also hold true for silver...

Buy some silver and put on your seat belt for a wild ride...

Poor old Solomon
Jason Happy
The silver story
I've read all of Ted Butler's articles, and I emailed him this week regarding the issue of silver reserves. The silver scarcity story is a confusing one. The problem is that there are little "official" reserves left, basically what's on the COMEX 70 million ounces, and Warren Buffet's silver 130 million ounces... Much more silver is in coin form or hoarded by private investors, or jewelry, or silverware. Supposedly, there were up to 40 Billion ounces worldwide at one point. The current annual 200 million ounce shortfall between new silver from mines, and silver demand would wipe out the 40,000 million world reserve in 200 years. Surely there has not been a 200 year supply demand gap this large. Perhaps the world hoard was only 20 Billion ounces? Still...

So, there are no "offical" reserves on record because central banks do not hold silver. But it does not mean that no silver exists. The real story must be that there is a tremendous amount of junk silver in coins hoarded in people's closets around the world, probably mostly in the US, as we were among the last people to give up silver coin?

The latest best estimate figures are that there are 4 ounces of silver per person on the planet, and .7 ounces of gold. And that 6 ounces of new silver are mined for every 1 ounce of new gold.

Still, I hold some junk silver coin, and I expect it's value to rise significantly.
Jeff
Forum Back Up!
Everything is back up and running. Post away......
-Jeff
Chris Powell
Senator Gramm may help question Greenspan
http://www.egroups.com/group/gata/342.html?Latest from GATA Chairman
Bill "Midas" Murphy.
Journeyman
Another paper-backed casualty
http://my.netscape.com/news/International/01_21_2000.roitz2010-story-bcinternationale
Saturday - 01:24 01/22/2000,EST

Ecuadorean Protesters Surround Government Palace

QUITO (Reuters) - Hundreds of Indian protesters surrounded
Ecuador's government palace Friday just hours after
President Jamil Mahuad, grappling with economic disarray and
facing calls he resign, refused to quit but left the
building.

...

Local media reported Mahuad was at an air force base
planning to leave the country. Other reports, quoting his
interior minister, said he was still in Quito.

...

Top military officials had yet to make another statement
regarding the country's leadership after the Andean nation's
armed forces' chief Gen. Carlos Mendoza said he had asked
Mahuad to resign in order to avoid a ``social uprising.''

...

``In their ambition and lack of respect for democracy in
Ecuador, the armed forces are trying to mount a coup
d'etat,'' Mahuad said. ``I call on the people to oppose this
coup.''

The United States strongly condemned what one official
called a ``proto-coup'' in Ecuador.

``We remind all parties that an attempted overthrow of the
constitutional government of Ecuador, under whatever
pretext, will have disastrous consequences for all
Ecuadoreans,'' a State Department official said.

``Any regime that emerges from such an unconstitutional
process will face political and economic isolation, bringing
even greater misery upon the Ecuadorean people,'' the
official warned.

...

In Quito, the Indians and their army allies told cheering
crowds in Congress that they had declared a ``government of
national salvation.'' They claim to have replaced Mahuad,
Congress and the Supreme Court, who they allege are corrupt
and unable to solve Ecuador's worst economic crisis in
decades.

The Indian groups are also sharply opposed the Mahuad's plan
to revive the country's economy by adopting the U.S. dollar
as its currency. The Indians said it would further
impoverish the country's poor.

...


``We're here to end the looting (by the government) and to
support a just cause by our indigenous comrades,'' said
Cobo, who added he had been nominated to lead the
self-proclaimed government's military.

``We haven't come here searching for power, we're here to
found the country of Ecuador again,'' he said.

...

Mahuad, a Harvard-trained lawyer who took office in August
1998, has seen his popularity plunge after failing during
his 17 months in office to pull Ecuador out of economic
crisis.

Inflation, poverty and unemployment have skyrocketed under
Mahuad's command and the economy contracted 7.5 percent in
1999. [But did the Ecuadorian currency appreciate in value?
Did the currency "deflate? -J.] The country is also immersed
in tough negotiations to restructuring its debt, on which it
partly defaulted last year.

Regards,
Journeyman
Journeyman
Repost of reference link for previous post
http://my.netscape.com/news/International/01_21_2000.roitz2010-story-bcinternationalecuadorprotests.html?cp=aimSorry! (Something's wrong with the link in the heading of my last post, try the link in this message.)
Journeyman
Good job Jason Happy!!
Sir Happy (like the sound of that one) you've done an excellent job of fielding all sorts of questions on various practical objections to reinstituting a PM based (honest) money supply all day IMO. Sort of amazing how many misconceptions there are even here!!

But it's kind of like learning the metric system, I think -- it makes more logical sense to use meters, etc., but it is foreign until we get some practical experience using it. Seems to me it's probably similar with the PM standards. Amazing what 67 years of disuse can do to the cultural meme pool!!

Regards,
Journeyman

P.S. A dollar monetary token now costs 1/288.20 (.0035) ounces of gold. In 1933 a dollar was much more expensive: then it cost about 1/20 (.05) ounces of gold. Dollars have gotten a lot cheaper!
Cavan Man
On money creation and credit
http://www.prudentbear.comExcellent commentary from Friday with regards to money supply and growth.
18KARAT
Chestnuts from Survey of Consumer Finances
http://www.ntrs.com/rd/rd35/pos2000/pos_econ_21jan.html
Here's an interesting fact:

Did you know that during the last 5 years,
US households have been net sellers of stocks?
That's including both direct and indirect shareholdings
i.e. including mutual funds, pension funds and trust accounts !!

Oh? Well who's been been buying the darned things then
and driving up the share prices to orbital velocity?

Answer: US Corporations through share buybacks and cash takeovers.

And what's more, as a result of their fantastic corporate buying spree
their level of debt to assets has now reached the highest level since WW2.

For these and other amazing revelations see Paul Kasriel's latest study.
(Above Link)

I think I'm going to apply to become his press agent.

18K
Hipplebeck
gold exports
Is this true?
The US number one export was gold?
This is a very bad sign IMO
I just can't believe the US has gone down that far in it's ability to manufacture something that the world wants.
It looks like the rest of the world already knows what the dollar is really worth.
R Powell
Oil, cold weather, and economic bubbles
I've been reading Ravi Batra's "The Crash of the Millennium" and come upon his explanation of the pin that burst the bubble of the Japanesse economy. Page 131, "At the end of 1989, an unusually sharp cold spell suddenly raised the price of oil. This along with rising interest rates, pricked the market bubble, and share prices began to sink from the first trading day of 1990. Japan's bubble economy has been limping ever since." What created the bubble? Batra contends it was a wage gap in which increased productivity wasn't reflected in wage gains. This wage gap disrupts the equilibrium between supply and demand. It took time before the bubble broke. Batra again, page 66 "For a while the balance between the two forces can be maintained by artifical demand through excessive business investment, or through the expansion of consumer debt, money supply, corporate debt, government budget deficits, and even exports, but these are mere palliatives that may mask the problem for some time." I've been reading this while watching the cold on the weather chanel, watching the price of oil skyrocket(especially heating oil) and wondering if I can pay my Master Card bill with my Visa Card. Maybe I should sell some Re-poses or print larger denominations on the next batch of bills.
18KARAT
Follow Up to 18KARAT (1/22/2000; 7:19:24MDT - Msg ID:23412)
http://www.federalreserve.gov/RELEASES/Z1/Current/z1.pdf
If anyone would like to verify Paul Kasriel's latest analysis from Federal Reserve Flow of Funds data

the data can be found in the above PDF file
Table F.213 page 45

18K
goldfan
Astrology, Gold, and Who cares?
Some people spend large amounts of their personal time and energy examining the stars to see what they might portend. They make all sort of arcane measurements and algorithyms, seeking to gather heavenly data and use it to locate where they are in the chaos, whether there is a trail to be on, and what might be encountered around the next bend.

As I get it, these astrological investigations are carried on only by relatively few people. Most people restrict their interest in astrology to the occasional glance at "your horoscope today" in the daily newspaper.

Even if I were to pay a lot of attention to the experts in astrology, I would have difficulty choosing whom to believe, and how and what to act on, of their forecasts.

I nonetheless have great admiration for their diligence, effort and intelligence. As a group they have carried on this work for millenia.

So it is with members of this forum, and the few others of like "investigatory proclivities" ie. All those who want to find the truth of our economic situation, even though this is not popular work. In my personal life I have a lot of close friends and many acquaintances. I know nobody who is anywhere near as alarmed as I feel about what might be coming to us, in economics, and in social civility. For all my obsession, talking and writing, I have influenced only perhaps 6 or 7 to sell their mutual funds, and put a bit of the cash into a few gold coins.

Maybe I am wrong, maybe I am addicted to my opinions, like so many who believe they're right. Maybe there's something I'm missing, that makes the herd right, and me wrong. Maybe it's a waste of effort to keep on speaking up. Can you imagine addressing a herd of cattle grazing peacefully in a field, exhorting them to "Run! Get out! You're about to be slaughtered and eaten!" How much attention would they pay to your oratory?

Anyhow, somewhere in Shakespeare, I believe, is the phrase, "Our fate's not in the stars, 'tis in ourselves."

So I continue to do this stuff because I choose to, and enjoy it, and I hope you do too.

FWIW
Goldfan
Journeyman
"The Gold Will Rise Again!" rain-check

For all of you that have been lined-up waiting for a follow-
up to (MID# 23279), "The Gold Will Rise Again" - - - all
three of you - - - I'm going to ask you to accept a rain-
check. So much good work has already been done clearing the
smoke & mirrors from the trail to a new hard currency, I'm
gonna hold my fire till a little later. With Sir Happy :)
and others out there firing away, maybe if I wait long
enough, I won't have to do anything at all!

Particularly, Aristotle looks like he's about to enter the
fray, and that's the big guns. At any rate, I'll fill in
when necessary and if I have any relevant ammo.

Regards,
Journeyman

P.S. I'm not so nieve or enthusiastic that I don't realize
there are some REAL stumbling blocks on the trail, but other
than misconceptions about hard currency, (a big boulder in
itself, but one being slowly pulverized here at USA GOLD)
there may be only one major boulder that has the potential
to semi-permanently block the trail. I'm listening tho --
come'on folks, convince me it CAN'T happen and save me a lot
of time and trouble!!

On the trail to hard currency! Believe it!
Journeyman
Colombus @ Goldfan

Hey, Goldfan, how many people believed the world was round when Colombus sailed for the "new world?" Thing is, you're NOT alone --- and neither are we at this forum. Check out Greenspan's speech at Jackson Hole, Camdesus' early retirement, calling for a "new [economic] archetecture," Clinton to CFR, etc. etc.

Only the "herd" doesn't recognize the possibility of the BIG ONE -- and even they're being warned of it by incresing numbers of analists. I'm glad you're not ready to "capitulate" as they say in the markets. There's a high probability we're close to the climax.

On the other hand, I've told my wife that if nothing happens by my birthday 2001, we can probably relax.

Regards,
Journeyman
Journeyman
Colombus @Goldfan P.S.

THE BIG ONE has already happened to Japan, Mexico, N.Korea, Thailand, Indonesia, The Philippines, Russia, Greece, Yemen, Turkey, Brazil, and now Ecuador (to name a few) -- who want's to make the argument, "It can't happen here 'cause this is America?"

Regards, J.
Peter Asher
Goldfan, you made our day!
>>>> Can you imagine addressing a herd of cattle grazing
peacefully in a field, exhorting them to "Run! Get out! You're about to be slaughtered and eaten!" <<<
HOF one-liner, absoultly
RossL
Exporting Gold and "The Big One"

I must admit that I was skeptical. That was my reaction when I first read the FOA scenario about how the POG will jump $100 or $1000 a day sometime soon.

Now I'm beginning to realize that's the way it must happen. TPTB, The FED, the big NY banks, or whomever they may be, will provide us with a facade of normalcy until that facade cannot be sustained any longer. That's what the Roosevelt and Nixon administrations did in the past.

Gold will leave the country at these low prices until the manipulators have no means left to control the price. If gold is truly the #1 export, then millions of ounces per week must be leaving the USA. My guess is that is not sustainable much longer. It would take thousands of tons of gold to make things appear normal up to election day.
beesting
For Educational Purposes Only-or How to Stir up a Hornets Nest!
http://www.murabitun.org/WITO/dinar.html
GOLD and SILVER used as MONEY Worldwide!!!

The above URL is to a site that to my knowledge has already implemented a bimetallic monetary system, to the best of their ability. PLEASE READ ALL OF WHATS IN THIS SITE CONCERNING GOLD & SILVER AS MONEY BEFORE GETTING UPSET AT ME!!!
I have absolutely NO affiliation what so ever with the above site!!!

Here are is a list of unanswered questions:
1. Will the entire Islamic population of the world(estimated 1 billion people)be allowed to use this monetary system by their respective Governments and leaders?
2.Would Christianity be allowed to use this monetary system?
3.Would Buddists,Hindu, and all factions of Eastern Belief systems be allowed to use this monetary system?
4.Would ancient Judaism EVER accept this monetary system?
5.Would those people not already covered worldwide, including Indigenous peoples accept this system?
6.Would the U.S./IMF-- BIS factions ever accept this system?
If we could ever answer "YES" to all these questions,WITHOUT CHANGE-ING PERSONAL INGRAINED BELIEFS, wouldn't the world be a better and safer place to live?

The BIS seems to be able to at least get many of these factions in financial meetings, examples:
China-Far East-Mostly Buddist and Hindu.
North & South America-Mostly Christian.
Arab Countries-Mostly Islamic.
European/former USSR--Mixed??
Others not covered also invited.Thats a start!Maybe there is hope!!

Right now there are approximately 180-195 Central Banks in the world, most using different Fiat money systems, and what a MESS that system has caused in hardship and suffering, for many.

Maybe it will take a worldwide financial meltdown of the present economic system,of some kind, and a lot of patience and understanding after the event, by everybody,for a worldwide Bi-metallic system to ever evolve.

Is the human species ready for it??
Would the world be a better and safer place for our children and grandchildren?
You tell me...Thank You...beesting.
Journeyman
Re: For Educational Purposes Only-or How to Stir up a Hornets Nest!
@beesting (1/22/2000; 12:24:24MDT - Msg ID:23422)

beesting, why would this stir up a nest of your distant relatives (the Hornets??) :>)

Regards, J.
TheStranger
Thanks to My Father for Directing Me to This Article
http://www.cnbc.com/commentary/commentary_full_story_Markets.asp?StoryID=11878Have I been reading Kudlow wrong, or is he coming around?

Excerpt from above link:

"An important point. Gold and dollar-moving monetary actions by the Fed (adding or withdrawing high-powered liquidity) precede by a year or more even the most accurate government inflation reports.

So money matters. Though you wouldn't know it from Mr. Greenspan's New York Economics Club appearance. In a 60-minute presentation about the pros and cons of future inflation threats, featuring an 11-page speech followed by a question-and-answer period, the Fed chairman never once mentioned the word money.

This, to me, is incredible. For money is always the root cause of inflation. Not aggregate supply-and-demand curves, not unemployment, not the new information economy, not the rate of economic growth, not stock market wealth, and certainly not Fed attempts to fine-tune all of the above, but money. Money matters.

U.S. economic Nobelists Milton Friedman and Robert Mundell certainly believe that inflation is caused by excess money. Or deflation is caused by a shortage of money. Earlier in the 1990s, Mr. Greenspan's own speeches emphasized the monetary causes of inflation. But not anymore.

This is where gold and the dollar come in. They are the most accurate early-warning indicators of future inflation. They tell us whether monetary purchasing power is rising or falling. They are the ultimate yardsticks of value.

If the supply of money (created by the Fed) exceeds the demand for money (by financial markets and the economy), then rising gold and a falling dollar will signal the need to remove excess money and prevent faster future inflation. Too much money chasing too few goods...

...But the promise of future monetary and price stability will never be fully realized -- and interest rates will remain much higher than need be the case -- as long as Greenspan and Co. continue to play cat and mouse with established monetary theory."

Lawrence Kudlow
koan
Lawrence Kudlow
Whereas I generally agree with the article, I have always considered Lawrence Kudlow a political economist i.e. he is so political, that his political views modify his economic views, so much so, that I never feel very confident that he is giving us a steely economic only, unbiased opinion (to the degree that is possible). I always feel he has some sort of social agenda behind his economic commentary. And, many feel economics is a social science as well as a hard science, so many economic policies have to be considered in a social light. Just my opinion. Out for a walk hoping the bears are still asleep. I am watching gold very carefully, but still playing the wireless and tech stocks mostly. Cheers.
Journeyman
Why doesn't Greenspan talk money supply? Re: TheStranger Msg ID:23424

Indeed Greenspan DOES know ALL about money supply -- AND
it's importance:

"I mean a central bank's fundamental purpose is to
maintain a stable money supply, maintain a stable
financial system. Unless we recognize that the value of
the currency is VERY crucial to what OCCURS in an
economy, we can find ourselves -- central bankers --
creating either too much or too little in the way of
money supply." -semi-annual Humphrey-Hawkins testimony
(Day 2) to House Banking Committee, 24 Feb 1998

So, why DOESN'T Alan of Greenspan like to talk about money
supply and inflation these days? It's not as simple as he's
embarrassed because he and his organization have been
pumping out a lot of "money" lately.

In Msg ID:23027 on 01/16/00, "Who's right, Kudlow or
Greenspan?" I posted three questions related to Kudlow's
comments on CNBC, which he apparently based on the article
in your link.

The questions were (including one of the introductory
paragraphs):

This isn't the first time Prof. Kudlow has presented this
argument against FED tightening and critical of the FED's
stance as being pre-emptive on an inflation which doesn't
exist. Did Greenspan miss the boat by not connecting
currency depreciation ("inflation") with "money supply" in
his talk?

QUESTION 1: Why would FOA, Oro, and probably TownCrier
disagree with Prof. Kudlow's take on inflation? What did
Kudlow apparently miss?

QUESTION 2: If all the indicators (gold, CPI, etc.) indicate
no inflation, why DOES Greenspan talk tough about fighting
"inflation?"

QUESTION 3: Why doesn't Greenspan pay attention to money
supply OR the CPI directly in relation to "inflation"
anymore, and instead rely on something called the "personal
inflator numbers"?

HINT: The answers to all three questions rest on the same
underlying idea.

If you can answer these questions, you have a key to
understanding the FOA/Another scenario, and it's
credibility.

So far, only Al Fulchino, Peter Asher, beesting, R Powell, &
Solomon Weaver have responded. Perhaps I can entice you
too?

Regards,
Journeyman

P.S. I can guess what "personal inflator" might be --- but
does anyone have a specific link or other reference to
"personal inflator" as referred to by Greenspan? Oro?
TownCrier? I don't like guessing if it can be avoided.
Thanx in advance!!
Jason Happy
If I were king...
A big question I've been grappling with, as Canuck Gold has
challenged me, is how to make the transition from our current money system to honest gold the most practical and fair.

The transistion question is a lot tougher than the practical
daily life application question of life under a Biblical gold standard.

What would I REALLY do if I was elected president on Nov. 2000. (Not gonna happen, I'm only 29!) To destroy the unfair old, and usher in the honest new, in a way that would be the most fair to all?

Attempting to pay off all the dollar claims by selling gold at $20,000 an ounce would not do the trick... (for those who missed it, 6 trillion $ / 300 mil oz. = $20k/ounce) but you could take steps to make such an offer attractive again.

One thing that could be done, I suppose, is to monetize the debt, (buy bonds), and buy gold at the same time.

After all, isn't that the strategy that we would all suggest for anyone to persue on a personal level? Get rid of your debt, and buy gold? If it's good advice for a single person, why wouldn't it be good for the U.S. government?

As the Government bids for bonds on the open market, pushing the price up, the interest rate drops closer to zero (as there should be no usury according to the Bible) so that's a good thing.

As the Government bids for gold on the open market, the price shoots up, backing ever greater ammounts of currency. By the time gold hit $5000, the 8000 tons or so of U.S. gold would back about 25% of the 6 Trillion dollars out there, and perhaps by that time, the U.S. would have even more gold...?

This two fold strategy would increase the (dollar) value of bonds to the holders of the 6 Trillion government debt, and help destroy the excess (fraudulent) purchasing power of all the excess dollars.

Suddenly, our exports should be cheap to the world, and imports would cost a lot more. It would help out our balance of trade, and be a boom to all sorts of industries across the U.S. that have withered and died.

Unfortunately, this beginning strategy would probably be very unpopular in such a time of plenty?, and would need to be followed up with numerous other reforms such as a national bankuptcy, eliminating all debt, returning home ownership to the people, the full scale destruction of numerous oppressive and useless government agencies, reform of the legal system, the release of political prisoners (non violent plant & herb growers), the destruction of all patents, copyrights, trademarks, and such, but I'm getting off topic.

Yes, it would be much like what both Nixon and Rosevelt did, but those presidents were not the ones who inflated the currency... (The actual excess & fraudulent currency creation happened many years prior to both of them) the revaluations just happened to occur on their watch.

The real trick would be to hope that the dollar doesn't collapse to zero before you reallocated the nation's gold reserves to all the dollar holders? If gold overshot, and hit $21,000 an ounce, then the offer of $20,000 gold would effectively back the currency 100%, and there could be a total return to the gold standard. Well, it might take $40,000 gold, if you monetized the entire 6 trillion debt,
but, since that debt was not borrowed gold to begin with... that's a tricky issue. But, there are a lot of old people who hold bonds, as they are the "safest" form of investment as Wall Street says. Idiots! Don't they know about gold? Still, you don't want to hurt the old people, even though this whole mess happened during their entire lifetimes and they have all mortaged their property and children to the hilt.

The other possibility, prior to the attempt to buy gold on the open market, is to recover the bulk of the gold sold to the private Federal Reserve. Basically, confiscate their gold, as they confiscated the people's.

The trick is how to do it legally?

Well, the Constitution says only gold and silver is money, and the Federal Reserve Corporation has the charter to provide the money?? Fine, make them cough it all up.

I know it's not that simple. Perhaps, instead, we could sue them for fraud. They say they loaned $250 Billion around 1945 for the U.S. to win the war. This, when gold was $35 an ounce. Fine, the 7,143 million ounces of gold must have existed in the past, somewhere in their vaults to be able to honestly make the loan, right? Oh, they never had it? There was never even 1/2 that much gold in all of
world history, which you can prove in a court of law? Great! They are either bankrupt then, or frauds. So, we
simply confiscate all their assets.

The executive order goes out:

All assets in all trusts belonging to all the families of the owners of the private corporation known as the Federal Reserve Board are hereby to be confiscated due to the criminal attempt to defraud the people of the United States of America, and the world. They attempted to show ownership of the entire world over two times. They attempted to loan the entire world's gold supply twice over, without ever having initially loaned the actual gold. They must make good on such a claim and pay up the entire world at least once. Therefore, we take them at their word, and confiscate everything they have in this world. According to their own professed claim, they still own the entire world after we accomplish such a real world confiscation, so they cannot
complain.

Immediately thereafter, all debts are to be declared null and void, in a world jubilee, and no claims made to property or money are valid from this time forward.

Thus, leaving the theives penniless, and without any legal remedy under the laws of God, and according to their own professed claims.

Signed, the President of the United States! 8-)

Oh, you say these are forign families not under our jurisdicion? Fine, I hereby declare war on these individuals, and request the assistance of all nations to put an end to the fiat dollar system and restore gold as money...

Oh, you tell me that these people are evil and you don't want to mess with them, because they have attempted the assassination of every president who ever attempted to do such a thing since Andrew Jackson? Fine, let's have all Christians everywhere pray for the safety of the president until he can carry out these orders.

Oh, we don't have the backing of the people for this idea, because they prefer the purchasing power of $20,000 fiat dollars rather than the purchasing power of an ounce of gold?

God, help us in our education campaign of the people.

Maybe I can start small, and wish to see the next state of the Union Address of the president of the United States begin by saying two simple facts:

1. There is 6 trillion dollars floating around out there, which is about $20,000 for every person in the United States.

2. The United States gold hoard, over 8000 tons, or about 270 million ounces, is just under one ounce of gold for every person in the United States, which is just over the actual figure of .7 of an ounce of gold availble per person world wide, with 100,000 tons and 6 Billion people.

The simple facts never hurt anyone, right?

Hmmmm... maybe I can wish even smaller, and ask for these two simple facts to be presented at the top of this forum?

Ideas, comments, nominations for the HOF, please.
Chris Powell
Court ruling strips lawyers from Armstrong
http://www.egroups.com/group/gata/343.html?The latest in the U.S. government
campaign to keep Martin Armstrong
from telling what he knows about
manipulation of markets.
Journeyman
Re: If I were king ... @ Jason Happy Msg ID:23427
Sir Happy,

You've certainly put your finger on one of the tough problems. I really like the boldness and sweep of your suggestions --- I think, however, we need a more subversive "bore from within" fifth-column sort of approach. I could of course be wrong.

But if the FOA/Another scenario comes to pass & Nobelist Robert Mundell gets his way . . . . I believe just such an approach is already, unknowingly perhaps, already built into the systm.

I'll try to explain what I mean better when I get the time to put it together.

You're sure keeping us on our toes, Sir Happy!!

Regards, J.
beesting
Journeyman #23423-Why would this stir up a hornets nest?
Hi Sir Journeyman,
First, I've enjoyed all your posts in the last few days, actually everything you've ever posted.

To answer the above question, I have to first ask a question.

What,line of thought throughout history, has caused so much bloodshed?

Answer-"WE"(the goodguys)Against-"THEM" (the badguys).

Look at post # 23422 and tell me if you think all those mentioned could ever peacefully co-exist,using the same money-Silver and Gold? I think given time, they could.But,my own brother dis-agreed,calling me a star-y eyed edealist.

Shortly after the Viet Nam era I was in a U.S. group called, "Beyond War". We honestly felt humans had reached the point where war was no longer necessary.Current history has proved us presently WRONG,unfortunately. "Might makes Right", and you and me and anyone who pays taxes contributes to that might!

Why would post #23422 stir up a hornets nest?
Ask another question, if all of us reading this are the good guys! Who are the bad guys, and why are there wars?

Maybe if all of us here could ever support a grass roots bi-metallic movement or E-Gold or Gold Silver Dinar-Dirham system, without interference, and without dissension amongst ourselves, the world would be a better place to live.

I'm a good guy!....Those in the Know....Buy Gold...beesting.




Jason Happy
(No Subject)
Chris Powell, thanks for keeping us on our toes!

From his url at GATA:

The law firms who were paid by Armstrong (being sued for fraud), and had their money confiscated by the judge's order, "should have been aware of the possibility that they
were being paid with corporate funds obtained by fraud," Judge Owen wrote in his ruling.

Massive implication?

Since the dollar is created by fraud, and thus obtained by fraud, everyone paid in any dollars similarly deserves to have their dollars confiscated.

Wow, is the system on the verge of collapse or what?
Jason Happy
bore from within/grassroots gold?
Journeyman, beesting;

How much gold needs to be purchased to influence the gold
market to a massive upward swing?

If 8000 tons would blow the market wide open, then we'd need 1/63 people to buy $20,000 worth. Or, about 4 million people. Or, we could convince 400,000 people to sell their homes, and buy $200,000 worth of gold at $300/oz. Which is easier?

Or, we could get 40 million people to buy $2,000 worth of gold.

Or, we could convince 400 million people to buy $200 worth of gold.

Or, we could get 4 Billion people to buy $20 worth.

Seems like a thin market, and it would probably take less than 8000 tons of new demand to do it.

Perhaps our best efforts should be directed towards creating a profitable way to market the educational information needed to effect such gold buying behavior in people? True, MK's doing just that by running this gold forum, which stimulates people to buy gold from him.

Should we all become gold dealers, and compete with MK? How about if we handle the marketing, and MK cuts us the checks for comissions? Somewhat like an affiliate program? Then, we can each gather and produce what we think might be the best "buy gold" information, put it on a website, advertise our own websites, and provide tracking affiliate links to MK's business? hmm...

I used to run a webpage that had 2 million visitors in about two weeks... which was so profitable for me, through similar affiliate programs, that I took the last two years off to research all sorts of questions like "what amd I doing all this for", "what is money" "why do we pay taxes" "what is the mark of the beast" etc.
TownCrier
To answer many of the questions we've received at The Tower about the stunning rise in the level of U.S. gold exports
http://www.bea.doc.gov/bea/newsrel/trad1199.htmWhether you compare atoms of gold, ounces of gold, or tonnes of gold, it is all the same. The diffence between a gold coin, a gold bracelet, or gold teeth is nothing other than the essence of the current application. The gold remains the same and available for alternate applications at any point in time. Having said that, The Tower would like to introduce you to an official term that might at first put you aback...but it shouldn't. The term is "nonmonetary gold."

Knowing as you should that all gold is the same, you should recognize that the term "nonmonetary gold," as used in official government reports, simply means that the gold being referenced is not gold that is carried on the official books of the Treasury or of the Fed. There, that was simple and painless enough, wasn't it? The Tower's bottom line is that gold may be classified as "nonmonetary gold" here and now by the U.S. Department of Commerce, while tomorrow it might be setting in a bank vault overseas. With that, we now take you to the Commerce Department's International Trade report:

U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES
November 1999

A look at our trade deficit in Goods and Services...

The Bureau of the Census and the Bureau of Economic Analysis, through the Department of Commerce, announced today that total November exports of $82.9 billion and imports of $109.4 billion resulted in a goods and services deficit of $26.5 billion, $0.9 billion more than October, revised. November exports were $0.6 billion more than October. November imports were $1.5 billion more than October.

In November, the goods deficit increased $0.6 billion from October to $32.4 billion, and the services surplus decreased $0.3 billion to $5.9 billion.

--Exports of goods increased to $59.5 billion, and imports of goods increased to $92.0 billion.

--Exports of services decreased to $23.3 billion, and imports of services increased to $17.4 billion.

A look at our exports of Goods...

From the report:
"The October to November change in exports of goods reflected increases in industrial supplies and materials of $0.5 billion (primarily nonmonetary gold); capital goods ($0.2 billion); and consumer goods ($0.2 billion).
Decreases occurred in other goods ($0.3 billion); foods, feeds, and beverages ($0.2 billion); and automotive vehicles, parts, and engines ($0.1 billion)."

From their tables, exports classified under "Industrial supplies and materials"

Total exports of for November rose by a net $0.548 billion over October's total to $13,860 billion.

Following is a list of the exported "Industrial supplies and materials" showing the largest change over the previous month:

Nonmonetary gold________increased $0.608 Billion . . . Nov gold exports totaled $1.008 Billion, up from $400 million in Oct
Cotton, raw____________increased $69 million
Pulpwood and woodpulp____increased $65 million
Plastic materials________increased $55 million
[...]
Nonferrous metals, other__decreased ($42 million)
Fuel oil_______________decreased ($68 million)
Nuclear fuel materials____decreased ($95 million)
Chemicals-organic_______decreased ($0.117 Billion)

You can see that our gold exports at $1 billion make up over 7% of our entire national exports of "Industrial supplies and materials." The increase in gold exports single-handedly matched the $0.6 billion increase in our overall November exports stated above. And just when you thought you saw the whole story, check out this important footnote to the data...

"The export adjustments include:
Gold exports, nonmonetary--This addition is made for gold
that is purchased by foreign official agencies from private
dealers in the United States and held at the Federal Reserve
Bank of New York. The Census data only includes gold that
leaves the customs territory."
Jason Happy
I'm serious; let's all start marketing gold
Instead of pontificating in the dark and in relative obscurity, on a board getting a miniscule 1300? hits a day, why don't we all gather our mental resources together to make MK's business explode beyond belief, using our spare time?

If we can send him qualified leads, through an internet based affiliate program, we, as a group, through our own different individual marketing efforts begin to see which techniques are most successful for selling gold. Then, as we share the ideas that work best, and continue to innovate, we stimulate investment demand for the yellow metal beyond belief, all at a profit for ourselves, and our host!

First step: creating the web based affiliate program, and these days those are already pre done, you just have to install one, and you are ready to go.
Jason Happy
Like Amazon.com and their affiliat program for selling books...
What we really need is cooperation among ourselves to make it work,
and a comitment from MK to reduce his margins (on sales from our
efforts) to the very bare bones
so that we can provide our customers with gold at the lowest cost.

We need to not copyright our sales techniques and/or articles and
information presented... 8-).

Once we get an affiliate program up and running, and we have our web
sites all set up, we all end up doing what we normally do...

research and write useful information about why people should buy gold
post it at the forum, and also on our own websites..., and when
someone hits on a particular essay that pulls in the sales, we share
the info... Also sharing info on how to get our websites listed
in search engines, build traffic, that sort of thing.

kitco already has an online order form, let's get with the program
here, and do one better!

Amazon.gold!!!
RossL
Exporting Gold

Thank you Town Crier for verifiying the gold export figures.

The November USA export figures are $1 billion

using ~$300 per ounce, that makes 3.33 million ounces

Which is ~103.68 tonnes of gold exported from the USA per month.

How long can the USA export this much gold?

Where is it coming from?

Recent GFMS estimates for WORLDWIDE mining production is 214 tonnes per month.
ji
@ Jason Happy - A grassroots silver currency
http://www.norfed.com/Check out the link for a grassroots silver currency in your back yard.
Bonedaddy
Only a few have realized the need.
Often we hear the point pondered, why own GOLD? Most folks seem to be doing fine with out it. It doesn't earn me any interest. I've got safe investments. Why own a relic?
If the monetary system is sound and people are behaving rationally I don't need the protection GOLD offers. If the stock market is reasonably priced and the new paradigm of technology increasing productivity works out, I'm wasting my time buying GOLD.
Let me state for the record: Right now, I live a comfortable life. I have more than enough income to meet my expenses. I have several months living expenses in cash. I have a years worth of living expenses at current value in GOLD. Life is good. But remember this:
It is better to be fed than hungry.
It is better to be warm than cold.
It is better to own a little than to owe for alot.
It is better to be free than held captive.
It is better to buy GOLD for $300 than for $3,000.
Seasons change.

Jason Happy
silver certificates
ji, in a year and half, norfed has sold about $150,000 worth of silver? At a 100% premium?

Surely our group can help MK sell more gold coins than those guys. I'm talking about changing the world here, not starting a hobby.

Besides, they don't have an "online" affilliate program. Sure, you can sign up online to sell their 50% backed paper (shudder!) but you can't make money by sending someone to a webpage (eventually resulting in a gold purchase from MK), as I was suggesting...
Solomon Weaver
gold exports
Is is possible that those massive gold exports are not physical gold but represent a net "sales" figure of paper contracts....with all of the recent "long in Asia" then "short in NY" activity, it is possible that this generates a net of close to $1 billion per month....

Poor old Solomon
Jason Happy
Bonedaddy's post
What I am suggesting is that Bonedaddy should be able to take his most recent post, turn it into a webpage, and at the bottom (or top) have a "click here to order gold now" button that takes the viewer to a secure online order page where the person can enter a credit card number, or fill out the information for an online check, and buy gold then and there. And if Bonedaddy's simple, yet powerful message happens to be the thing that brings MK a new customer, then MK plegdges to deliver Bonedaddy a reasonalble percentage of all future gold orders that originated from customers coming from Bonedaddy's webpage...

Simple, effective, fair, and is basically free marketing that pays for itself for MK, since the cost of the marketing come out after the sale is made.

Such a process would catapult MK's business to being the largest gold dealer in the United States. Currently, Investment Rarities is the biggest dealer, and they have about 100 phone reps...

But, I know the web is more powerful.

What do you say Michael J. Kosares? How big do you want your business to get?
Jason Happy
(No Subject)
Such a "pay for the marketing after the sale is made" paradigm is, prior to the net, relatively unfeasable. It worked for the 900 number industry, which resulted in all sorts of ads in newspapers nationwide. The costs and risks of the advertising was taken on by entrepreneurs, some of whom went on to make fortunes, such as that late night guru, Don Lapre.

Of course, with the internet, we don't have to "pay" for our ads, we just put up webpages, and list them in the search engines, spend time trading links, newsgroup promotions, etc.

If MK just gets an affilliate program started, all sorts of internet marketing geniuses, smarter than the lot of us, will come out of the woodwork, sign up to the program, and begin selling gold online, by merely placing a link on a webpage that's already exists... already receiving traffic, full of people looking for information about money, or investment advice, etc.

Imagine excite.com seeing the potential, joining the affilliate program, and placing a link to the top left of their webpage, (order gold online now) or running a news article on the topic...

MK would have to end up hiring a bunch of people to process and fulfill the orders... maybe he doesn't want the headache?

Skip
Jason Happy - re: Web Affiliates idea
You have an excellent idea! Indeed, I'm willing to become a participant, as I have my own commercial website. Also, since I am an Amazon.com affiliate, I know how that program works. So what do you think, MK?
--Skip



TheStranger
Journeyman's Questions
Actually, Journeyman, if you were foolish enough to go back and read all of my posts , you would find the answer to your questions spelled out in monotonous repetition. But, even though I know your purpose is to counter with your own view of these matters, here is what I have already expressed:

"So, why DOESN'T Alan of Greenspan like to talk about money
supply and inflation these days?"

Stranger: He and his minions have spent the last two years trying to reinflate what was a dangerously deflationary world economy. While the left hand added liqidity, however, the right hand used verbal warnings and innocuous rate increases to jawbone against the twin dangers of stock market speculation and bond market decline. Public discussion of the exploding money supply would have defeated this purpose.


"This isn't the first time Prof. Kudlow has presented this
argument against FED tightening and critical of the FED's
stance as being pre-emptive on an inflation which doesn't
exist. Did Greenspan miss the boat by not connecting
currency depreciation ("inflation") with "money supply" in
his talk?"

Stranger: Journeyman, perhaps I am misreading Kudlow here, but I think your premise is mistaken. I would say, THIS IS THE FIRST TIME I have seen Kudlow accept that, indeed, the Fed may be overstimulating. The way I read Kudlow here, in other words, is that he may be changing his tune. Am I wrong about this?

"QUESTION 1: Why would FOA, Oro, and probably TownCrier
disagree with Prof. Kudlow's take on inflation? What did
Kudlow apparently miss?"

Stranger: In recent months, especially, I think Town Crier has come down on inflation's side. Up until today, Kudlow has clearly expected something akin to price stability. I cannot really speak for FOA or ORO's views. What Kudlow was missing was the monetarist view that inflation is first and foremost a function of money supply. In fact, it IS money supply. In the link I posted today, however, he appears to me to be having an epiphany on this issue.

"QUESTION 2: If all the indicators (gold, CPI, etc.) indicate
no inflation, why DOES Greenspan talk tough about fighting
"inflation?""

(Already answered above).

"QUESTION 3: Why doesn't Greenspan pay attention to money
supply OR the CPI directly in relation to "inflation"
anymore, and instead rely on something called the "personal
inflator numbers"?"

Stranger: Again, this is a faulty premise. For reasons already stated, I believe he does pay attention to money supply, but wants to keep that attention sub rosa.

Finally: Journeyman, I thoroughly enjoy and repect your ideas. Please don't keep me waiting in suspense too long for your reaction to any of this.
Al Fulchino
Sometimes I think we are voices crying in the wilderness ///and web links


First of all, sometimes it seems useless to talk about gold. No matter the real value and all we think about it, we are analagous to a foreign language television program. Everyone else is watching something else. I am not depressed , don't get that idea...lol. It is just that we, as a group are really different from most of our neighbors. What a real shame...............for them!

re: Jason's idea

We have two web sites they don't get millions of hits, but a mutual banner or almost any other arrangement is suitable to the Fulchino's. Our sites are www.designer gifts.com and www.fulchinosmobil.com since we are talking sites.
Jason Happy
(No Subject)
This is great, the idea's barely a couple hours old and we've already got three Affiliates ready to sign up to start advertising "gold coins on the net" for MK's business.

Me, Skip, and Al Fulchino.

I knew the marketing geniuses would start crawling out of the woodwork!
Cavan Man
Favorites Here @USAGOLD
http://www.goldensextant.comAnother fine intellect singing the same melody as our friend FOA. Good read.
Cavan Man
Jason
Like you, I believe it is no accident that silver and gold are found here on earth. I admire your idealism very much.
As you know, convincing your friends to part with some of their FRN's in exchange for gold and silver is not an easy task. Your "affiliate" idea has some merit and is a good thought. You seem to be very intelligent. Therefore, write a brief business plan. Focus on fifty people you know well who have liquidity to spread around. You might get five initial orders. Your minimum is $25K. Emphasize the monetary history of the US in educating your prospects. Season with Stranger and FOA. Just a couple of quick thoughts.....
Ray Patten
Gobs of money statistics form the St. Louis Federal reserve bank.
http://www.economagic.com/fedstl.htm
If anyone wants to talk about money numbers, wade into the pool of numbers provided by the St. Louis Federal Reserve Bank. Make sure you wear a life presever!
Jason Happy
(No Subject)
http://www.economagic.com/em-cgi/data.exe/fedstl/currcir+1Thanks to Ray Pattern, this chart shows that the currency supply, as of Dec. 1999, has grown 17.668% since last year.

Number Six
Euro/Dollar action at G7 summit...
Saturday January 22 7:16 AM ET
Europe Wins Over US With G7 Euro Silence
By Abigail Levene

TOKYO (Reuters) - The Group of Seven's final statement from its Saturday meeting was deafeningly silent on the euro -- a defeat for the United States that had wanted a clarion call for the ailing currency to recover.

The industrialized nations made no specific mention of the euro in their final statement, referring only to concern about the vibrant yen in the eagerly awaited section on exchange rates.

European officials are convinced the euro will revive on its own and had opposed highlighting the softness in the currency, which has sent Europe's imports pouring into the United States.

But mindful of its gaping trade deficit, Washington had been expected to seek a G7 call for a stronger European currency.

Recent days have seen European officials chorusing the line that the euro is no cause for concern and will rally as soon as markets take on board the continent's brighter growth outlook.

French Finance Minister Christian Sautter said on Friday he was sure financial markets would propel the euro higher once they appreciated the European Union's growth and investment potential.

His German counterpart, Hans Eichel, said on Saturday he was not worried about the exchange rate of the euro, which has shed some 15 percent of its value against the dollar in its first year of life, and dismissed the whole debate as ``artificial''.

Europe Insists Growth Pickup Will Bolster Euro

``The economic potential behind the euro is obviously greater than that of any other currency, including the mark,'' Eichel told a breakfast meeting with reporters. ``When people see how Europe picks up, the euro-dollar relationship will change.''

European Monetary Affairs Commissioner Pedro Solbes played down the euro's current flirtation with parity against the dollar, telling Reuters Television it was not a key issue.

``From the point of view of economic fundamentals, parity is not a crucial point of discussion,'' Solbes said.

``What interests us is the normal evolution of the euro compared with the dollar. A little bit higher, a little bit lower, is not so important for us,'' he added.

The United States has urged Europe and Japan to work harder for growth, an appeal reflected in a G7 communiqu comment that countries must seek to secure a more balanced pattern of growth.

The finance ministers cautiously welcomed recovery in Europe, saying structural reforms would remain important there.

Italian Treasury Minister Giuliano Amato, whose country languishes at the bottom of the euro growth league and is constantly urged to speed up reforms, said Europe's economic outlook was rosy but structural problems would weigh it down.

``Europe is expected to do quite well in 2000. Perhaps even better than G7 projections,'' he told a post-G7 news conference.

``There are inherent limits in the potential for growth in Europe as long as structural rigidities remain. We have to remove those rigidities,'' Amato said.

Experts both inside and outside Italy say structural reform there is long overdue, with the creaking pensions system and notoriously inflexible labor market badly in need of an overhaul.

EU Commissioner Solbes urged Europe to harness its improving economic health to the cause of structural reform, which is vital if the continent is to attract more capital.

``Once we have reached a high level of growth, the temptation is to say everything has been done. This is not correct,'' Solbes said. ``We're having very good economic conditions and we ought to use this period of good economic growth to do the additional structural reforms we have to carry out.''
Twice Discipled
Iowa Caucases - Why do you vote for your selection
I present the following because I feel that the leadership of this country has a direct impact on things we hold important here.
--> A return to the Constitution and the form of money that it states shall be issued by the government. There are a multitude of issues that go hand in hand with this, including abolishment of the unconstitutional income tax, and other moral issues that I will not get into here.

I just got in from a rally at the First Assembly of God church in Des Moines where a few of the presidential candidates spoke. Those present included Alan Keyes, Steve Forbes, Gary Bauer, and Howard Phillips (Constitutional Party). Not present, but invited were George Bush, Al Gore and Sen. Brady.
An interesting note is that Alan Keyes received a momentous reception upon arrival and upon departure. (ok, I am biased somewhat but try to see things somewhat in an unbiased manner - my wife and I continued to comment about the crowd reaction to him after leaving.)
He spoke of how candidates should present their convictions and not the issues of special interest to interest groups with deep pockets. His most chalenging point however, was the following:
If each of us goes to place our vote and vote for the person we feel would serve our own best interests, if he or she was to get into the White House, we can only expect that person to do those things in the White House which would be in their own best interest and not necessarily ours or our country's best interest. Think about this!!

When you place your votes in the primaries, will you vote for business as usual. In the many years since the gold confiscation by Pres. Roosevelt and the removal of gold backing for the dollar by Nixon, we have voted in people who have not really made a difference in getting us back to the foundation of Founding Fathers intended.
We can vote for the person who will move us away from the total disgrace we are enduring now but continue the socialistic legislative actions which take away our Constitutional rights, or we can vote for those who stand for Constitutional law ... our country is a republic, not a democracy. There IS a difference.

I would like to ask each candidate these questions ... What do these words mean to you and what are you willing to do to return us to these principles?

"No State shall � coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts�"
Solomon Weaver
how much silver is there really
Jason Happy (01/21/00; 21:19:52MDT - Msg ID:23402)
The silver story
I've read all of Ted Butler's articles, and I emailed him this week regarding the issue of silver reserves. The silver scarcity story is a confusing one. The problem is that there are little "official" reserves left, basically what's on the COMEX 70 million ounces, and Warren Buffet's silver 130 million ounces... Much more silver is in coin form or hoarded by private investors, or jewelry, or silverware. Supposedly, there were up to 40 Billion ounces worldwide at one point. The current annual 200 million ounce shortfall between new silver from mines, and silver demand would wipe out the 40,000 million world reserve in 200 years. Surely there has not been a 200 year supply demand gap this large. Perhaps the world hoard was only 20 Billion ounces? Still...

So, there are no "offical" reserves on record because central banks do not hold silver. But it does not mean that no silver exists. The real story must be that there is a tremendous amount of junk silver in coins hoarded in people's closets around the world, probably mostly in the US, as we were among the last people to give up silver coin?

The latest best estimate figures are that there are 4 ounces of silver per person on the planet, and .7 ounces of gold. And that 6 ounces of new silver are mined for every 1 ounce of new gold.

Still, I hold some junk silver coin, and I expect it's value to rise significantly.


-------

Looking at the above repost of Sir Happy comments yesterday:

I will generally agree that there is some silver in junk coins, and certainly some in the form of jewelry and silverware.

CBs do not need to hold silver...because it is not used as reserves, but bullion banks do hold some silver because they trade in PMs.

No insult to Sir Happy, but I find it implausible that there is 20 billion ounces of silver in "unofficial" hands, and only 200 million in "official". This would mean that only 1% of the worlds silver was held in documented form. If this were the case, the industrial users of silver would have been encouraging people to cash in just like we do with aluminum cans - why have miners make such an effort.?

Of course, the world has mined silver for centuries, but as I understand it, the USA discovered very rich reserves in the 1800s and created a massive silver standard coinage in America...In 1964, a large amount of US silver coins were taken out of circulation, and in the silver bull in the late 80s, a lot of Americans cashed in their old coins.

If it is true that there is still a massive "collective hoard" of silver, then when precious metals come back into favour, we could see a very robust physical market happening outside of the large Exchanges.

-------

Note regarding Sir Happy and the idea of web based gold sales:

I know that MK has a business and that he also runs provides the resources for this site...I do, however, appreciate the feeling that this is not a commercial site.
I also suspect that MK has a love of selling numismatic coins and that trying to be the "low cost leader" on generic bullion coins is not really their strategy.

My suggestion to Jason, if he already has skills in internet marketing, would be to create a web site which would allow the US mint to sell directly (for example, in 5 coin lots) at wholesale prices. I believe that this site would do well with e-gold site, since both are tailoring to the common man. That site could have HOF type pieces from the posters of this forum listed and could encourage coin owners to come lurk at USAGold. It would also allow MK to pick up the business when those coin owners want to become coin investors "semi-numismatic" and beyond.

Poor old Solomon
lamprey_65
Question About Spreads
Spreads in the paper market are unusually wide and seem to be growing...just wondering if this is a consequence of either -

1. Low liquidity
2. Uncertainty about Tuesday's BOE auction
3. The paper market beginning to lock up
4. All of the above
5. Another reason I haven't though about!

Lamprey
Jason Happy
(No Subject)
Thank you Solomon for the comments and advice.

Maybe MK's not our man for the job.

About the 1% silver in official hands... consider that gold, the monetary relic of all importance only boasts of 25-30% official hands... 30-33 thousand official tons, 100-120 thousand world wide? Maybe 1% in official hands is not so small after all. Consider all the silver jewelry and flatware out there. Ride a city bus in San Francisco and notice all the silver rings on people... perhaps the people DO have "their fair share" of the 4 ounces of silver per person?

Thank you Canuck Gold... Here is my "business plan" number estimates. Knock yourself out! Regarding trying to sell 50 of my friends, thinking 25K as a minimum first attempt estimate, I would never think in such small terms... Here we go, hold on to your hats people:

If the coming bull market in gold is not significantly greater than
the previous gold bull markets, we can expect investor interest to
rise fifty fold from the current 1/1000 to 1/20, as it has in past gold bull
markets, vronsky's numbers. Of course, if the coming bull
market for gold is greater than past gold bull markets, this will be
a low figure.

If there are 100 million potential gold investors in the United States,
representing the 100 million households, 5% of which will be gold
buyers, this is 5 million gold buyers that need to be processed...

If the average gold buyer spends 5% of his assets on gold, and the
average person has $20,000 to spend, this represents a $1000 gold
purchase, or about 3 one ounce gold coins.

Again, a low number, the $20,000 includes all people in the U.S., about 300 million, not the 100 million we are using.

1000 x 5 mil makes a 5 Billion dollar gold coin market (typical bull).

The U.S. Mint at its website is excited over selling a million
ounces of gold, or .3 Billion worth in a single year, at the start
of this coming gold bull market, 1998. 2 million ounces in 1999,
which is .6 Billion worth!

I'm estimating a 50 fold rise in gold interest, and yet computing
only a 10 fold rise in gold coin sales here with these figures...

The comissions on a one ounce U.S. Eagle are $25 on average, if I'm
not mistaken.

If 50% of these comissions are split between MK and his affilliates,
this represents a $37.50 comission to each affilliate for each $1000
in gold sales.

Assume the 5 Billion gold market will result in the sales (at an
average price of $500/oz., about 10 million ounces of gold coins.)

At $12.50 split comission per ounce, is $125 million dollars in
split commissions for gold coin sales in a typical gold bull market.

A given percentage of this will be for local coin shop sales, home
shopping sales, broker sales, bank sales, and internet sales.

I don't know about the rest of you, but 95% of my knowledge of gold
comes from the internet. Assume a low estimate of 1/10 of gold coin
sales will be made over the internet in the coming bull market.

This represents 12 million dollars in available comissions, to be split
among all internet gold coin sales. Miniscule, I know.

However, this is for a 50/50 split. Assume MK gets on the ball on
starting an affilliat program, then his share of the internet sales
will be much greater than any other program. If MK becomes the largest
online dealer, his costs will be lower, margins will be greater, etc.

Assume MK reaps 50% of online sales, and his share of the comissions
will be 6 million dollars, while he will pay out 6 million to his
affilliates.

Cost to set up an affilliate program? Less than $1000?

Mid range numbers (doubling all estimates?):
1/10 people become gold buyers... 10 million buyers
10% of assets are spent on gold... $2,000 each

20 Billion gold market, at $500 oz. makes
40 million ounces of gold coins???
1200 Tons???
Tripple question mark, because these numbers should significantly
alter the dynamics of the gold market.

Quadruple the split commissions, 500 million dollars...
double the online sales... 1/5th of all coin sales?
= 100 million in split commissions for internet coin sales.

MK gets 1/2 the action because he was the first to start an online
gold coin sales affilliate program, which would be 100 million for
MK, and 100 million payed out to affilliates.

If 10,000 affilliates in the program, $10,000 each for a part time
business, on average. Of couse, some people may make more or less.

If 1000 affilliates, $100,000 each more or less...
If 100 hard core affilliates, a million each, more or less.

Of course, 20% of the affilliates will be responsible for 80% of
the sales, the people on this forum will probably be in the upper
20% since we know more are ahead of the curve, etc.
Brujo
Gold Sales
Jason, I admire your thoughts but there is no Gold that can be bot by the general public at this time. That's why we are going to have a massive short squeez. I've read concerns that the amount of physical gold for delivery will not meet the demand.
Jason Happy
(No Subject)
Yes, I'm aware of the coming short squeeze in gold. 14,000 tons sold short has been a figure floating around... It's why I'm anticipating the coming gold bull market. Yes, I'm aware that gold coins were being rationed during the past year, and yet, gold coin sales managed to double in 1999 compared to 1998. If your business experienced a doubling in demand of real product, you might have manufacturing shortages for a spell or two as well...

But, I think you may have it backwards regarding the "no gold available" for the public. In fact, it is the largest buyers who are being defaulted on, or told to wait. All the little buyers are getting their gold coins. When they can... Well... hmm... looks like everyone is already being slowly defaulted on.

I guess that's why we are going to have the gold bull... gold doesn't default. Paper does.

Sure, my estimates may be too large.

But, as a business plan that would probably cost less than $1000 to get into, the risk/reward ratio is among the best you will ever see.
Brujo
Gold Contracts
Jason, The demand for gold has been creating 5-10ton/yr shortfall without affecting the price. The amount of gold you need is controlled by the governments and the hedge banks, not the public. The coins produced in this country are on a 3 yr old schedule that they won't change. Last I saw,in Nov, the hedge banks controlled 80+% of gold contracts with near time delivery. Even that won't help them. There is no gold to cover the shorts. The 10+ tons of short sales that are talked about are just the amount that left a paper trail. Some conjecture puts the real figure at 20+. It is probable that the governments will quietly slip bullion onto the mkt and the POG rise with a little order.
Brujo
Trigger
I started reading the forum this last week and some people have been conjecturing on what event will trigger the rise in gold and the down turn in the mkts. I moved 100% into resource stocks 2 yrs ago after spending a yr looking into Y2K. While I was doing that I started running into more and more sources that had a common theme of upcoming earth changes. The first of these is the solar flares this spring. NASA,Mayan CalendarReaders,Art BELL'S GUESTS are the primary sources to check.
Brujo
Replys
I live 25 miles out from the nearest ISP. The last mile is in air phone line and the ISP got a ton of new people this Jan. My answers may be irregular. I have lived here since 1975 unlike Gary North who took up country life not long ago.
Brujo
Gold Sales
Jason, The fact that they are only filling small orders in an indication of how short the supply is. I was refering to the amount needed to turn the mkt around. Try to place an order for 10 tonnes,of the physical product for delivery to you. See if you can place a bid at the next BOE sale and take delivery.
Knallgold
Swiss gold
"'Zurich, Jan. 20 -- Swiss National Bank Vice President
Jean-Pierre Roth said Thursday the National Bank only
had a small window of opportunity for the planned sale
of 1,300 tonnes of gold reserves, and couldn't afford
to wait too long. Roth wouldn't say when the planned
sales would begin, but said the legal framework
allowing the sales would be in place by end-March....'

Not ..wait too long? It has nothing to do with the legal framework, so there is obviously another agenda.Is it the buyer who can't wait ?
My take is (some already speculated on it): The Europeans have to act quickly because of GATA close to success(?).A shot by a stranger (not you...) is not allowed, only the ECB/BIS wants to have credit for the destroyment of the paper Gold market.And it could be that the first swiss sale will mark the start of the new Gold market (per FOA).And to spin it further, they will report a physical price, at the first of April,of lets say 310 euro (315$).

Town Crier, you are an excellent reader of official statements, what is your take on the SNB statement?

GD
no subject
test
WAC (Wide Awake Club)
Saudis Love $40 oil
USAGOLD
Solomon Weaver, Jason Happy....All....
Centennial Precious Metals did a substantial volume in gold bullion coins last year like the U.S. Eagle, Philharmonic, et al -- several million.

We also did a substantial volume in pre-1933 gold coins, primarily of the European genre -- and that volume was substantially higher than what we did in the bullion gold coins. That is because pre-1933 is what the typical gold investor (for privacy reasons) coming into the market at this juncture prefers. In other words, it fits the profile. Also, when you take into consideration the opportunity this managed gold market has provided us in the way of an artificially low spot price, the premium paid for pre-1933 European does not seem all that onerous to those with a view toward hedging ALL the contingencies. A similarly sized bullion coin is only marginally less expensive.

So Solomon, we did both and recommend both depending upon what the client is out to accomplish.

We did very little platinum or silver as these are primarily commodity plays as opposed to monetary insurance plays -- and it is the hedging that most financially well-heeled investors want. Their interest is to protect the wealth they've gained in other pursuits -- inlcuding the stock market. They don't see gold as a place to make a buck as much as they see it a place to keep a buck.

By the way, before I get a storm of protest, I also see unhedged, or rationally hedged, blue chip producers the same way -- they will directly benefit if the international players pursue the Mundellian gold component to the primary reserve currencies. However, this is a stock play and not a monetary insurance play. Gold stocks, as I state in my book, are not a proxy for ownership of the hard metal. They are stocks first and gold second as such, gold, itself and stocks are two distinctly different financial vehicles.

Most know how I feel about commodities, options, gold loan programs, etc. This is leveraged gambling not for the faint of heart. And anyone who believes that this is a substitute for rational portfolio hedging had better go back and read a fundamental text on portfolio planning. Leverage can in no way be construed as hedging the way typical investors today use it. Know that the downside can be as precipitous and volatile as the upside and you could lose most, if not all, the investment.
RossL
Exporting Gold
http://minerals.usgs.gov/minerals/pubs/commodity/gold/
This link has govt. statistics on gold mining, importing and exporting. The USA has been exporting more than (mining + imports) for years. Monthly averages for mining appear to be around 30 tons. If the USA is now exporting over 100 tons per month, then the export pace has picked up considerably from what is shown in the govt. documents.
Black Blade
Future Gold supply to market is not a sure thing
The Metals Economics Group (MEG) have just recently published the 10th edition of "Corporate Exploration Strategies". Considering that to take a mine from the planning to production stages usually takes a long period of time. Usually a minimum of 5 years, and at times longer in the US when court challenges ensue over environmental, cultural, social issues, etc. This annual survey reveals that exploration budgets have decreased substantially over the last few years due to falling metals prices, Asian financial crisis, cutbacks in exploration spending by major mining companies, and difficulty in raising capital among the juniors. What this means for the long-term POG is obvious.

Exploration spending rose from 1993 to 1997, topping out at about $5.1 billion, then a 31% drop in 1998 to $3.5 billion. This last year, budgets shrank a further 23% to $2.7 billion. Exploration spending by major mining companies have been replaced by increased acquisition activity instead, resulting in a "feeding frenzy" by majors devouring juniors a "bargain basement" prices. Exploration distribution has not changed dramatically with S. America having about 29.1%, Australia second with 18.7%, Africa slipped from second to third from 17.5% to 14.9%, Canada fourth and unchanged with 10.8%, US fifth with 10%, Pacific/SE Asia with 8.1%, and CIS with 8.4%. ("Corporate Exploration Strategies" is a 2 volume 550-page study, price US$9000).

Without additional exploration to replace dwindling supplies as mines are mined out, the current 1000-ton deficit of gold will only grow wider over time. At the current price levels, many miners are high-grading their deposits for the lowest cost production, further depleting their resources and endangering their viability going into the future. Meanwhile there have been some bankruptcies in the industry over the last few years (including Pegasus Gold, Royal Oak Mines, etc.) and a few in danger of bankruptcy (including Alta Gold, etc). The strategy of forward sales (hedging) has not work out well for some miners (including Cambior, Ashanti, Emperor Mines, etc.), and has resulted in disenchanted shareholders of some mining companies (such as Barrick). Many question whether the gold markets are manipulated and whether governments, central banks, miners, hedge funds, etc officially sanction such practices. This has led many high profile individuals such John Murphy (widely respected TA analyst) to publicly state that gold is no longer an indicator of inflation as it is a manipulated market.

The CPM Group (no relation to USA Gold) has a survey that concludes that the total supply of newly refined gold to market in 1999 will total 105.6 Moz, 1.1% more than in 1998. The scrap component has decreased but has been compensated for with a 2.7% rise in mine production to 68.6 Moz. Mine output for year 2000 is expected to increase by 3.1% to 70.7 Moz, as part of an overall increase of 2.5% refined supply to 108.2 Moz. CPM estimates that central bank sales have fallen by 49% to 7.4 Moz (63% lower than 1997). CPM expects this lower level to be maintained this year in the 6-9 Moz range. Fabrication demand is estimated to have declined in 1999 (first time since 1983), by 2.7% to 101.1 Moz. ("Gold Survey 1999", US$80 from CPM Group).

In short, the current low POG level can not be maintained over time as the cost of production will increase and supplies will diminish as a result.
rsjacksr
Who needs money?
http://www.economist.com/editorial/freeforall/current/fn0372.html Article by Benjamin Friedman of Harvard University on "E-money" and why the FED rates and control of the money supply and therefore the economy may in fact become irrelevant i.e Here comes DOW 30,000 ????

canamami
Reply to Knallgold - #23462
Knallgold,

I was fascinated by the SNB's statement concerning the narrow "window of opportunity". Was this part of a larger statement, which could add meaning or context to the "window of opportunity" statement? Otherwise, what is afoot?

On one level, the statement could reflect a belief that gold will soon lose its monetary function, and that it will be worthless before too long. On a certain level, this actually is the most straightforward and plausible explanation. However, as anyone who reads this Forum is aware, there is arguably more to this than meets the eye. I personally believe there is sufficient evidence to conclude that conscious manipulation of the gold market is being undertaken: the expert opinion of long-time gold watchers as to the unnnatural price movements of gold and the gold market, the timing of the BOE announcements, the Washington Agreement, then the subsequent liquidations by Kuwait, Russia, etc., to help make up the shortages, etc. I'm not sure of which theory is correct: gold-for-oil and/or currency wars (FOA/Another and Oro)), to prevent the sending of an inflation signal (Don Coxe at one point), a combination of governmental and private manipulation to protect those who are short gold (GATA), or perhaps an attempt to demonetize gold as a means of advancing a socialist agenda of big government (Greenspan at one point).

If I were, arguendo, an intelligent socialist politician and I were faced the ascendancy of capitalism as effected by Reagan, what would I do? I would pretend to be generally sympathetic to capitalism, but espouse enough lefty ideas to prevent a third-party candidate on the left from arising. My first tactic then would be to socilaize the health industry in a manner that there was no way to purchase exceptional health care independently of the state mandated system, because one impetus to responsible living and wealth creation is to provide oneself and one's family with exceptional health care. The choice is then for productive citizens to acquiese in higher taxes to finance exceptional health care for everybody (i.e., an expanding state sector), or to accept poor health care to keep taxes down (we'll all be equally dead), or just to stop working hard (we'll all be equally poor). The second alternative is to suck in enough people into a form of pseudo-capitalism which will then crash, thereby alienating them from capitalism and freedom, and make them willing to embrace socialism and control. Look at how the New Deal followed the Roaring Twenties, and see what was done to long-term holders of gold and those who tried to protect themselves from the insanity with gold contracts, physical gold, and gold investments.

I'm sorry I got off topic, and I must go. I will briefly post again later.
canamami
Further Reply to Knallgold
Knallgold,

With respect to the "window of opportunity" statement, are there developments in Swiss political life which cause the SNB to fear that the gold sales will be delayed. For example, is there a fear that a referendum will be forced on the issue? Has a movement arisen to stop the gold sales?
Al Fulchino
Canamami
http://www.geocities.com/Heartland/7006/psychopolitics.htmlBased on your post you will enjoy the above link, if you haven't already discovered the subject. Best to you.
canamami
Reply to MK
MK,

You made a comment a little while ago, about whether the Tweedledee/Tweedledum situation in US presidential politics would've arisen if Ronald Reagan were still competent to participate in debate. I quite agree. Reagan was always a man of principle, and would always take a stand on matters of principle, notwithstanding his policy of not speaking ill of another Republican. I recall when Clinton first took power, stating that the rich should pay their fair share. The Republicans reverted to Nixon/Ford mode, arguing not the core principle, but in a sense that there should be a "slower, less intrusive" socialism. Reagan on the other hand asked in an op-ed piece in the New York Times whether Clinton was saying that the rich had done something wrong, and that they deserved to be punished....hitting the true, underlying issue right on the head, as he often did. I believe Reagan also spoke out against Clinton's health care plan on human rights grounds, but I don't recall where I read it. It would have been interesing to see Reagan's response to Clinton's various antics, and whether he would've been effective in attacking Clinton, though perhaps a simple juxtapostion of the men and their presidencies is enough.

It is a sad reflection that the great leaders of our era - Reagan, Thatcher, John Paul II and some others - have effectively passed from the scene or are in the process of doing so, and one doesn't see comparable leaders on the horizon.

Black Blade
Crudele article...."CPI Hocus Pocus don't fool us"
I've hit on this in the past, bur Crudele explains it so well, the following is a follow-up article on CPI number manipulation. John Dessauer (one of Louis Rukeyser's "elves") wrote a good expose on CPI numbers a few ago. The following is found on nypostonline(?) I seem to have lost the link (Black Blade):

I hit a nerve last Monday. Aside from a couple of bubbleheads who'd like to see me die a horrible death for picking on Washington's highly-questionable inflation numbers and their sacred capital gains, most readers didn't think it went far enough. So I will try harder this time. But first, here are a few comments that were e-mailed to me.

*"I too am deeply concerned about inflation. I live in the San Francisco Bay Area and I believe price inflation here has averaged between 7-8 percent over the last several years ...The economic statistics coming out of (the Clinton) administration are obviously seriously flawed."

*"You failed to mention housing prices ... Sold my home in New Canaan, Ct., for a 25 percent increase in only 18 months."

*"The spinmeisters are at it again, as if they ever stopped. I'm in Salt Lake City, Utah, and this region is very heavily involved in mining for the commodities you're watching escalate in value ... mostly because of rapidly declining warehouse stocks of copper, zinc, silver, aluminum and nickel."

OK, so keep that nerve exposed because I'm gonna pick at it again. I did forget to mention on Monday that the consumer price index that rose just 0.2 percent in December doesn't include the increasing cost of buying a house. Instead, it uses some asinine housing cost guess. For instance, if you bought a condo in Manhattan in '99 for, say, $300,000, and this year the same place sold for $400,000, that doesn't count as consumer inflation according to the government's way of thinking.

In the CPI, Washington calculates housing inflation as being what it would cost you to rent your own house. Yup, that how it's done. In other words, if you could rent your own house in '99 for $2,000 a month and now it would cost you $2,200 this month for rent, that's the figure that matters in D.C.

You ask: How can you get a real figure on something like that? You can't. And that's what makes it so good for those who want inflation to look low. And, taxes aren't included in the CPI either. Why? Because Washington doesn't want them included. I don't know about you, but my taxes take up quite of lot of my CPI -- that's the Crudele Price Index.

Now, let's move on.

John Williams, who operates a one-man watchdog agency that monitors government statistics, says Washington also changed the way it calculates inflation so that today's numbers really don't compare with those of yesteryear.

"Gradually over the last several years, the government shifted to what it calls 'geometric weighting,'" says
Williams, who calls his organization the Shadow Bureau of Government Statistics. "That means anything that goes up in price automatically gets a lower weighting in the inflation] calculation. Anything that goes down in price gets a higher weighting."

So you have automatic low inflation.

The shaky argument behind the change in the method of calculation is that if a product goes up in price, consumers will shift to an alternative. For example, if steak becomes too expensive, you'll start buying hamburger instead.

"As originally conceived, the CPI was intended to measure the cost of a constant standard of living -- a fixed market basket. They've changed the concept from being one of a cost of living to being one of a cost of survival," says Williams. But even more important,Washington found a way to fudge the numbers so financial markets won't really be able to tell the correct level of inflation.

People will still be able to tell because they're the ones who'll have to give up steak for hamburger, or name brands for generics. But Wall Street won't have a clue.

Black Blade note: What's next? Hamburger helper without the hamburger?
canamami
Replies to FOA and Al Fulchino
Al Fulchino,

Thx for the link. It looks very interesting.

FOA,

A few days ago you mentioned that off-market transactions are already taking place with the major CB's, and that therefore the gold lease rates are not that relevant.

To clarify: (1) Is this strictly the result of your analysis of widely known facts, or (2) Do you have direct knowledge of this, or knowledge from others (for example, Another himself) who are directly involved in off-market gold leasing, or (3) a combination of (1) and (2) above?

Thank You,
canamami.
Cavan Man
canamami
You are so very right about Reagan, Mrs. Thatcher and Pope John Paul II.

"If you've ever had dreams of leadership, now is the time, this is the place, and you're it. We need you."

Warren Bennis
From, On Becoming a Leader

With regards to the SNB, more than likely the reference is to an internal situation. Alternatively, perhaps the comment by the official is in reference to the impending turmoil in the gold market as projected by FOA.

Just a thought....
NewGold
Speaking of currency wars & Oil, I saved this prophetic post from Sept./99 to my hard drive
I read elsewhere that TZADEAK is now posting here under the handle Permafrost, is this true?

Phos (9/29/99; 13:33:22MDT - Msg ID:14897)
Tzadeak
Sorry -should have included the copyright in the last post:
TZADEAK* (@ The New Gold Bull.....) ID#372344:
Copyright � 1999 TZADEAK*/Kitco Inc. All rights reserved

Skip (9/29/99; 13:33:09MDT - Msg ID:14896)
Media coverage on PM's
In the local paper today there was the usual news on the financial page, yet there was NOTHING about gold's jump! Doesn't this make you wonder why the media cannot seem to be objective? Are most of the USA's newspapers ignoring what's happening in the gold market?

Phos (9/29/99; 13:27:01MDT - Msg ID:14895)
Golden Truth
Take heart, one day does not make a market. The trend is up and the shorts are in trouble. Tzadeak posted on Kitco today
---------------------------------------------
Welcome ALL to the New Gold Bull......definitely NOT for the faint of heart....congratulations all who hung in there...
Buy GOLD on the DIPS is my new one now....
As I predicted, the propaganda war againt Gold was defeated DEEP inside their propaganda public event at the BOE
auction sale....
make NO mistake this is the New Gold Bull.....
"they" have unleashed Gold from bondage, in part by the ECB announcement on caps on Gold sales/leasing....You say Gold is manipulated?? what a shocker.....
Why? Why now?.... many complex reasons....A major one is the absolute need for Global monitization of the new OIL price, ie INFLATION.....New Prediction, OIL will be over US$ 30.00 by year end.....YES Gold is/will go up ,against ALL currencies, not jut the US$....
that's another one.....My previous prediction of US Gulliver Syndrome is unfolding before us.... "they" have returned
Gold to it's role once again a world proxy/currency, a shelter/haven against world uncertainty, and believe me there is going to be plenty of it.....especially for the US....Don't loose sight of cause and effect....the current effect, short covering involve "The Battle of The Hedge Funds"...and will go on for sometime yet, some HF longs are/will force others to cover....paper can be "created out of thin air"
BTW Tiger is denying reports that it lost 2 Bill US$ in Gold shorts.. speaking of Tiger word has it that it has accumulated 1/4 of the world's Palladium supply giving some credibility given the poor showing of PD lately, BUT watch out when this thing is out of the way....OPEC has learned well from the CB's in the control of OIL, It will flood the
markets as soon as any NEW Oil is ready to hit market, thereby using it's excess capacity as a whip on any new major Oil projects....The NEW OPEC will once again hold the west up for ransom, the ARABS in particular know they have
maybe 20 good years left ..... and the Sud-Americanos are getting cojones...the West will develop and begin to widely impliment car batteries ( 3-5 years ) ... You HAVE to love those "white metals".....
The world is now in a fluid state, WTO is nowhere, China is holding out wants to change the "rules"....and the Euro's are coming on strong.....,let the "Battle of the Currencies" begin....
Predictions:
Gold will be $400.00+ by next year, with much more to come.....
Inflation will be a household word again....
Gold shares will do well especially unhedged miners and Juniors with probable NEW Gold finds...
New realities for Gold miners worldwide.....
South Africa will nationalize Gold mines by 2004-7 and head the "United States of Africa".....

Leigh
New Gold
Dear New Gold: The other day I asked PERMAFROST if he was indeed TZADEAK; there are some things about PERMAFROST that seem a little characteristic of our old friend. He, however, has denied it.
canamami
Reply to Cavan Man - Somewhat OT
Thx for you reply, Cavan Man. Do you see any leaders of quality among current politicians (I don't know which country you live in?). In Canada, there will be a leadership convention in the Reform Party or its successor within the year. I believe there are elements of true greatness to Manning, but I doubt he is electable (the media villified him to such a degree), though he will run for the leadership of the new party, if it's approved. There are some good young politicians - Jason Kenney, Stephen Harper, Stockwell Day, perhaps Mario Dumont from Quebec (though he's a mild separatist). Most are, interstingly, post-boomers - Kenney's 31, Dumont may not even be 30 - and perhaps too young for wide acceptance on the national scene.
NewGold
Leigh
Since I am not a regular lurker, I haven't followed his posts too closely but Permafrost's denial notwithstanding,
what do you really think?
Leigh
NewGold
Gosh, NewGold, I don't know. I didn't mean to start a rumor, especially if it's a false one. Here are the things that made me think PERMAFROST is TZADEAK:

1. PERMAFROST calls a lot of attention to himself, as does TZ.
2. The guys on Kitco have said before that TZ keeps reappearing under different names.
3. There was a terrible fight last summer, with TZ (under the guise of his friend Mellow88) making terrible accusations against FOA. You see that PERMAFROST is now been attacking FOA.
4. In TZ's previous posts, he has tended to capitalize a lot of words, and so does PERMAFROST.

I apologize to PERMAFROST if my guess is a wrong one.
Leigh
NewGold
5. Someone on Kitco said that TZ has been travelling in Europe, and hasn't PERMAFROST been posting from Europe or thereabouts?
Chris Powell
Good essay on lease rates from Gold-Eagle
http://www.egroups.com/group/gata/344.html?Marcia Peters sees another short squeeze
in a few months.

NewGold
Leigh
Thanks for your opinion Leigh, however, there have been a number of people who have questioned or as you say
attacked FOA, and many more posters who like to
attract a lot of attention to themselves, but your point
about Permafrost using caps and travelling to Europe
make sense. I heard this about Permafrost on another
Gold forum and wondered, since you follow him, if
he has recently made any good recomendations, that
one would have been able to profit from?

Also do you pick up any other similarities?
Chris Powell
Has IMF come over to the gold side?
http://www.egroups.com/group/gata/345.html?Reg Howe shows how much more debt relief
the IMF could provide to poor countries
with a higher gold price.
Leigh
NewGold
No other similarities that I can spot. PERMAFROST is a philosophical, rather than a predictive, kind of guy. I agree that there are a number of people who disagree with ANOTHER and FOA; however, few of them are as vehement about it as PERMAFROST. Back in August, TZADEAK(Mellow88) was also making ugly attacks on them.

NewGold, please don't read too much into my guesses. In fact, nobody else has written in to say that they have noticed these things too, so I could be wrong.
NewGold
Leigh
Thanks for being so candid, and I guess I will have read
his posts a little closer, and make up my own mind.
But you must admit it's kind of confusing to try and figure out it out sometimes, when posters use different handles.
Mr Gresham
Mundell on Euro -- (Jan. 1999)
http://www.columbia.edu/~ram15/lux.htmlbackground look from a year ago
Number Six
GOLD/OIL theories.... any thoughts much appreciated...
I saw this on another forum...

solarhermit


(1/22/00 9:23:58 pm)
Why do Saudis love $40/barrel oil???


Your primary investment is real estate and production payments are made in gold bullion. Now what risk is there to establish a more aggressive pricing policy, incur a bit of world inflation and reap the benefits of price escalation? The economics couldn't be more straight forward. 2 million barrels/day at 1/7 ounce/barrel and $280/oz rising to $400/oz helps pay the bills. Sell the gold, buy Euros, the dollar falls and gold rises to a reasonable level of $600/oz. The only economices better than that would be to install more solar panels!

========================================================

Now it has just come to my attention that the USA's biggest export last year was GOLD...

Could it be going to the Saudis in such a blatant manner...?

I had heard of the Another/FOA oil for gold deals in the past, and believe them, but has something changed...

What are we missing here?

Any thoughts much appreciated.
Cavan Man
canamami
RE: LeadershipI live in the US (St. Louis). Go Rams! I believe you live in Canada. I have been there many times on business and very much enjoy the visits etc.

Perhaps I am too cynical or getting that way but, I see very few "leaders" involved in state, local and national politics. I've adopted a grass roots approach myself; will probably run for school board or perhaps councilman someday. Depending on the organization (as I've learned so well), there may not be a perceived need for leadership; dominant cliques somtimes resist it.
Just Weight & Measures
Number Six
I have heard several references to the US exporting a large amount of gold last year. Can someone please confirm or refute this?

I heard Frank Venerosso explaining the fundamentals of supply & demand in relation to gold yesterday. He said supply is down because European CB selling has decreased, there is less destressed gold selling and forward short selling is decreased. Demand is up as industrial and consumer demand has increased in Asia.

Yet, ever time the price moves up, this mysterious official sector supply appears, selling into the strength. My question to all you intelligent gold investors is, who is this undisclosed official sector supplier? How & Who can supply large amounts of gold to the market and yet remain nameless. Perhaps the mysterious vendor - cloaked in conspiracy - exsists only in Mr. Venerosso's mind?
JLV
Number Six
I had heard of the Another/FOA oil for gold deals in the past, and believe them, but has something changed...

What are we missing here?

_________________________________________________________

What we are missing, is that breakthroughs in nanotechnology have accomplished the alchemist's dream.

Very secret.
Black Blade
Petroleum isn't counted in the CPI core rate, but.......
Global demand for oil swelled in the fourth quarter of 1999, driving prices higher.
BY Bruce Stanley, Associated Press

LONDON -- Global demand for oil increased much faster than supplies at the end of last year, pinching inventories and driving up prices as buyers hoarded crude ahead of feared Y2K-related disruptions, a respected industry study said Thursday. "The numbers show markets that are tight and getting tighter," said the monthly report by the International Energy Agency.

Signs that OPEC will extend its production cuts in output beyond March have added to upward pressure on oil prices. Prices for the benchmark oils of Europe and the United States rose by more than 4 percent in December and surged further this week. West Texas Intermediate crude was flirting with $30 a barrel, a level not seen since the January 1991 outbreak of the Gulf War.

"The market needs more oil now. But non-OPEC supply is growing only slowly in response to the price rises of the last nine months," the report warned. World demand for oil swelled to "an extremely strong" 77.3 million barrels a day in the fourth quarter of 1999, exceeding available stockpiles by 3.1 million barrels daily.

The Paris-based IEA is part of the Organization for Economic Cooperation and Development, a group of the world's richest countries. Demand should ease slightly this month, it said, as buyers work though inventories they built up as a precaution against Y2K-related supply interruptions. And economic growth seems to be offsetting the economic impact of higher oil prices in much of the world.

"I don't think we're near a crisis stage," said Peter Gignoux, head of the petroleum desk at Salomon Smith Barney Citibank. But he concurred with the thrust of the IEA report. "They're raising a flag and saying, 'Watch out, this market is getting short of oil," he said.

Black Blade note: Not many sources seem to be talking about the shipping and refining problems with the petroleum industry. Couldn't be related to y2k/embedded systems not making it into the new year, right? Something obviously wrong with this picture.
Brujo
Gold Supply Sales
The u.s. gov has lost control of the POG but it would not be good for the world if gold went into a run away bull mkt. It can't look like they are selling so they are making deals here and there to allow unofficial gold into the mkt. The effect they are hoping for is a slow rise in price that allows the shorts time to unwind.(IMHO)
HLime
Lets work with em
Lets face it from MK's perspective, what sells more gold is desireable, and it
would not hurt any of us either. The idea of "net affiliates" may have merit but
this method of marketing will never reach the average Joe.

May I suggest the following:

Approach your friendly locally owned bank "ore" credit union with a business
plan to have them sell bullion coins and bars. Offer to front the inventory cost
and split the commission with em. Offer to print up display cards for their teller
windows, lobby, and flyers to give out at the drive up. The business plan should
stress two bank services that they could profit from, deposit boxes and a gold
savings account. Your average Joe does not have $300 to drop on a coin but
he might save $30 a month and then redeem for the real thing.

Lets put our heads together and design the marketing displays and drive up
flyers.

Teller Display:

Gold - Insurance for a lifetime.

Picture of gold eagles

Safe and affordable
This bank will: sell at low commissions
offer safe storage
set up a gold savings plan

Repurchase guarantee at our cost over spot gold prices.


Just a start, lets flesh it out.
Harry



Brujo
Gold Supply Sales Failure
The u.s. gov. needs time for their gold plan to work. They don't have any. The flares this spring will take it all away, (IMHO).
Just Weight & Measures
RossL @23466
Great Links Ross!

Thank You.
Black Blade
Can 1 billion Chinese help out?
Recently (over the last couple of weeks), the Chinese government has made overtures to the international gold investment and mining community. Now Chinese citizens are allowed by law to purchase and possess bullion gold.

Dr. Pui-Kwan Tse of the USGS reports in the Mining Journal's annual review for 1999 that gold in China is purchased by the central bank at a fixed price. With depressed prices for gold, the mining companies in China are forced to increase production in order to meet financial obligations. Since the Chinese currency is not convertible into USD, foreign investment for gold mining is sure to be restricted into the near future. The State Gold Bureau has planned to introduce a shareholding system and investment mechanism to procure investment capital for the gold sector where foreign investments had been severely limited except for a few isolated joint-venture mining projects.

The Chinese gold market does have tremendous potential however, as living standards continue to improve. Most of the gold is in the form of jewelry (average 22K to 24K). Asians have a traditional bias toward gold as a hedge against currency devaluation and for wealth preservation. There are more than 10,000 gold jewelry shops throughout the mainland. Published data on gold consumption indicated that in 1997, per capita gold purchasing was 0.2 grams of gold, total of about 240 tons. Statistical data is confusing; however, many Chinese citizens bought gold from Singapore, Taiwan, and in Hong Kong.

Anyone who has traveled to Asia can attest to the high quality and purity of gold jewelry. Now that the Chinese people have the option of a liberalized gold market, the question is whether or not they will make substantial purchases of gold.
Ray Patten
Oil refinery fire historical data!
http://pub3.ezboard.com/fdownstreamventurespetroleummarkets.showMessage?topicID=279.topic
Someone claims to have put a historical perspective on oil refinery and pipeline explosions and fires. Get this: the average for the years '90 to '97 is three. '98 was 29; '99 was 90; and so far in '00 it has been 64. I think I'll go out and buy more 5 gallon gas containers.
TheStranger
Three Great Posters I Miss Seeing
JA
Aragorn
turbohawg
Bonedaddy
Jason
Jason, thank you for your kind comments on my last post. "Simple, yet powerful..." I like that. I think your marketing idea has alot of merit. The web brings opportunities that my mind can barely conceive. You are obviously a very bright person and I enjoy your posts very much. If you choose to persue this concept, I wish you the utmost success.
Bonedaddy
Stranger, I had a thought....
about the GOLD export numbers. Frankly, I was shocked that so much GOLD left the country. I'm not sure why, but that seems like a bad thing to me. As a good red-blooded 'merkin, I would rather send cheap transistor radios overseas and keep the GOLD here. Did other nations export more GOLD, or was it only US? I'm trying to figure something out, perhaps you could shed some light for me? Does this mass exodus of GOLD somehow represent a repatriation of dollars by someone? Someone holding too many of our dollars? Does it portend evil days ahead for the dollar? As you know, I am quite dense, so please type slowly so I won't have trouble reading your reply. Thanks!
GD
Question for TheStranger and All
I have not posted since before labor day but have been able to catch up on the great posts here once or twice a week as time permits. Things are booming in the car business, as we are a big 3 auto supplier, here in the Motor City. The project I have been working on for the last 2 months has been a $80 million dollar quotation for the 2004/5 GM small car platform. I have been putting in long hours, and usually find myself falling to sleep with the last 3-4 days worth of the forum's posts in my hands. I wont know if we will be awarded all or some of the business until mid-Feb.

With the y2k concern behind us and the prospect of AG's money printing frenzy coming home to roost, I have been very interested in the posts at the Round Table regarding Inflation/Hyperinflation. Up until the last few months it seemed as though Deflation might have been a possibility. Deflation doesn't seem as likely now.

Knowing what is on the economic horizon, I would like to distill all that I have learned about the REAL economy and what the future may hold for it , into a sound wealth accumulation plan.

Having prepared my family's finances to protect against the possible Y2k ramifications, I find my self wondering about how to re-structure my wealth (albeit small) for the prospect of high/ hyper inflation. Unfortunately, the conventional wisdom of the financial planning services industry does not contain the level of understanding posted here at this forum. Therefore, it is very difficult to find a thinker(s) with which to have a dialogue about "how to structure one's wealth to comprehend the possibility that our .com economy may not be sustainable".

Therefore, I am asking the members of this Table Round, not for investment recommendations, but for commentary as to my train of thought, as I begin to figure out how to best plan for my family's future.

My first Thought:

Having held off on large purchase until the passing Y2K, and with the prospect of inflation/hyperinflation on the horizon, how does one best position his families savings, as well as structure purchases such as a new car and a bigger house?

It seems to me that even if one could pay $25k for a new car or put 40% down on a $300k house that it may be more prudent to play the inflation odds by financing the purchases with a minimum down payment. (Note: My wife wants to replace her 8 year old car and the condo we've been in for the last 13 years. I've got to do this to remain in good stead with her.) One could then take the leftover cash and purchase PMs or other hard assets that will increase in value in an inflationary environment. This way you have locked in the prices for the car and home at today's prices and will pay it over time with lower value, more available (inflated)dollars. In addition, a hedge position with PMs is created.

The additional benefit of this scenario is that, if the inflation/hyperinflation scenario does not play out, the boom economy continues a while longer and the paychecks keep coming in and you can pay your bills anyway and continue building wealth.

I this rational sound?

I would be honored with your comments on these thought. and look forward to further dialog'

Many Thanks in advance. GD




TheStranger
Bonedaddy
I assure you, Bonedaddy, on this subject, I am quite dense also. I presume you have read TownCrier's informative post, (01/22/00; 16:07:37MDT - Msg ID:23433), already. If not, I think you will find it helpful. Also, I'll bet you are going to see a reference to this in Michael's daily market report tomorrow.

I am pretty weak on precious metals weights and measures, so somebody please doublecheck this, but I think this export increase amounts to something like 86 tons of gold. If so, that would certainly be a lot. One caution, however: trade numbers are notoriously erratic. Most economists withhold any serious assessment of them until patterns begin to develop across 2-3 months or more. Who knows? This might even be just an aberration that gets offset by something in next month's report. Certainly, somebody would have some explaining to do.

Sorry I am no more help than that.
Solomon Weaver
GD wants advice
GD (1/23/2000; 20:00:46MDT - Msg ID:23502)
Question for TheStranger and All

With the y2k concern behind us and the prospect of AG's money printing frenzy coming home to roost, I have been very interested in the posts at the Round Table regarding Inflation/Hyperinflation. Up until the last few months it seemed as though Deflation might have been a possibility. Deflation doesn't seem as likely now.

------

GD

First of all, it is probably important for you to sit down and think about investment strategies which will work over the long haul. Don't just look to trends.

My own personal suggestion to you is that at the current prices, both stocks and real estate appear to be rather expensive....be careful about buying into a new home...think twice...think about what your long term priorities are (retirement, work, etc.) Understand that the market in home realestate could become a lot less liquid....

Regarding structuring your assets::: think at this time of liquidity. In the coming stock and banking crisis (at least as anticipated by many here on the Forum) one of the greatest problems will be cash flow and liquidity. Gold, other PMs (physical ownership) some CD and TBill, Bonds denominated in Euro.

Regarding your point about being past the danger of deflation. It is pretty safe to say that real deflation is much harder to survive than inflation (particularly in a society which has a lot of debt). It is also pretty clear that for the last several decades, as we have had a better real time view of international trade, cash flow, credit, and consumption, most of the large nations have successfully managed money supply to avoid deflation.

But just consider that now most people (and bankers) are thinking about "return on investment"...in a real crisis, the bankers will begin to think of "return OF investment". When Asia got the flu in 1998, there was a severe deflation in the prices of goods. This could happen in America if we all suddenly became concerned about servicing our individual debts and not buying any un-needed consumer products. Credit expansion is monetary inflation.

The jury is still out on deflation vs. inflation in a crash ala 2000. Most likely, there will be "price increases" in certain things (like heating oil, gasoline) which are tightly connected to oil, and dramatic "price decreases" in things which are luxuries (for example, the price of gold might rise because it is also money but the price of diamonds could fall because they are luxury).

Time for bed...yawn....you youngsters out there just keep me up late at night...and it grows on my old bones..

Poor old Solomon
TheStranger
GD
GD - Be careful! As investors, human beings often tend to extrapolate the present to devine the future...(i.e. - Qualcomm will always rise 50% per month, inflation will always be low, the money supply will just keep going into orbit, and so on). True, if someone ties the steering wheel down, any car will go off the road eventually. But the economy is a dynamic vehicle where someone is almost always there to turn the wheel. For that reason, take my advice and assume that, indeed, some overcorrection from the recent deflation threat is now taking place. Further, expect this overcorrection to result in a generally higher pricing environment for a time at least, anyway. But do not bet the farm on fullblown hyperinflation until you actually begin to see the car going off the road. This way, you won't wind up in traffic court!

Now, having said that, I will tell you what I would do if I did see hyperinflation coming, which I don't. First, assuming I had confidence in the sustainability of my income, I would go out and buy the biggest home I could possibly qualify for and do so with a thirty-year fixed-rate ASSUMABLE mortgage. Then I would put all of my qualified investment money (IRAs, 401ks and so on) into stocks or funds that invest in inflation beneficiaries. These might include REITs, gold coins, gold mining stocks, oil stocks, natural resource mutual funds and so forth.

GD - most rich people get that way slowly. If I were you, I would hold off awhile on the "biggest house you can possibly afford" ploy, that is unless you are expecting some large pay raises as time goes by. But I think putting at least some of your retirement account money into inflation beneficiaries right now makes a lot of sense. At least, if you wind up wrong, you can switch with a phone call anytime you like. If you don't have a retirement plan, start one.

None of the above represents anybody's advice but my own. If you find it helpful in any way, you are welcome to it.
Journeyman
Kudlow/Greenspan @TheStranger
Stranger, intended to post my take on the Kudlow/Greenspan questions last night, but it got way out of control! Today was a little better but had other committments. As soon as I get it a bit smaller, I'll post it -- probably tomorrow.

It's hard to resist a request couched as yours was.

Liked your advice to GD.

Regards, J.
Peter Asher
Stranger, GD
When thinking about humungous houses think Price of Oil/energy.Think resale at any price in a deflated, plus smaller home thinking, market. And also that a home may be an enduring long term form of consumption, but it is not a productive asset
Peter Asher
Stranger
Turbohawg is alive and well and sending occaisonal E-mails.(A little bit too of topic)
Jason Happy
Efficiency: Gold vs. VISA/MC
Expounding on the meaning of life under a gold standard....

This post is for Bonedaddy, because he said he likes my posts so much, otherwise, I think I might not have come up with anything to say today... (thanks for the ego polishing, I'll try not to shine too brightly)

I have said before that there would be no taxes under a gold standard. Well, not income taxes, anyway. There might still be taxes on liquor, cigarettes, gasoline, and taxes on imports (tariffs), which is largely how the United States financed all of its operations from 1776 to 1913.

(Everyone knows that the Federal Reserve was incorporated then, and began the income tax shortly thereafter, right?)

So, why not income taxes? These depend on the government being able to track the money you make through banks, and the money you earn through your employer, or through the "tax deduction" that is claimed when people report their bank payments to you as "expenses" on their own taxes... However, if someone hands you a gold or silver coin, annonymously, just as with cash, there is no paper trail. And, thus, no way to track, and thus, no way to tax. After all, if there is no paper trail, how can the government prosecute you or even have any evidence at all in a tax case? "Well, your honor, we think he needs to pay some sort of taxes because we think he has an income that might have exceeded his expenses this year," just doesn't cut it in a court of law. No wonder the banks and governments are so eager to move to a completely cashless system!

This brings my thoughts back to the velocity of money. Under a gold standard, with less money floating around, Canuck Gold pointed out that there would be an increased velocity of money. True. Also, with our current system, money that entrepreneurs save up for taxes is recycled to the government and back to the people once a year. Slow moving money, hitting two entities in a year.

So, without the income tax, money would probably move faster, in between more people during the course of a year, thus making more people prosperous. Every transaction creates prosperity for each of the participants, otherwise the trade would not be made, right? Thus, the more transactions, the more prosperity.

Speaking of transactions, think of VISA/MC. We tend to think they make life convenient for everyone, right? Consider that they "charge" about 3% per transaction, sometimes as much as 15% for certain risky businesses owners... Gold never stole so much. Imagine, if you were robbed fully, and lost what you bought once every 33 times you made a purchase, the loss would be about the same. Or, consider another way, you are robbed a day's wage every month. VISA/MC protects from theft? What a spin! I never knew common cash theft muggings happened more frequently than once a month to the average person! After all, it's only profitable to pay for protection if the protection racket is cheaper than getting your cash stolen, right?

Shaving gold coins was never such a bad problem. And neither were muggings.

Try to start using "cash only" for all of your purchases, groceries, gas, clothes, eating out, and you will also get a better feeling for how much money you are really spending. After all, if you have to withdraw the money from the bank to get it into your wallet in advance, you have to at least think about the money twice before it's gone; once when you withdraw it, once when you spend it.

Here's another implication of the VISA/MC 3% charge... If 90% of the purchase transactions that people make are run through VISA/MC type charges, then this one single corporate behemoth is sapping almost 3% of the entire money out of the nation each year! No wonder the Fed is compelled to create more new money than 3% per year! Of course, that 3% is spent on a lot of things, like free credit card swipe machines... the salaries of the people who drive around delivering and servicing those little machines... the big computers that process all that money data... ooh big expense for sapping almost 3% of the 8 Trillion economy each year. That's only 240 Billion dollars. Even one percent, is 80 Billion for the bankers! Give me an $80 Billion annual advertising budget, and I might just be able to convince all of America to use gold coins!!!

I think the banking industry, (excluding the private Federal Reserve Corporation which is both exempt from audits, and does not pay taxes), did profit a full $60 Billion for 1998, but that includes all sorts of money making methods, not just the VISA/MC charges, which are, in reality, probably a smaller portion of general revenue.

Maybe I can get several $ Billion to advertise $$ Bullion if I were to apply for a government grant on behalf of the treasury, which is trying so hard to sell gold coins to people. Who knows, the government has done more stupid things...

Gold coins; everywhere you want to be.
Some things money just can't buy, for everything else, there's Gold!

Uncle Sam? That'll be several million, please, just for the hours of labor of creative work needed just to come up with those slogans...
Number Six
FOA - can you please comment on this rather significant post? thank you...
Date: Mon Jan 24 2000 01:33

SDRer ( USD-"the broken jaw of our lost kingdom" ) ID#290174:

Copyright � 1999 SDRer/Kitco Inc. All rights reserved


from the frozen dollar/SDR
to the WILDLY divergent XPT/XPD in the monitored 6 on Saturday
many small 'identifiers' sign that we have arrived
at the door of Ultimate Disquiet

G-7 did not go well. Those who worried about Summer's 'abrasive' personality were right to worry. This administration has an unholy talent in selecting, for jobs in sensitive theatres of interest, persons most likely to raise hackles. In fairness, there was nooooo one, none, NO ONE, including any deity you care to name, who could have held back, let along diverted, the tide of ill will swirling around the decrepit USD.

Word is that BIS stands ready to 'put' platinum and/or palladium wherever they need to go to protect gold-in-the-box,280.ish ~ 315.ish, else a currency burns. The burning will not be European, where gold backing will be announced and gold priced wherever it needs to be priced to support the System. $30,000? $50,000? Impossible? Better the impossible probable than the improbable possible.

Word is that a passel of derivatives has unraveled, and this unraveling is threatening some highly sensitive icons. I can not say more than that, if I am to abide by the rules I set for myself on this board so long ago. If you've been shuffling down this path with me, you can no doubt make an accurate guess.

How will this play out in the days ahead? They still control the government: safe to suggest we will be treated to a blitzkrieg of propaganda; safe to suggest they'll gladly move heaven to hell to keep the market afloat.

Will confidence hold? The key question. Perhaps the only question.

The eyes are not here
There are no eyes here
In this valley of dying stars
Eliot, "The Hollow Men"

Good night.
Number Six
SDR post...
Which currency?

Which Icons?

Anyone care to SWAG on this :o)
Goldfly
Here it comes........
http://news.excite.com/news/pr/000123/nj-opis-oil-increase
Huge Oil Price Increases Imminent for Truckers,
Airlines, and Homeowners


Updated 5:00 PM ET January 23, 2000

LAKEWOOD, N.J., Jan. 23 /PRNewswire/ -- Oil price
increases, that in some cases surpass the hikes seen during
the Persian Gulf War, are about to stun homeowners,
airlines, and trucking companies, according to OPIS Energy
Group. The New Jersey based publishing company reports that
many retailers have yet to pass on recent wholesale price
hikes of 40-60cts gal that have hit some markets in the wake
of record cold temperatures.

Wholesale prices for many fuels reached all time record
levels in the northeast on Friday, as oil suppliers and
marketers scrambled to find oil to deliver to end-users in
the region. Wholesale prices for heating oil at supply
points in New England, for example, soared to over $1.25
gal, an increase of more than 50cts gal in less than ten
days. These prices are four times the value they fetched in
markets exactly one year ago.

Homeowners and commercial buyers who paid well under $1.00
gal for their heating oil just a month ago now face retail
costs of $1.50-$1.75 gal. Heating oil retailers typically
have little inventory and must immediately pass wholesale
increases on to their customers.

The surge isn't limited to heating oil, however. Diesel
fuel prices have soared to similar wholesale price levels as
suppliers in Winter-ravaged states have opted to put fuel
normally sold for over-the-road purposes into the heating
oil supply pool. Diesel truckstops, service stations, and
fleet centers in the Northeast saw increases of 25-40cts gal
over a three day period this week. Even areas far removed
from the Northeast saw stiff price hikes of 5-15cts gal
during the week as the oil industry struggled to keep the
distribution system moving smoothly in the face of brisk
demand and low stocks.

Stiff retail diesel prices will rear their heads before the
month is over. OPIS' Retail Pricing Director Fred Rozell
cited a nationwide retail average of $1.37 gal for diesel,
up less than 1cts gal since January 1. If prices merely
catch up with the wholesale trends, some markets could face
increases of well over 25cts gal.

In Connecticut and Massachusetts, for example, the average
price for diesel stood at $1.39 gal on January 21. Retailers
replacing those gallons faced a cost of over $1.60 gal
heading into the weekend.

Jet fuel cost increases were even more drastic. Airlines
which could buy fuel for under 75cts gal just a month ago
saw aviation fuel costs soar to $1.30-$1.35 gal by Friday at
major airports in New York, Newark, Boston, and
Philadelphia. Like diesel fuel and heating oil, these costs
are about four times higher than what was commonplace a year
ago.

What's ahead? OPIS Publisher Tom Kloza warned that the
supply shortfall in the Northeast might not ease until
February. "Refiners and traders are racing to get fuel to
the market, but the system may not be comfortable for two
weeks or more.

Until then, look for price spikes and tremendous
volatility," Kloza added.

With more wild price moves expected, OPIS has extended a
free e-mail bulletin service that updates suppliers,
marketers, and end-users on price swings nationwide. Sign up
for free OPIS PRICE WATCH ALERTS at http://www.opisnet.com.

OPIS Energy Group analyzes oil prices and trends for the
petroleum and transportation industries throughout North
America. The company tracks wholesale and retail prices for
gasoline and diesel fuel, crude oil, refined products,
feedstocks, and LP-Gas. This year alone, more than 100
billion gallons of fuel will be purchased pegged to the OPIS
Price Index.
RossL
Number Six - G7 meeting

I haven't been "shuffling down this path" with SDRer so I don't have an guess. The WSJ has an entirely different story on page 2 this morning. Here's a quote:

"The meeting came at a time of relative calm in the global economy. The financial crisis that spread around the world more than two years ago has now passed."
Number Six
RossL
LOL! what a complete joke the WSJ is. How embarrassing for them to publish such crap.

Currency = dollar?

Icons = ABX? BB's? The FED [LOL!}
The Invisible Hand
FOA's Overview -> HOF
FOA's four part Overview frees me of the duty of having to cut 'n past the material of his many posts. The rephrasing of some of the issues dealt with in old posts also helps my simple mind to finally understand those posts.
I second its nomination for the HOF, it being understood that if more parts follow, as announced, they will be added.
ORO
Summers - G7 - SDRer
Summers is the Fall Guy.

When the time comes, whether or not he is at fault, his head will roll. He is the culmination of 3 generations of economists in the "excuses for government action" tradition (as opposed to scientific study). Remember that for the academic economist the government is defined as "that which provides research grants".

From the WSJ article:
"With the U.S. economy growing at nearly 4% a year for the last three years, unemployment minimal and inflation apparently in check, Mr. Summers was in a good position to brag about American economic doctrine: flexible labor markets, deregulation, a budget surplus and openness to foreign trade, among other things."

Talk about asking for a slap in the face. No EU or Japanese company of significance has ever structured financial reporting on such fraudulent notions as those leading the markets in the US. The people he was talking to know that.

Considering that the US debt led prosperity of today is largely a result of the G7 ex US doing their best to prop the dollar for over a decade, I would say that if the officials had their way emotionally, the dollar would now be trading at 5 to the Euro and Summer's head would have been used for Arsenal's next Soccer game.

Watch Pt - it has blown upwards.

SDRer tracks the interbank quotations that are used to settle derivatives trades (e.g. determining how much nargin one bank owes another) and to translate currencies from one to the other for the purpose of squaring the books. One of the main mechanisms needed to have the system floating is to have one of the transnational currencies - SDR, Au, Pt, Pd fixed in all currencies at the same exchange values so that cycling from one currency to another there is no significant arbitrage opportunity to multiply money.

The presence of spreads larger than 0.02% (0.1-0.2% total spread) justify borrowing funds in order to make use of the pricing discrepancies (0.02% not considring fees and bi/ask spreads which are much higher than 0.02% - usually at 0.1-0.2%). These are only open to banks. If banks had not closed these loops, that is a sign of weakness in the settlement system - or a sign of special accomodation for somebody, which in itself is a sign of distress.

A $1 hole in the pricing of gold as allocated account or paper acount (through pricing in other currencies) is something to drive a truck through.

As FOA and Another indicated, the gold backing for the Euro would become the major support for the currency in the event of a derivatives disaster - notably the expected destruction of the paper gold markets.

SDRer's posts with the details that put him on "red allert"

Date: Sat Jan 22 2000 22:20
SDRer (Quiet Saturday? i don't tink so�) ID#290172:
Copyright � 1999 SDRer/Kitco Inc. All rights reserved
Interbank--Oanda

1/21/00
1 Gold ( oz. ) = 284.113 ECU || 289.000 US Dollar
1/22/00
1 Gold ( oz. ) = 286.946 ECU|| 289.500 [everybody up]

Silver
1/21/00
1 Silver ( oz. ) = 5.1416 ECU || 5.200 US Dollar
1/22/00
1 Silver ( oz. ) = 5.1740 ECU || 5.2200 US Dollar

Platinum
1/21/00
1 Platinum ( oz. ) = 438.459 ECU || 1 Platinum ( oz. ) = 446.000 US Dollar
1/22/00
1 Platinum ( oz. ) = 445.039 ECU || 1 Platinum ( oz. ) = 449.000 US Dollar

Palladium
1/21/00
1 Palladium ( oz. ) = 439.632 ECU || 1 Palladium ( oz. ) = 445.000 US Dollar
1/22/00
1 Palladium ( oz. ) = 447.011 ECU || 1 Palladium ( oz. ) = 454.700 US Dollar

Lordy. Off to cram this stuff in the db. bbl

Date: Sun Jan 23 2000 12:30
SDRer (To:Aurator[holder of JPY gold currency account]& Earl/Erle[holders of EUR gold currency accounts) ID#286249:

Gentlemen: It is my pleasant duty to inform you that present circumstances mark this time-frame as an opportune time to activate your gold currency accounts.

[1] Aurator's JPY gold currency account 1/22/2000 offers a premium of $1.0769016 per ounce of gold over the fiat/paper gold account.

[2] Earl/Erle's Euro gold currency account offers a premium of $00.9437890000 per ounce of gold over the fiat/paper gold account.

Thank you for doing business with the new world monetary order. Happy shopping.



Date: Sat Jan 22 2000 11:04
SDRer (...the vicissitudes of ether assets... ) ID#286249:
Copyright � 1999 SDRer/Kitco Inc. All rights reserved
To the list of "cleaning fiats" we now must add some USD pegged currencies, that are now ( if only we might 'trade' in SDR ) profit making points. Shift some electrons between peg and pegged and
voil�!

Since December 28, 1999
The USD/SDR has been frozen-
USD United States Dollars: 0.727268/1.37501 [more on this later]

However
One finds interesting movement in currencies pegged to the USD
e.g.,
1/12/200-- ARP Argentina Pesos: 0.730923/1.36813
1/12/2000-- BMD Bermuda Dollars: 0.732395/1.36538

One 1/13/2000 the electrons could flow back to NY at parity.
A veritable feast of...uh...well...investment income? GOSH. U can't play that game with gold, where an ounce is an ounce. A is A. {:- )



Jon
Fraudulent CPI % increases
If the Govt is indeed manipulating increases to keep them as low as possible, would that not give rise to a massive class action suit on behalf of Soc. Sec. recipients, whose benefits are tied to the CPI? Any lawyers out there?
TownCrier
Today's Market Report: Gold traders brace for tomorrow's auction...up or down?
Market Report (1/24/00): The yellow metal was bounced around a bit in overnight trading, with U.S. selling in early London trade cited for a brief dip toward $286 before being lifted again on short covering. Selling pressure re-emerged when the New York markets opened, retesting the early London low. As we fetch this over to the server the spot price is hovering near $286.80. Trading is largely expected to remain rangebound, with all eyes on tomorrow's auction of 25 tonnes of the precious metal by the Bank of England on behalf of HM Treasury. This auction is to be conducted as the three before it, with an 11:30 am London Time deadline for bid submissions from eligible bidders -- LBMA members, central banks, and other international monetary institutions holding gold accounts at the Bank of England. Until results of the auction are announced by 12:15 pm London Time, market participants are said to be staying on the sidelines, worried about the possibility of a knee-jerk reaction to the outcome. To date, each of the previous auctions have been followed by significant price movements. Few are apparently willing to predict whether this possible break from gold's narrow January trading range will be to the upside or to the downside. However, Standard Bank of London reports that U.S. funds have been gold buyers over the past week, which might point to their expectation of prices breaking higher following the auction. Standard notes, "The outcome is (as ever) difficult to call but with metal prices generally firm, and oil prices at 9-year highs the prospect for a break above $290 looks good."

There was plenty of interest in last week's release of the International Trade report by the U.S. Department of Commerce, notably from the sharp rise in gold demanded by our trading partners. November gold exports from the U.S. totaled $1.008 Billion, up from $400 million in October. That increase in gold exported single-handedly matched the $0.6 billion increase witnessed in our overall export levels for November.

That's it for today. We'll know the auction outcome by this time tomorrow...stay tuned.
TownCrier
Fed continues to add reserves to banking system
http://biz.yahoo.com/rf/000124/u6.htmlWith the current two-week reserve maintenance period terminating on Wednesday, the demand for funds remain. Following Friday's coupon pass in which the Fed added permanent reserves, today the Fed said temporary reserves were added with overnight repurchase agreements totaling $5.5 billion.
Broken Oak
November Gold export figures
Let's see here. $1008 million divided by average price of $285 times 31.104 grams per ounce divided by 1x10^6 to give tonnes = 110 tonnes exported in November alone from the USA. Past years net exports 92@149 tonnes, 93@582 toones, 94@281 tonnes, 95@221 tonnes, 96@311 tonnes, 97@268 tonnes, 98@120 tonnes.

Looks like 99 will be a banner year for net exportation of gold from the USA.
Cavan Man
Invisible HaND
That is the three required: you, myself and PH in LA.

Got to run.......
Knallgold
@canamami
Sorry my late response.
You have very interesting political thoughts'some things already evolve in this direction here in Europe,look at those "socialist-capitalists" like Blair,Schr�der,or Leuenberger and Dreifuss in Switzerland.And if you think their political actions to the end,you have to conclude that their goal is to socialice the health industry!

But back to the SNB topic:I received this statement through GATA,and it was that short.This confused me also.I was just totally surprised to read of a "small window of opportunity" as they always claimed to sell in small tranches over a very long period (10 years).Somehow it sounds like an emergency has developed in the last half year.

As for the possible reasons, the " belief that gold will soon lose its monetary function" as you called it would certainly be logic, but absolutely make no sense now in the face of the WA (1."GOLD will remain...")

And there are no political developements that would delay the sales.We had already elections (last October),and there is absolutely no sign of a referend.Even if there would be one held, the SNB can't hurry up with the sale to circumvent it.They just have to wait until end of March when the legislation comes into force.

Their only fear could be that the market breaks loose very soon and that this could initiate the referendum.But besides this, the SNB has all the time of the world to proceed with the sales after the end of March.

Are they also still part of of the manipulation and try to calm down the market together with the US etc.? It wouldn't fit with FOA's scenario ,but not be in conflict with the WA as the sale is part of it and the time of the sales wasn't fixed in it.

Or do they tell us simply the new Gold market will come as early as this spring (FOA)?

And it would imply that the 2000t of the WA are used up much sooner and we could see a free POG already this year, not disturbed by any sales.

But to tell the truth, I am totally clueless on their statement, it is a mystery.
beesting
Asking for Statistics on U.S. Gold Production.
Sir TownCrier,
Have you came across any statistics on annual U.S. Gold Mining production, in your cyberspace travels?
If so,how much has been exported from annual total production in the past,and how much has been used for domestic consumption?
We know the U.S. Mint set a new record in Gold sales for 1999, over 63 tonnes.
How much is consumed in Jewlery,Dental,and other in the U.S.,anybody know???

Almost unbelievable to me that Gold was the highest dollar export item from the U.S. the last part of 1999.
Sir TownCrier--Thanks in Advance.....beesting.
beesting
Broken Oak, didn't see your post before I posted.
We must be thinking along the same lines,aye.....beesting.
Cage Rattler
Currency Arbitrage
My two bits - as a currency trader, I would be extremely surprised to see currency arbitrage opportunities as described below. All of us in the trade have looked for these "sure bets" but have yet to find any in practice. If you follow the various currencies in realtime, you'll notice they adjust instantaneously. However, quoting services that use end-of-day data or average data for a day may well produce discrepancies that don't actually exist in reality.
nickel62
Finding data on gold production from Gold Fields Mineral Services
http://www.gfms.co.uk/index.htmlThis is the web site of Gold Fields Mineral Services but I don't know if you have to be a subscriber to get the information you want. Give it a try. Maybe someone else could give some insight.
JA
Stranger
http://www.mcalvany.com/b2/Thanks for the compliment. However, I have decided I am really more of a visiting observer than a poster. I never considered myself as adding much value to the discussions. I do still frequent this site often. And it is nice to have you back.

The above link was posted at worldnetdaily.com which claims to be one of the most popular sites on the internet. I don't know whether that is based on number of hits or some popularity voting. Anyway I thought the article covered an interesting summary of some of the monetary expansion numbers.
TownCrier
Sir bessting...
It seems from your comment (along with those of some others) that there has been a bit of misunderstanding of the information conveyed regarding the November trade report. Specifically, you said, "Almost unbelievable to me that Gold was the highest dollar export item from the U.S. the last part of 1999."

What we had was gold as the undisputed leader among the exports in that its increase over the previous month blew everything else away by a wide margin. It was not, in itself, the "highest dollar export item."

From Saturday's post, of the various exports categorized as "Industrial Supplies and Materials," (which totaled $13.86 billion in November) items sub-classified as "Chemicals-organic" were exported in the amount of $1.341 billion, which was down $0.117 billion from the October level of $1.458 billion. Our export leader falls under the general category of "Capital Goods, Except Automotive," sub-classified as "Semiconductors." Our November export of semiconductors was $4.309 billion, up $0.413 billion over October. Next in line were Computer Accessories exports of $3.033 billion (down $8 million) and telecommunications equipment exported at a level of $2.229 billion (up $0.249 billion). The entire broad category of "Auto, Vehicles, Parts and Engines" were exported at a level of $6.249 billion in November, down $62 million from October.

But taken all together, there are not many sub-classifications that approach the $1 billion mark, so gold was indeed among the top exports. Its $0.6 billion increase is utterly without equal...the big class of semiconductors and telecommunications being the only ones to come anywhere close.

Consider this final thought. Although the gold exports totaled $1.008 billion, are trading partners were still left holding $26.5 billion in excess cash from our trade imbalance. When you consider the laundry list of available products that we have to offer, gold stands as an obvious choice to absorb this balance of payments if they have already purchased all the goods they need.

We'll be anxiously awaiting the December trade report...
Golden Truth
Technical Analyis on GOLD.
http://futures.tradingcharts.com/chart/GD/20If anyone is interested in technical analyis in a controlled GOLD market. This is a free site and has lots of good info on different commodities.
While your there check out the T/A on crude Oil, hint- Long Term: The market is EXTREMELY BULLISH.
G.T
SteveH
markets
Dow down over 200, Nasdaq down over 100. LT bond up, gold down slightly, Platinum up big, palladium too.
Chicklets
Test
test
Golden Truth
The Final Spike?
http://contraryinvestor.com/mo.htmU.S CURRENCY creation way up! check out the report above.
G.T
Golden Truth
DOW DOWN!
DOW now down 317 points, look out below!
Hello GOLD!
G.T
fox
fox
not bad indeed



Breaking News Sport Technology Special Reports News Roundup




netAssets news
Harmony profit leaps 112.5%
The SA gold mine lifted production by 1.7% to 11,000kg and announced it would pay an interim dividend of 50c. Hilton Shone reports


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

The Harmony gold mining company saw cash operating profit leap 112.5% to $17m (R103m) from $8m (R51m) for the quarter ended December 31 1999. Production was up 1.7% to 11,000kg.
The company has declared an interim dividend of 8 US cents (50 SA cents).

During the period the gold price received slipped to $282/oz from $315 at the beginning of the quarter.

However, the average selling price was $297/oz (R58,375/kg)compared with $264/oz (R51,688/kg) for the previous quarter. Earnings rose 44.4% to 13 US cents (82 SA cents) from 9 US cents (56 SA cents) while cash costs rose 4.4% to R48,992/kg ($249/oz) compared with R46,945/kg ($240/oz).

Chief executive Bernard Swanepoel said the increased gold price on unhedged Harmony's results was dramatic and had enabled the company to declare the interim divided. "We expect to deliver a performance similar to our achievement during the last six months and will continue to be a consistent dividend payer," Swanepoel said.

Hilton Shone, I-Net Bridge

24-1-2000















� I-Net Bridge (Pty)Ltd
Disclaimer



ORO
Stock plunge
One week late. Er..one trading day late? And also three weeks early?

The options expiration should have had something to do with this.
Often, the call sellers were delta hedging by buying up shares. The day after expiration, the market is sometimes unprepared to buy the stock (expiration of the options on the Friday before, and settlement on Saturday). This is often the sign of liquidity lacking. Because of the hard turn on the bond, and the recent drain of liquidity by the Fed, I would say that delta hedgers have been liquidating during the runup because of the higher interest rates. Last time this hapened in a big way was in July and Aug 1998. This is not "in a big way" (yet).

Cage Rattler - didn't make any sense to me either, at first. But averages are important for the interbank settlements system, particularly for the IMF and BIS - where national accounts come together for settlement. They do not take the close, just as the stock deals with warrants and mergers do not take their cues from market closes but from averages of ranges of trading over more than one day, sometimes of weeks. The size of the transactions does not permit their conclusion on a last trade basis - simply too volatile to settle trades of 5% of global GDP per day.
TownCrier
"Housekeeping" announcement
http://www.usagold.com/january.pdfMK asked us over here in The Tower to please call to the attention of the Round Table the following information:

This is nothing new to anyone who has visited the HomePage recently, but the rest of you may like to know that in the interest of serving you better you may now direct your e-mail inquiries in one of two ways.

For product and order information:
contact USAGOLD / Centennial Precious Metals at cpm@usagold.com (or call 800/869-5115)

For website questions and comments:
contact our sitemaster at sitemaster@usagold.com

For those of you who discovered that your e-mail servers may have compressed your latest version of the News & Views newsletter, you may download it directly to your computer as a .pdf file by clicking on the link above.
TownCrier
Continental Drift May Erode U.K. Euro Reluctance
http://quote.bloomberg.com/pgcgi.cgi?T=markets_newsfeat99.ht=&ptitle=EMU%20Top%20Stories&touch=1&s=1c89fe3f17110caf59dcb7dc83c52381"As the national pride attached to currencies dissolves, Britain may find use of the euro drifts over from continental Europe in subtle and irresistible ways, subverting the U.K.'s reluctance to join the common currency." So says Mark Gilbert in his commentary for Bloomberg.

This is a very good snapshot of the world at large, using each other's currencies in whichever manner they find to suit them best. Of course, this also means they can reject a currency too...the obvious problem which threatens the dollar.
CoBra(too)
On Short Notice!
With the pace of MK's Site we may not be able to cool the sparkling Moet in time, NO Equivalent - not Moet, really!- Not in time, so ALL get ready to toast TO our host - Sorry MK - Caps to all and "TO" seemed necessary!

Here's to bubbles ... Cheers to USAGOLD!
... and thank you for your ongoing efforts - CB2

PS-Brown Palace will hold a chilled bottle of bubbly after
millenium in your name!


ORO
Carnage for the day
NASDAQ 100 -4.9%, -6% from new all time high

NASDAQ composite -3.4%, -4.6% from new all time high

Russel 2000 -2%, -3.7% from new high

SP500 -2.7%, -3.8% from day high, down 5.1% from all time high Jan 14th.


Dow -2.2%, -3.1% from day high, down 6.4% from all time high Jan 14th.


Some biggus 'thickus stocks

Symbol Name Capitalization, $B Price ProPE 1-Dy % change % Change from 52 wk Hi Loss $B today Loss $B from 52 wk hi
(MSFT) MICROSOFT CORP 535 1 101 54 -2.5 -15.1 -13 -81
(GE) GENERAL ELEC CO 472 2 138 39 -4.2 -13.4 -20 -63
(CSCO) CISCO SYS INC 380 3 109 91 -5.4 -5.4 -21 -21
(INTC) INTEL CORP 327 4 99 37 0.8 -4.2 3 -14
(WMT) WAL MART STORES INC 278 5 59 44 -5.9 -15.4 -16 -43
(IBM) INTERNATIONAL BUSINESS MACHS 219 6 118 28 -2.9 -14.4 -6 -32
(XOM) EXXON MOBIL CORP 206 7 84 26 -0.9 -2.6 -2 -5
(C) CITIGROUP INC 190 8 55 18 -2 -7.5 -4 -14
(ORCL) ORACLE CORP 170 9 54 42 -9.3 -9.3 -16 -16
(MRK) MERCK & CO INC 169 10 70 26 -3.4 -19 -6 -32
(T) AT&T CORP 166 11 51 23 -2.9 -20.2 -5 -34
(KO) COCA COLA CO 165 12 65 44 -2.9 -7.9 -5 -13
(LU) LUCENT TECHNOLOGIES INC 162 13 53 29 0.5 -35.6 1 -58
(TM) TOYOTA MTR CORP 161 14 87 42 1.2 -10.8 2 -17
(AIG) AMERICAN INTL GROUP INC 161 15 102 28 -2.5 -11.1 -4 -18
(SBC) SBC COMMUNICATIONS INC 147 16 41 19 -3.8 -30.1 -6 -44
(AOL) AMERICA ONLINE INC 145 17 62 138 -4.6 -34.3 -7 -50
(NT) NORTEL NETWORKS CORP 139 18 100 78 -2.1 -7.8 -3 -11
(HD) HOME DEPOT INC 138 19 58 47 -4.8 -17 -7 -23
(PFE) PFIZER INC 136 20 34 35 -2.4 -31.6 -3 -43
(PG) PROCTER & GAMBLE CO 135 21 103 28 0.4 -12.5 1 -17
(SUNW) SUN MICROSYSTEMS INC 132 22 79 76 -6.3 -8.6 -8 -11
(JNJ) JOHNSON & JOHNSON 125 23 84 27 -6.9 -21.2 -9 -26
(EMC) E M C CORP MASS 123 24 114 86 -6.1 -6.1 -8 -8
(BMY) BRISTOL MYERS SQUIBB CO 121 25 59 26 -4.3 -24.9 -5 -30
(WCOM) MCI WORLDCOM INC 118 26 41 21 -2 -36.8 -2 -43
(TWX) TIME WARNER INC 117 27 88 132 -3.6 -4.8 -4 -6
(HWP) HEWLETT PACKARD CO 115 28 114 28 0 -3.7 0 -4
(DELL) DELL COMPUTER CORP 112 29 42 43 -5.1 -23.5 -6 -26
(QCOM) QUALCOMM INC 102 30 140 75 -9.7 -21.9 -10 -22
(SNE) SONY CORP 96 31 233 94 -0.7 -19.6 -1 -19
(BEL) BELL ATLANTIC CORP 93 32 60 18 0.1 -13.5 0 -13
(YHOO) YAHOO INC 93 33 324 503 -7.6 -31.6 -7 -29
(BLS) BELLSOUTH CORP 89 34 46 21 -2.4 -9.6 -2 -9
(MOT) MOTOROLA INC 88 35 139 47 -3.5 -7.7 -3 -7
(TXN) TEXAS INSTRS INC 88 36 109 51 -0.8 -2.6 -1 -2
(JDSU) JDS UNIPHASE CORP 81 37 216 231 -7.4 -9.6 -6 -8
(UPS) UNITED PARCEL SVC INC 81 38 66 29 -1.6
Total 6378 -3 -14 -208 -911
Foreign Big Caps
(TMX) TELEFONOS DE MEXICO S A 299 111 17 -2.3 -7 -7 -21
(NTT) NIPPON TELEG & TEL CORP 232 72 77 -1.6 -22.3 -4 -52
(NOK) NOKIA CORP 224 180 66 -4.3 -7.3 -10 -16
(DT) DEUTSCHE TELEKOM AG 186 64 88 -5.5 -11.5 -10 -21
(BPA) BP AMOCO P L C 182 56 23 -0.5 -9.7 -1 -18
(FTE) FRANCE TELECOM 131 128 46 0 -5 0 -7
(ERICY) ERICSSON L M TEL CO 130 68 60 1.4 -0.5 2 -1
(BTY) BRITISH TELECOMMUNICATNS PLC 129 198 31 -0.3 -18.9 0 -24
(RD) ROYAL DUTCH PETE CO 128 59 23 -1.6 -11.3 -2 -14
(HBC) HSBC HLDGS PLC 99 60 16 0.7 -16.6 1 -17
(GLX) GLAXO WELLCOME PLC 98 52 27 -3.7 -26.2 -4 -26
(VOD) VODAFONE AIRTOUCH PLC 87 55 52 -1.8 -5.3 -2 -5



lamprey_65
Strategic Petroleum Reserve
Senator Charles Schumer of N.Y. and other New England legislators are calling for the President to announce withdrawals from the strategic petroleum reserves so as to "break OPEC".

Now, living in N.H., I understand the political need for these guys to look like they are doing something -- the spike in heating oil is really causing concern up here. There problem is, I don't see this working.

Say we announce a drawdown from reserves...100,000 or more barrels a day. OPEC is going to see this as a real threat (they survived $10 oil and said enough was enough). They would most probably just say, "fine, you take oil out of the reserves, and we'll match by cutting AT LEAST AS MUCH"

Yep, we're spoiled babies here in the U.S. We love it when we get cheap commodities from around the world at their expense, can't stand it if we have to anty up some cash for others' hard work. Hmm, wonder if that analogy also applies to the working poor within our own country.

Lamprey
TownCrier
If History's Any Guide, G-7 Concern About Strong Yen Won't Help Japan Much
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=d88846c1f6fb510ac444d1b001176034...but Japan has certainly been helping to prop up the U.S. dollar. In the past year the Bank of Japan has acted on behalf of the Japanese Finance Ministry to sell $70 billion worth of yen into the foreign exchange markets, using the yen to buy dollars more often than not.

Japan's fight to keep the yen weak against the dollar will likely remain their own private battle. US SecTreas Summers said within days of succeeding Robert Rubin that Japan shouldn't be focusing on currency manipulation. And similarly, German Finance Minister Hans Eichel said, "You can achieve very little with intervention against markets." As such, the ECB has itself been maintaining a diligent hands-off policy on forex intervention with regard to the euro's cross currency valuation.
Hipplebeck
(No Subject)
If I were Japanese, I would buy gold
TownCrier
G-7 Statement on Yen May Tie Hayami's Hands; More Japanese Spending Seen
http://quote.bloomberg.com/fgcgi.cgi?ptitle=U.S.%20Economy&s1=blk&tp=ad_topright_econ&T=markets_fgcgi_content99.ht&s2=blk&bt=blk&s=bce6c85bc869ef46cb3da1c093c6242bDespite Japan's efforts to the contrary, the yen still rose against the dollar last year by 10.8%. How far might the dollar fall if Japan throws in the towel?

This article gives a fairly good overview of the Japanese government's motivation to curb the yen. There goes your notion of a free, unmanipulated market right out the window. You'd better believe it happens in paper...that's the appeal (or the curse, depending on your perspective.)
beesting
110 tonnes of Gold.
Sir TownCrier,
Thanks for setting me right on understanding better the Nov.1999 import/export figures released.You're a good man sir T.C.
If anyones interested,lets discuss that news release some more,as usual my head is still spinning.
Accepting Sir Broken Oaks # 23520 figure; 110 tonnes of Gold exported as accurate,thats a tremendous amount. That amount doesn't include domestic new sales consumption for Nov.1999.
We know from figures released by the U.S. Mint, new Gold coin sales averages a little over 5 tonnes per month, although Nov.1999 was a down month.
Lets take a wild Guess-ti-mate, and say only 5 tonnes(probably a very low figure)more of Gold is used monthly in the U.S for everything else.
So, with these Guess-ti-mates 110+5+5=120 tonnes of U.S. Gold was sold in Nov.1999. If we multipied 12 months times 120 tonnes=1440 tonnes annually, this figure is NOT realistic! So lets knock 40 tonnes a month off of our above Guess-ti-mate figure. 80 times 12 = 960 tonnes.
If the whole world produces approx. 2500 tonnes annually(WGC figures) that would mean the U.S. produces 38% of total world production. THEY DON'T!! Some-things wrong!!
South Africa is rated number one Gold producer in the world, and if I remember right they only produce 20% of world consumption.(500 tonnes = about 20%)I Maybe way off on these figures,they don't come out right???

Lets try to figure together what "non-monetary Gold" means again.
From Sir TownCriers # 23433 Sat.22,2000 post:
This Export Adjustment Includes:
Gold exports,non-monetary-This addition is made for Gold that is purchased by Foreign Official Agencies from private dealers in the U.S. and held at the Federal Reserve Bank of New York. The census data only includes Gold that leaves the Customs territory.

Question;If 110 tonnes of Gold(4 times more than the BOE sales) was sold in the U.S. in Nov. 1999, why didn't someone on the Gold forums hear about it?? Why didn't the "Spot" price reflect a huge demand?? Was this a delivery on previously promised Gold off market??
Private Dealers in that amount of Gold(110 tonnes) could only mean Bullion Banks or Gold Mining Companies.

Could Gold Non-Monetary mean paper Gold??
A promise by a Gold mine or whoever to deliver 110 tonnes of Gold sometime in the future???
I may be way off base here but, please think about the amount exported(110 tonnes), and ask yourself what happened?
Could the buyer be an oil producing country trading dollars received for oil, for Gold???
Too many unanswered questions, we need more transparency in the Gold market! FWIW....beesting.


Al Fulchino
lamprey_65 (1/24/2000; 15:36:43MDT - Msg ID:23540)
I didn't realize you are new to New Hampshire. If you already know this, then excuse me. You can pre-buy your heating oil from most suppliers up here. I.E. I locked in mine at 72 cents a gallon back in August. You choose the amount you want and if price goes down you pay the lower amount. If it goes up as it is now, you simply draw down what you need as the locked in price. Come spring, most of the companies credit your account or send you a check if you so desire. Hope that helps, if you were not aware .
canamami
Release Time for BOE Results
Does anyone know the release time (E.S.T.) for the BOE auction results?
TownCrier
Sir canamami, auction info from this morning's daily report...
" This auction is to be conducted as the three before it, with an 11:30 am London Time deadline for bid submissions from eligible bidders -- LBMA members, central banks, and other international monetary institutions holding gold accounts at the Bank of England. Until results of the auction are announced by 12:15 pm London Time..."
lamprey_65
Al Fulchino
Yes, thanks. I was more concerned about my grandparents...they are on a pay as you go plan and I tried to explain why buying in the summer is better (they just moved back up here...they lived here about ten years ago but went south for the winters then). I guess now they'll realize what I was talking about :-(

Lamprey
canamami
Reply to Town Crier
Town Crier,

Thank You.

canamami
TownCrier
Forgot to add your requested EST translation at the end...
Subtract 5 hours.
RossL
beesting

You said:
"Question;If 110 tonnes of Gold(4 times more than the BOE sales) was sold in the U.S. in Nov. 1999, why didn't someone on the Gold forums hear about it?? Why didn't the "Spot" price reflect a huge demand?? Was this a delivery on previously promised Gold off market??"

The spot price traded above $298 on Nov. 25th and was sold down to about $276 by Dec. 6th... If I remember correctly, that dip was blamed on the Dutch bank selling a few tons. Other than that, spot price stayed in a $10 range in November.

This is just conjecture, but I don't think it's realistic to attribute 100 or 50 tons to jewelry sales. Somebody in the USA with a lot of gold in their vault could have sold to depress the price for Y2K, or, to bail out some distressed shorts.

Possibly they could have just hit the spot market with a few tons here and there to feed the demand. My question is: how long can "they" keep the price depressed by dumping more vault gold on the market? Who has tens of millions of ounces or more?

Why are the Swiss in a hurry to sell their gold? Is there a time limit for their share of the Washington Agreement sales? Or are they worried about a short going into default and causing a panic?
R Powell
Mr. beesting
Maybe the large movement of gold whether physical or on paper was from central banks to central banks and thus no consequential price movement on the published gold quotes. Also, remember that Warren Buffet bought about 89 million ounces of silver before a threatened lawsuit forced him to reveal himself. He eventually took 129 million ounces and shipped them to the London warehouses where they can enjoy some privacy. However, I'm not suggesting I wouldn't love to find out not only how much gold was taken but also Who took it? Buffet took physical silver. He managed to buy slowly for,I belive, the better part of half a year before he was discovered and when he was the POSilver did indeed move. That's all I can contribute now.
GD
TheStranger, Peter Asher, Solomon Weaver, All
Thanks for your generous responses to last nights post. I wish I could have stayed awake to respond at that time.

I should have included in my post that my current portfolio is very conservative. The last 5 years I have been accumulating PMs(20% net worth=NW), PM mining shares (10% NW), and cash (20% NW). My current real estate holdings are 25%NW and 401k is 20% NW. I have been holding back on any major purchases for 5 years in anticipation of y2k and the coming crash. Still kicking myself for not jumping into general equities like the sheeple.(smile)

Solomon Weaver: I agree that real estate is over priced, especially in the Detro-metro area. Rising at 6-10% a year. I can also envision picking up some great deals if the scenarios postulated here come to pass. The conundrum is that it may still take a couple more years. I'm beginning to think that all of the cash that I have squirreled away may become worthless if the dollar tanks or inflation takes off. I think there will be a lag until real estate prices drop due to unemployment and mortgage defauts. By then my cash has evaporated. That is why I'm considering sticking it into a bigger home at today's inflated prices. Under a dollar crash scenario/or hyper inflation my PMs should be able to cover the mortgage. Thoughts?

PeterAsher: your 22:49 is right on for the 2008-2011 timeframe when the boomers start to retire and move into smaller houses. As far as energy consumption, I would build a solar home if possible, but it doesn't make much sense yet in Michigan. I would try wind as well but still to costly. Maybe not so in the years to come. Also, this larger home may act as a safe haven for other family members who don't have the same type of financial resouces as I. Especially if predictions at the forum come to pass.

TheStranger: Your 21:48- My strategy has been that this period of prosperity have been a time to "save for a rainy day", hence my portfolio mix stated above. I figure that in good times I have a six-figure income with more to come, and if the USD goes the way of the buggy whip then my hedge strategy should keep my family safe. Your thoughts on the above?
-------
With what lies on our horizon, if you want to do something, is it the lesser of two evils to Mortage asset purchases with other peoples money and put the excess cash and liquid assets into inflation/dollar crash hedges --or-- just bite the bullet and use these liquid assets and pay for over-valued non-performing assets ie new car and house?
Therein lies the question.

Your thoughts requested.

Thanks

GD
TownCrier
Thoughts for Sir beesting
"Could Gold Non-Monetary mean paper Gold?"

Not likely. As posted on Friday and Saturday in responses to this issue, think of nonmonetary gold as the government's term for making the distinction that the gold in question is not from the source that occupies the books of the Treasury or Fed. It would come from miners, refiners, and from households.

But then you ask, "A promise by a Gold mine or whoever to deliver 110 tonnes of Gold sometime in the future?"

Yes, some of this exported gold could in fact be the payment of obligations to overseas counterparties that took the delivery side of a gold loan (they fronted the cash the miner was seeking.)

You asked, "If 110 tonnes of Gold(4 times more than the BOE sales) was sold in the U.S. in Nov. 1999, why didn't someone on the Gold forums hear about it?"

Someone DID hear about it...everyone at USAGOLD did . I felt it was important to pass along for general consideration, and clearly the information has fueled some thought and raised some eyebrows. I win some, I lose some. This time it would appear that the news did get noticed.

You: "Why didn't the "Spot" price reflect a huge demand?? Was this a delivery on previously promised Gold off market?"

You and I provided part of the answer...some of this gold might have been previously "promised" (payment obligation on gold loans.) Further, please recall that the "spot" prices are largely a mathematical derivative of the derivatives market (the gold commodities futures) which adjusts the price to remove the future cost of funds and the future cost of metal (i.e. interest rates on dollars and lease rates on gold.) As long as those will metal are willing to offer it up at the price derived by the paper trade, there are many value-minded people who will continue to take all that they offer with a smile.

The point to be gained from the footnote to the data is that we really don't know how much more gold was purchase, but fails to show up in the data because it didn't leave our shores through customs...only it's title of ownership changed hands while the gold sits well guarded at the FRBNY. If you think about it, its not much different than you buying gold from MK and opting for Swiss storage...he makes the buy on your behalf with the gold that is already available IN Switzerland. It changes ownership, but doesn't pass through customs...and therefore not an export.
Bonedaddy
Lamprey, you made my day!
So, Ol' Chuck Schumer's going to break OPEC with the Strategic Pertoleum Reserve? I doubt OPEC could hold out more than a week! Go get 'em Chuck! ;) (Maybe when he's done with OPEC he can confiscate all the assualt rifles in the Rocky Mountains.) Let's sic him on the topic of GOLD manipulation. I love it when he gets righteously indignant, his nostrils kind of flare. What a man.
R Powell
Town Crier, Cage Rattler, Forum
Town Crier has stated that the Japanesse are fighting to support the dollar (keep the yen weak). Your opinions please. Will they succeed? Also how big a "correction" (downtrend) in the market is needed to hurt the dollar? I believe it may be an exodus of foreign investment from our market that finally shows the "buy the dips" investors how painful a severe bear market can be. What will be the pin to burst the bubble? A falling dollar, rising oil prices (inflation), an overheard comment from Abby Cohen? Will a failing Dow average sink the dollar or a dollar decline sink the DOW? There was talk (CNCB) today about a small flight to quality from stocks to bonds. How painful before the flight turns to gold? So many questions-- so little knowledge. Don't worry, I have a day job. Thanks to all.
Peter Asher
GD
Some answersto the questions you are raising are, I think, a bit off topic; but I can answer you at peterasher@earthlink.net
lamprey_65
Town Crier, et al
http://www.bankofengland.co.uk./goldauctnot003.pdf#xml=http://www.bankofengland.co.uk/cgi-bin/pdf_hl.pl?STEMMER=en&RGB=ff00ff&WORDS=gold+auction+&DB=WebSite-Full&URL=/goldauctnot003.pdfHope the link above takes...it's pdf format (acrobat) - from BOE's site and gives the particulars of tomorrow's auction. Notice that payment is to be made to BOE's account AT THE NY FED! So, I take this as meaning that the FED is holding the gold auctioned in their international vault. Now my question...those 25 tons auctioned in November should not have shown up on U.S. trade numbers -- right?

Regardless, it is interesting where payment is to be made.

Lamprey
ORO
The Flight to Quality pattern
Usually has the following (closing of the barn door after the horse is gone) sequence of jumping from one pan to the next and then to the fire....

Stocks, high powered growth at unspeakable (or knowable) valuations,

Transition to "safe" stocks, drugs, food, utilities,

Then flight to steady high dividend stocks, and commercial bonds,

Following this or concurrently, movement into government bonds- particularly if there is worry of deflation/credit market lock-up.

When fear is more inflationary, the money moves to real goods and resource stocks as well (gold too) and short term bonds

Finally, there is a move into gold once interest rates on govie bonds is "too low" - gold stocks perform well AFTER gold prices rise in a deflationary fear environment, and BEFORE POG rises in an inflationary fear. Gold is alwaays the last stop for money to park. Usually, it is not bought in the physical form but as futures (no different from a bond actually)
R Powell
ORO Flight to quality pattern
Thanks. We should be able to see it happening with your signposts. When and if it occurs please remind us as I for one would like to see the events unfold and while I'm watching, perhaps make a few bucks. I find they often come in handy. If I were reading a book these signposts would be underlined.
Peter Asher
ORO (1/24/2000; 18:52:13MDT - Msg ID:23559)
Sometimes less is moreThanks for a straight and simple sequence of events. Helps put the conceptual ducks all in a row
RossL
Chart of the Week
http://www.investech.com/
James Stack doesn't think the recent bounce in the DJ Utilities is a flight to quality.
GD
re:peter asher
Hi Peter,
Thanks for the offer. I've taken you up on it. Please watch for an email.
I didn't want to take to discussions off the path. Just wanted to figure out how to use this "golden knowledge" for day-to-day finances.

GD
TheStranger
The End Game
I sent a note to a concerned friend this evening and thought I might share this excerpt with the room:

"what has pulled gold stocks back
down again is tomorrow's scheduled sale of gold (by the Bank of England) of
another 25 tons. Probably that will have concluded successfully before you
read this, and we will already be seeing some renewed buying. Let's hope
so, anyway.
The stock and bond markets are being spooked by the first real threat
of recovering inflation in about two decades. You and I have been awaiting
this for over a year, but most investors are just starting to come around to
seeing it now. All broadly based commodity indices have risen 25% or more
since last February. Oil alone is up more than 170%. Unemployment is at
levels which historically have led to large wage demands. The trade deficit
last week came in above $26 billion, meaning that Americans are now shipping
excess dollars overseas at an incredible annual rate of 300 billion. As
this money piles up in foreign banks, it puts downward pressure on the
dollar and, thereby, upward pressure on U.S. import prices. In short, just
about all the inflation signals I predicted a year ago are now happening,
all that is, except for the big gold rally.
Gold has been held back by three factors, in my opinion, all of which
are VERY temporary. One was the false impression on the part of the
investing public that inflation was dead. The second is the erroneous
notion that central banks are dumping more gold than the market can absorb.
And the third is the effort on the part of bullion bankers to hold the price
of gold down long enough for their customers who are short (ala Cambior) to
extricate themselves. But I believe all of these factors are about to come
to a head very shortly.
Going forward, you own Barrick, Newmont, the Morgan Stanley Natural
Resources Fund and ExxonMobil, all of which should be prime beneficiaries of
this developing inflation picture that I see. If I am wrong, you will have
every right to be disgusted. But, if I am right, we should have a pretty
good year. Meanwhile, I note that January has not turned out well for the
stock market so far, so I think signs for us are fairly encouraging."

The Stranger
TheStranger
koan
Good luck with those telecom stocks, koan. You may have more bears after you than you realize.
TheStranger
JA
Thanks for an interesting link, JA. I meant what I said about wanting to see you more. Don't stay away so long.
lamprey_65
Every little bit helps
Bridge News:

Kazakh central bank says will support gold industry
Almaty, Kazakhstan--Jan 24--The National Bank of Kazakhstan plans to support the republic's gold mining industry in boosting its forex/gold reserves, an
official with the NBK said Monday. He said the bank plans to arrange a US $5-million syndicated loan to one of the country's largest producers, Balkhash. (Story .19109)

Chris Powell
Greenspan says other central banks attack gold, not his
http://www.egroups.com/group/gata/346.html?Federal Reserve Chairman Alan Greenspan has
replied directly to GATA and seems to admit
that there's a conspiracy against gold, but
one that doesn't include the Fed.
Farfel
The KITCO Brain Drain Continues
Sorry to use your forum Michael but there's some pompous idiot over at KITCO (named WHO CARES?) who posts one piece of idiocy after another and never seems to get a compelling response.

Well, I volunteer.

For one thing, he contends that gas prices must rise to 3.00 a gallon in order to have the same negative impact that the gas price rises had back in the Seventies (utilizing the logic that cumulative inflation in both wages and prices over the past twenty years RAISES the threshold of pain).

Of course, such a statement assumes that we live in a vacuum. No consideration is given to the fact that debt per capita levels have exploded this decade so that even gas prices at 2.00 a gallon have much more impact upon the debt ridden US consumer.

Nor is any consideration given to the fact that over 50% of all cars sold today are SUV's, averaging only 10-12 miles per gallon. Quite a change from the Seventies, huh? Where did all those little toyotas and volkswagens vanish? Any increases in gas prices again have much more severe impact today than back in the Seventies.

Moreover, the US goods deficit has exacerbated significantly since the Seventies (with the US importing increasing amounts of oil); so any price hike in oil is much more of a negative on the astronomical current account deficit, and of course, the higher the deficit, the more certain a dollar devaluation is looming just around the corner when the US government can no longer maintain US Dollar reserve currency status.

The litany of stupidity purveyed by Mr. Who Cares is endless, but this latest donation demanded a response.

Thanks

F*

koan
Hi Stranger
Check out the CNDX it was the only mkt up today. Canadian junior techs have been really good, especially wireless. I am already starting to take profits and move them back into the metals. Those bears won't get me, I have been careful of them for many years. Its always a pleasure to see your posts Stranger. PS just for fun Stranger check out NNM, GI and NHC on the CNDX exchange - I bought a lot of them in the .50 range. MOMO puppies on silicon investor can verify that - I posted it. Cheers my friend.
she-gold
confusion or deception
http://www.egroups.com/group/gata/346.html?am i confused?

Greenspan is quoted in his letter to Senator Lieberman:

"the Federal Reserve does not, either
on its own behalf or on behalf of others, including
OTHER GOVERNMENT AGENCIES, lend gold or silver,
facilitate the lending of gold and silver, or trade in
any securities, such as futures contracts and call and
put options, involving gold and silver."

Does not Greenspan imply here that the Fed is a government agency? ( which it of course is not )


ORO
The Stranger - the sneaky ways of the market obscure weaknesses
The Stranger, I liked your last post, but would like to interject a little comment.

In your letter, you wrote that the dollars were flowing out of the US and causing price inflation. The dollars go overseas because the people overseas are in debt and need the dollars to repay their creditors. Their creditors are largely EU and to some extent US and Japanese banks and funds. The point here is that there is a dollar shortage of sorts created by Euro debt issuance taking over dollar debt issuance's market share.
The current near equality in lending volumes in the foreign currency and debt markets between these two currencies is increasing the Euro availability, while starving the world of ne dollar issuance that is necessary to create the money to pay the interest on old dollar debt (...that Jack built). This causes Eurodollar rates to rise and forces the Fed to keep US based dollar liquidity growing. This also forces up dollar interest rates while increasing the monetary base. The net effect is that the US borrowing expands by leaps and bounds, and the need for US dollars to roll over debts from dollars to Euro is maintained so long as the process continues. The dollar debts rolled over into Euro debts cause dollars to be "extinguished" as dollar pricipal is replaced with Euro principal, both the dollars and the debt (the bank liabilities and the assets) are erased from the bank ledgers. In the case of dollar bonds, including Brady bonds, the bonds are payed off, and the asset disappears from the lender's books, and he has nothing to do with it but stick the dollars in a US bank or otherwize lend within the US (since much of the new overseas borrowing is done in Euro instead of dollars).

When this becomes price inflationary is when Yellin's process of reverberant doubt starts developing in earnest(like the OPEC people raising prices because of US dollar over issuance and London gold paper explosions decrease the potential long term value of the papers of both variety). As large dollar recipients throw out their excess holdings back into the markets that stack up as their prices are raised, the effects will start showing up in the dollar prices of other goods as the funds get recycled into the US and the higher oil price percolates into general pricing.

Once the volume of Euro interest payments exceed the rate of dollar debt conversion into Euro debt, the fresh dollars exported from the US through the trade deficit will stop the dollar from appreciating any further against the Euro. Since the Fed fills up the liquidity eaten up by the Euro with no visible compunctions, it will contnue cycling through the economy at greater volumes and will raise prices futher. This spread of both dollar supply and oil price inflations will eventually be perceived to be signs of "inlation" and will start eroding confidence in the dollar's value. It is only at this point that the old overissuance of dollars will culminate in a "quicker than you think" revaluation of it in the foreign markets and then more slowly within the US.
ORO
The Stranger - the sneaky ways of the market obscure weaknesses
The Stranger, I liked your last post, but would like to interject a little comment.

In your letter, you wrote that the dollars were flowing out of the US and causing price inflation. The dollars go overseas because the people overseas are in debt and need the dollars to repay their creditors. Their creditors are largely EU and to some extent US and Japanese banks and funds. The point here is that there is a dollar shortage of sorts created by Euro debt issuance taking over dollar debt issuance's market share.
The current near equality in lending volumes in the foreign currency and debt markets between these two currencies is increasing the Euro availability, while starving the world of ne dollar issuance that is necessary to create the money to pay the interest on old dollar debt (...that Jack built). This causes Eurodollar rates to rise and forces the Fed to keep US based dollar liquidity growing. This also forces up dollar interest rates while increasing the monetary base. The net effect is that the US borrowing expands by leaps and bounds, and the need for US dollars to roll over debts from dollars to Euro is maintained so long as the process continues. The dollar debts rolled over into Euro debts cause dollars to be "extinguished" as dollar pricipal is replaced with Euro principal, both the dollars and the debt (the bank liabilities and the assets) are erased from the bank ledgers. In the case of dollar bonds, including Brady bonds, the bonds are payed off, and the asset disappears from the lender's books, and he has nothing to do with it but stick the dollars in a US bank or otherwize lend within the US (since much of the new overseas borrowing is done in Euro instead of dollars).

When this becomes price inflationary is when Yellin's process of reverberant doubt starts developing in earnest(like the OPEC people raising prices because of US dollar over issuance and London gold paper explosions decrease the potential long term value of the papers of both variety). As large dollar recipients throw out their excess holdings back into the markets that stack up as their prices are raised, the effects will start showing up in the dollar prices of other goods as the funds get recycled into the US and the higher oil price percolates into general pricing.

Once the volume of Euro interest payments exceed the rate of dollar debt conversion into Euro debt, the fresh dollars exported from the US through the trade deficit will stop the dollar from appreciating any further against the Euro. Since the Fed fills up the liquidity eaten up by the Euro with no visible compunctions, it will contnue cycling through the economy at greater volumes and will raise prices futher. This spread of both dollar supply and oil price inflations will eventually be perceived to be signs of "inlation" and will start eroding confidence in the dollar's value. It is only at this point that the old overissuance of dollars will culminate in a "quicker than you think" revaluation of it in the foreign markets and then more slowly within the US.

The main thrust of currency devaluation for a reserve currency can only occur after a substantial period of piling up of reserves and must have a fundumental trigger of the sort supplied by the break with gold backing, and the two oil shocks (or the present one). This revaluation of dollars would continue even past the point at which new dollar supply no longer reaches the markets. At this point, the prices really get going. To get a feel for this, see the German Reichsmark disaster, and how long it took from the time of over issuance to the currency's destruction (see gilded opinion article for details).
TownCrier
Sir lamprey_65, your Msg 23588
Your comments:
"Notice that payment is to be made to BOE's account AT THE NY FED! So, I take this as meaning that the FED is holding the gold auctioned in their international vault."

Actually, the truth is a pale disappointment compared to your more lively and interesting speculation. In truth, all U.S. funds ultimately clear through the Federal Reserve Bank of New York, so proper and effecient protocol would ensure that the payment for the gold (which is to be bid in U.S. dollars) are directly cycled to the FRBNY to ensure that the "check" doesn't bounce. And the gold's location? Behind the third heavy door on the left at the Bank of England, London, England, Europe, Earth, Solar System, Milky Way 90210.
TownCrier
The GOLDEN VIEW from The Tower
Tough day for the stock indices. The DOW lost ground for the fifth straight day, finishing down 243.5 points (-2.16%). The Nasdaq composite shed 139.3 (-3.29%), its third biggest point loss on record volume that was just 10.7 million shares shy of the Two Billion mark. Ed Nicoski, chief market strategist at U.S. Bancorp Piper Jaffray, offered these sobering words to TheStreet.com: "There's no major portion of the market portfolio managers can put their money in and feel comfortable about. There just isn't any leadership except tech, and that can only go so far without breaking or causing the rest of the market to take a break." He suggested that that these market leaders (tech and biotech) were on shaky ground, and "at some point they're going to get hurt real bad and harder than the rest of the market," adding that he still felt they represented "long-term leadership" but that investors should also have some cash on hand in anticipation of an extremely volatile year.

Spot gold prices last quoted in NY were $287.20, down $1.40, while the February gold futures on COMEX settled down $1.60 at $288.10. Trading continued to be subdued as market participants chose to await the results of Tuesday's BOE gold auction (expected by12:15 pm London Time) before taking additional action. David Meger, senior metals analyst with Alaron Trading, told Bridge News, "COMEX gold was dead. There's no other word for it. We saw some nervous longs and some liquidation, but it was very thin trade." He said he didn't expect the market to move significantly as a result of the auction because previous sell-offs were the result of speculative longs who sold on their subsequent disappointment. While not expecting prices to jump sharply higher, either, Meger said, "I think it will continue to see the slow rally that we've been seeing, but it will be in no hurry."

Looking at the day's vautl action, the 900 ounces of Registered gold that left the COMEX vaults last Friday each found a dancing partner and returned today (...except for one ounce failing to find a date and apparently too embarassed to show his face.) The 899 ounces checked in with their dates, raising the Registered stock by 1,798 to 1,216,352 ounces in total (112,168 of those are listed as Eligible inventory.)

Turning to the realm of central banking, the Bank of Canada released its weekly statement of official international reserves for the close of business on January 23rd. Once again, Canada sold none of their gold assets, but based upon their weekly revaluation, these assets rose $9 million over the previous week to $520 million.

Staying with the big banks for just a bit longer, the National Bank of Kazakhstan gave gold an official "vote of confidence" as it announced plans to boost its forex/gold reserves through intentions to arrange a $5 million loan to support Balkhash, one of the republic's largest gold producers.

OIL

Venezuela oil minister Ali Rodriguez has attributed the recent run-up in oil prices to speculators. That being the case, it should come as no surprise that what the traders create, the traders can also wisk away, which they did today. Profit taking on NYMEX heating oil futures dropped the price by 7.75%, taking crude down with it. March crude ended down 37� at $27.83 per barrel. Rodriguez was likely building the case that OPEC's plan for conservative supply agreements is not to be blamed for the surge, and that they are ultimately intent upon price stability...a common theme echoed often throughout the OPEC membership, Mexico too. Adding some caution to the traders' activities today was news that two U.S. senators are pushing the administration harder to tap into the nation's Strategic Petroleum Reserve. But the White House reiterated its position (as indicated by Bill Richardson a month ago?) that "the SPR is not intended to be used as a lever to influence oil prices," as reported by FWN, but that $30 per barrel could bring this about.

And that's the view from here...after the close.
Jason Happy
Being specific
http://www.cal-neva.com/frb/fedsupr.htmIt seems to me that GATA's questions for Alan Greenspan were not nearly specific enough, and thus, allowed AG to be evasive.

Greenspan:
"Question 9 asks whether the Federal Reserve ever owns
or deals in derivatives that are connected with
precious metals and whether any other agencies write
call options against the Federal Reserve's gold
holdings. The answer to Question 9 is no; in
particular, the Federal Reserve has no gold holdings,
as noted above."

Perhaps the Federal Reserve Corporation has no gold
holdings. And maybe not even the private Corporations that
are the shareholders of the Fed Reserve. And maybe not
even the corporations that own the corporations that own
the Fed own gold. But, at some point, you arrive at people
who do own gold, who own the corporations, who own the
corporations, who control the fed, who controls the U.S.
policy.

The real question should be: Who are all the shareholders
of the private corporation known as the Federal Reserve,
and how did they obtain the legal power they now wield?

http://www.cal-neva.com/frb/fedsupr.htm
SteveH
POG
Feb gold up 2.40 at $291.

LT bond yield rising.
SteveH
Peter, Gandalf, Stranger, Aragorn, Aristotle, JA, all...
Feb gold still rising, lt bond still falling. Ode of an oversubscription in London? Praytel?
dragonfly
Farfel #23569
And also the reality that so many folks live so much farther from work nowadays than back in the 70's. My co-workers are starting to really worry as some live 50 plus miles away.
apdchief
BOE Auction
price 289.50
4.3x oversubscribed
The Invisible Hand
There we go!
Journeyman
Who owns the Federal Reserve? @She-gold "confusion or deception"

Sometimes the level of skulduggery, the BIG LIE, etc., makes
it difficult to believe the truth. Greenspan usually tells
the truth when he can, but sometimes I guess he forgets as
well. So- - - -

Repost from Oct. 18, 1999:

You've probably been assuming your whole life, when you
thought of it, that the "Federal Reserve" was a government
agency of some sort. As hard as this may be for you to
believe, despite the misdirective use of the word "Federal"
in it's name, it is not. It is, in fact, an agglomeration
of privately owned banks which work hand in glove with the
Federal Government. -L.Reichard White, "MONEY,"
(Brownsville, Penna: WhiteINK 1997)

.....The bankers have also been able to deceive the
American people into believing that a Federal Reserve
Bank is a government institution, when in fact, each
one is privately owned. If you want to see for
yourself, look in the government pages of a phone book
in a large city such as Los Angeles or San Francisco.
[A city where there is a Federal Reserve branch bank. -
LRW] You will not find any Federal Reserve Bank listed
in the government pages. But you will find a Federal
Reserve Bank listed in the white pages, just like any
other privately owned corporate entity. The Ninth
Circuit Court of Appeals also confirms the fact of
private ownership.
.....Each Federal Reserve Bank is a separate
corporation owned by commercial banks in its
region. -_Lewis v. United States_, 680 F.2d 1239,
1241 (1982). -Otto Skinner, _The Biggest 'Tax
Loophole' of All_, (San Pedro, CA: Otto U. Skinner
1997) p. 163

Here is an idea of who owns the Federal Reserve from _The
Economic Rape of America_ by Fredrick Mann, p21:

*WHO OWNS THE FEDERAL RESERVE?*

There has been much speculation about who owns the
Federal Reserve Corporation. It has been one of the
best kept secrets of the century, because the Federal
Reserve Act of 1913 provided that the names of the
owner banks be kept secret. However, R. E. McMaster
publisher of the newsletter _The Reaper_, asked his
Swiss banking contacts which banks hold the controlling
stock in the Federal Reserve Corporation. The answer:

1. Rothschild Banks of London and Berlin

2. Lazard Brothers Bank of Paris

3. Israel Moses Sieff Banks of Italy

4. Warburg Bank of Hamburg and Amsterdam

5. Lehman Brothers Bank of New York

6. Kuhn Loeb Bank of New York

7. Chase Manhattan Bank of New York

8. Goldman Sachs Bank of New York

In _The Secrets Of The Federal Reserve_, Eustace
Mullins indicates that, because the Federal Reserve
Bank of New York sets interest rates and controls the
daily supply and price of currency throughout the U.S.,
the owners of that bank are the real directors of the
entire system. Mullins states:

"The shareholders of these banks which own the
stock of the Federal Reserve Bank of New York are
the people who have controlled our political and
economic destinies since 1914. They are the
Rothschilds, Lazard Freres (Eugene Mayer), Israel
Sieff, Kuhn Loeb Company, Warburg Company, Lehman
Brothers, Goldman Sachs. the Rockefeller family,
and the J.P. Morgan interests."

Regards, J.

P.S. TheStranger. Durn!! Was about to post the
Kudlow/Greenspan question thing --- then I read Oro on your
comments yesterday, and I've got to redo it AGAIN!! (It's
the presentation of the background that's taking the time.
It's turned into a major dissertation. Think I'll have to
split it off.)
Goldfly
Journeyman - Au Contraire
http://www.usagold.com/FederalReserve.html"The question of ownership can still be addressed, however, by examining the legal rules for acquisition of such stock. The Federal Reserve Act requires national banks and participating state banks to purchase shares of their regional Federal Reserve Bank upon joining the System, thereby becoming "member banks" (12 USCA 282). Since the eight banks Mullins named all operate within the New York Federal Reserve district, and are all nationally chartered
banks, they are required to be shareholders of the New York Federal Reserve Bank. They are also probably the major shareholders as Mullins claimed."
Journeyman
Goldfly Re: Journeyman Au Contrair
Thanx, I needed that!

Excellent link! Didn't know that was there. Next time I post "Who Owns Fed," I'll leave the Eustace Mullins quot off.

However as to the main shareholders, I'm not sure Dr. Flaherty's observation that ~"it's difficult to determine who the shareholders are" disqualifies the list suggested by R.E. McMaster. Have to think about that one.

I also want to check-up on the good doctor's assertion that most of the FED's profit goes back to the treasury. This doesn't jibe with the FED keeping the seignoriage from paper money -- of course this is just a small snapshot of the FED/US Government interaction.

The main point of the post, however, was that the Federal Reserve System is NOT a branch of government, and if it were, it would defeat the excuse for it's existence, which is to take control of the issuance of money out of the hands of governments, which as the U.S. Congress continually re-proves, is at best totally inept at controlling spending, and thus less fit to control money supply than even the bankers.

Thanx again, goldfly!

Regards, J.
TheStranger
ORO, koan, Journeyman, Town Crier
Marvelous post! You have illuminated euro weakness and the Fed's dollar monetary expansion all in one short post. I may not know who you are Mr. ORO, but you certainly have my attention. If you are right about this (and I believe you are) then I suspect we will see no significant dip in U.S. money aggregates over the near term, causing many who were keying their forecasts off of y2k to scratch their heads. I apologize if you have explained this before and I somehow missed it.

I don't mean to ask miracles, but do you have a time frame for this process in mind? My meter is running.

**********

Nice work, koan! I am glad at least one of the knights has been cleaning up lately. Keep it up!

**********

Journeyman - I await your opus with great interest!

**********

Townie - for the umpteenth time, thanks for all the digging you do. Please be assured, you are a valuable resource to a lot of people.
Peter Asher
History article
http://deseretnews.com:80/dn/view/0,1249,150006933,00.html?Excerpt >>> Digging near Victoria, Australia, they found an exceptional
nugget. It weighed nearly 150 pounds, the largest single gold
nugget ever found. It was a happy, unexpected discovery for
them, so they named the nugget "Welcome Stranger." <<<<
TownCrier
Daily Market Report: Pick a direction...
Market Report (1/25/00): As we go to fetch this over to the server, the spot price is holding at $287.30, about a dollar above yesterday's NY levels at this time.... There are times when actions defy an explanation. This is one of those times. By most accounts, the gold market was poised to enjoy higher prices in the wake of today's 25-tonne auction by the Bank of England. The stage was set yesterday when speculative selling weakened the price into the NY session, recovering somewhat on what Standard Bank described as "good buying interest from the physical sector as Middle East operators used the price dip to cover 'unfixed positions'." Ahead of the 11:30 GMT auction deadline, the London a.m. gold fix was $288.70, up from yesterday's afternoon fix at $287.20. November's aucton was "only" two-times oversubsucribed (isn't simple full-subscription enough?) and the market's response was to trade gold $20 lower in the wake of that auction. According to Reuters, market analysts expected this auction to attract reduced interest. However, when the results of the closed bidding were released at 12:15 p.m. GMT, the auction was seen to be 4.3-times oversubscribed with the gold allocated to all accepted bids at $289.50 per ounce--a price higher than the spot prices leading up to the auction.

All considered, it leaves a rational person grasping for any reasonable explanations why selling pressure emerged as soon as the New York session opened, quickly dropping the price more than two dollars toward $287. The only item to point to was the release of the European Central Bank's weekly financial statement, revealing that the Dutch central bank's on-going program of gold placement through the BIS had last week moved another 23 tonnes. (This reduced the ECB's total gold assets by 208 million euros to 116.304 billion euros.) Yet in other central bank news, the National Bank of Kazakhstan gave gold an official "vote of confidence." Bridge News reported that the bank announced plans to boost its forex/gold reserves through intentions to arrange a loan to support one of the republic's largest gold producers.

And speaking of producers, South African miners were said to be standing back during this latest BOE auction after having been successful bidders in prior offerings, using the gold to unwind their hedge positions. AngloGold Marketing Director Kelvin Williams told Reuters that the company may or may not participate, but while it had been a useful mechanism for producers, "maybe its usefulness is declining now," adding that he saw a "firmness" to the gold market. A Gold Fields spokesman said their hedges had been restructured to their satisfaction using gold purchased in the past, and they had no intentions of bidding. Meanwhile, Harmony Chief Executive Bernard Swanepoel said, "I don't think mining companies belong at auctions...I think our job is to produce gold at a profit and not get involved in price-setting mechanisms." Makes you think the 4.3-times auction oversubscription should mean that much more, right?

That's it for today, goldmeisters. We'll see you here tomorrow.
Twice Discipled
Gold vs. "golden" - Important Msg for ALL
ok folks, I must admit that when I went to Wal-Mart and Sam's club over lunch and they gave me some "golden" colored $1 coin, I got a sick feeling. First of all the cashier said to the man in front of me "Would you like a gold coin as change?" His reponse ... "I wouldn't know what to do with it."
I smell a great big rat!
What a wonderful way for the value associated with gold to be even further eroded than to mint a "golden" coin which only has $1 value.
We have a lot of education to do if we do not want our GOLD coins associated with the value of these "golden" coins. And secondly, to teach people the difference.
TownCrier
Suggestion for Sir Twice Discipled
Those of us here in The Tower have decided to refer to them as "brassy" coins, or as the "brassy" dollar. Maybe the good knights and ladies at this round table will find that to be a suitable alternative to the prevailing vernacular. And it might prove to be a good conversation starter among your friends...a chance to make the distinction that they are not, in fact, GOLD coins. Its all about education...which begins with awareness.
lamprey_65
Our New "Brassy" Dollar
Yes, much education is needed. I must admit, most will never "get it"...the metal composition in the coin is worth much less than a dollar.

The new coin creates confusion, but initially the color was simply a way to distinguish it from the quarter and half dollar. Unfortunately, the term "golden" was chosen to enhance acceptance after the failed Susan B. Anthony (what a disaster that was and a terrible design to boot!). Remember, this is mainly about the vending lobby and Treasury trying to save some money with a coin instead of the short-lived dollar bill).

Lamprey
Solomon Weaver
golden brassy
Twice Discipled (1/25/2000; 11:36:38MDT - Msg ID:23588)
Gold vs. "golden" - Important Msg for ALL
---
once a gold disciple and yet a golden disciple....

My dear Sir TD,

All power to all of us to get the brassy awareness contrasted to the golden awareness. But beyond our friends, we will have a hard time to educate Americans.

The very fact that these coins are called "golden" and are also money is perhaps a help to our cause...paper never even pretended to be real gold. Now we have a coin that is in the same category as costume jewelry.

Now we need to lobby for a five dollar coin???

I still believe that if gold really returns to the monetary environment, its price per gram will be so high that most brassy coin users will hardly afford to buy one...and silver will become the poor man's gold....

Poor old Solomon
TownCrier
London metal report from Reuters
http://biz.yahoo.com/rf/000125/0k.htmlAfter earlier indications by AngloGold Marketing Director Kelvin Williams, (he said, "Going into (Tuesday's) auction we may or may not decide to take some metal from the auction. I think it's a good mechanism for producers at the moment, but I think maybe its usefulness is declining now,"--300,000 ounces of gold purchased at the third auction was used by Anglogold to unwind hedges) it was confirmed later today by Anglogold that they did in fact make an additional purchase of gold at this auction. They said it amounted to less than 10 percent of what was offered.

One trader said, "Producers should not be in the business of buying gold, they should be in the business of selling it." We took a poll here in The Tower and decided that was a novel idea. In that trader's equation, where do we see any element of MINING? Only selling?? If a miner is only in the business of selling gold (as many hedge funds have been,) then it only stands to reason that they will have to be in the business of buying it on occasion, also. Now, this isn't to suggest that Anglogold doesn't mine the precious metal...it is only to remind that silly trader that a point can be reached where it is more attractive for a miner to purchase the gold it has already sold (forward) than it is to extract it from the ground. In a perfect world, mines wouldn't sell any gold, but would only pay it out as dividends...leaving it up to the indivdual shareholders to sell or not to sell it for currency.

Combining the realization that this 25 tonnes, along with the 23 tonnes of Dutch gold, have combined within a week's time span to feed the need for physical metal, the small waver in prices following the Dutch news on the heels of the auction should be seen as positve for the true legs under the gold market. Can the stock and financial markets boast of such a sturdy foundation?
el St.One
New Junk Coin
T C Or anyone

What is the composition of the coin?

Is the Tone surface only or blended into the slugs?

As a closet collector I hope it passes the vinegar test, then again if it does not pass the test there will be a whole lot of multi toned coins, which even more people will refuse to carry.

Thanks............el
onlychild
Brass dollar & Wal-mart
Twice Discipled, Yours is not an isolated case. Apparently Wal-Mart is being used as a distribution network for these silly things. A co-worker of mine had exactly the same experience at a Wal-Mart in Raymore Mo. this morning. The cashier asked him if he would like a "gold" dollar in his change. More than a coincidence? Hey, if Wal-Mart says it's gold, who is to doubt it. After all, we buy it hook line and sinker when they spout off "Bring it home to the USA" Yeah, right! Bring it home from China that is! OC
TownCrier
WGC PRESS RELEASE: UK less able to withstand economic shocks
http://www.gold.org/Gra/Pr/Gf000125.htmGold auctions further weaken UK reserve position

LONDON: Tuesday, 25 January 2000 - Britain will be less able to withstand the effects of international economic shocks following the sale today of a further 25 tonnes of its gold reserves at a price of $289.50, said the World Gold Council.

The series of auctions - today's auction is the fourth in a series of five - has reduced the UK's gold reserves by 100 tonnes since July and achieved little but a further weakening of the country's overall reserve position, said the Council.

"This still seems to us to be an incredibly foolhardy action, based upon a complacent assumption that the 'good times' will stay indefinitely," said Miss Haruko Fukuda, chief executive of the World Gold Council. "On the face of it the UK's economy is sound, and growing without strong inflationary pressures, and it is easy to forget the problems of the past."

She said that the world had seen only recently in several countries, such as Taiwan, Indonesia and Korea - the 'Tiger' economies of the Far East - how economic fortunes can quickly change and the US, Britain and Europe are not immune to such problems.

"Prudence dictates that in an uncertain world the UK should hold a significant proportion of its reserves in an asset which is not in thrall to the vagaries of economic policy-making in Brussels or politics in the United States," said Miss Fukuda. "Only gold possesses that unique authority - it is the only monetary asset which is not someone else's liability. Our national gold reserves are the one pillar of economic strength that lie beyond the capricious whims of politicians and bureaucrats."

After the next sale in March a total of 125 tonnes will have been auctioned and the proportion in the UK's total reserves held in gold will be down to about 15% - the same level as that currently held by the European Central Bank.

"At that level we believe it is time to call a stop to these sales," said Miss Fukuda. Even at that point the UK will have significantly less gold than many of the major G8 countries and several of its European Union partners. The European Central Bank has committed itself to holding 15 per cent of its gross reserves in gold. Countries of comparable economic importance in the EU, such as France, Germany and Italy, have gold reserves far greater than those of the UK, and have said they will continue to maintain them at those levels.

"If the UK Treasury continues with its plan to sell a total of 415 tonnes the UK will be reduced to having just 7 per cent of its gross reserves in gold and in a global economic context such a sale unwisely yields a hostage to fortune.

"The government appears to have forgotten that in times of economic uncertainty, both during inflation and recession, gold provides the lodestar of dependability. Instead of selling, the government should be taking advantage of the relatively low historic price of gold to build up the country's gold reserves to a level in line with some of our EU partners," added Miss Fukuda.
End
--------
Click the link to see the associated table of national gold and forex holdings.
lamprey_65
Link to the U.S. Mint - info on the new dollar
http://www.usmint.gov/GoldenDollar/Even the link irritates me!
TownCrier
Excellent! Miss Fukuda, CEO of the World Gold Council, sure has a wonderful way with words.
Bask for a moment in the warmth of these...

"Prudence dictates that in an uncertain world the UK should hold a significant proportion of its reserves in an asset which is not in thrall to the vagaries of economic policy-making in Brussels or politics in the United States. Only gold possesses that unique authority -- it is the only monetary asset which is not someone else's liability. Our national gold reserves are the one pillar of economic strength that lie beyond the capricious whims of politicians and bureaucrats."

And in The Tower we are of the belief that what she says is true of the nation, also holds true for the individual...

"The government appears to have forgotten that in times of economic uncertainty, both during inflation and recession, gold provides the lodestar of dependability. Instead of selling, the government should be taking advantage of the relatively low historic price of gold to build up the country's gold reserves to a level in line with some of our EU partners."
Gandalf the White
Do you SEE ?
The Hobbits have been discussing the BoE auction at US$289+ and the COMEX spot close today at US$286+ and concluded that most folks will not see that the PHYSICAL gold from the BoE is worth about US$3 more than the paper gold of the COMEX.
<;-)
Gandalf the White
Brassy $ composition!
Physical Composition

The beautiful new coin features distinguishing traits including: a golden color, extra-wide border, smooth edge like the nickel's, and specially designed alloy.

Specifically, the Golden Dollar is: 8.1 grams in weight, 2 mm thick, and 26.5 mm in diameter.

The coin's physical makeup is a three-layer composite construction - pure copper sandwiched between and metallurgically bonded to outer layers of manganese brass. This alloy is a golden-colored material composed of:

77% copper
12% zinc
7% manganese
4% nickel.

Including the copper core, the Golden Dollar's overall composition is:

88.5% copper
6.0% zinc
3.5% manganese
4% nickel
====
<;-)
Gandalf the White
Suggested NEW name for the Brassy $
Like the folks in the Great White North have a "Loony" -- maybe the USA should have a "Sac" ?
<;-)
ORO
Interesting note - GOLDFAX repost from RESOLUTE
Date: Mon Jan 24 2000 21:47
resolute () ID#40778:
Copyright � 1999 resolute/Kitco Inc. All rights reserved
However, notwithstanding the above, the market is likely to trend higher over the next 2 months. There is growing
pressure from the IMF members and especially from Germany to allow the price of gold to increase to between $500
and $600 where it would find a long-term equilibrium. IMF still intends to continue its program of off-market gold
revaluation. The head if IMF, Michael Camdessus has suggested that the IMF, and the countries it is trying to help,
would be much better off if the price of gold were allowed to rise to its current equilibrium which is variously
calculated at between $575 and $600 ( see earlier issues of GOLDFAX ) . At this price, IMF would be able to have
almost twice the amount of funds available for highly indebted nations assistance program for the same amount of
gold allocated to revaluation program.

Michael Camdessus has further suggested last week that IMF is working to increase by as much as three times the
amount of gold already "pledged" to the revaluation program.

The revaluation process works by allowing IMF to sell a quantity of gold at the day's market prices to a country
which has a loan to be repaid on the same date. The gold is immediately returned to IMF as repayment of the loan.
The amount of gold held by IMF remains unchanged but the value of the gold changes from the "book entry" valuation
of less than $50 to almost $300 ( if that is the price of gold on the day ) . The IMF retains the amount equal to the
"book entry" value of gold in its reserves and transfers the remaining amount to the indebted countries support fund.

If IMF were to allocate three times the current amount earmarked for the program, the stakes would suddenly go up.
Doubling of the gold price from 300 to 600 and tripling the amount of gold would mean that IMF would have six times
as much money as it has now at its disposal to be spent on heavily indebted country assistance.

German central bankers have expressed to me privately similar opinions to Mr Camdessus,. They have even gone as
far as to suggest that central banks should stay out of the gold lending business altogether. This would push gold
leasing rates to around 15-20% in the short run and to 4-5% pa in the long run. The short term effect would be a
massive buy back program by miners and hedge funds which would drive prices up by around $100-$110. The
long term effect would be a total disappearance of forward premium which miners receive at present when selling
gold forward.

Consequently, with substantial disincentives to selling forward more gold than is absolutely necessary only bona fide
hedging would be undertaken to even-out the cash flows over the life of each project. It would also force the hedge
funds out of the gold borrowing sector, thus reducing market distortions arising out of the selling activities of hedge
funds in the bullion market.

As a result, the price of gold would become more volatile in the short term, but less volatile in the medium and long
term with prices approximating much more closely the balance between supply ( mine and scrap ) and demand. The
price of $600/oz would allow the reopening of most mines that are currently unprofitable and would thus reduce the
unemployment and the welfare expenditure in poor gold producing nations. This in turn would allow these countries
to begin to rely to greater extent on their own sources of funds for infrastructure projects rather than forcing them to
look to IMF and the World Bank for handouts.

In my opinion, this proposal has a lot of merit. Although it could lead to short term instability in financial markets in
OECD countries and higher developed country inflation in the medium term, overall it would stimulate non-OECD
economies and provide broader and more mature market for services and goods produced by OECD based
enterprises.

Notwithstanding the moral and ethical merits of this proposal, it would also have long term beneficial economic
consequences not just for the developing nations but also for US and its key trading partners. The present situation
provides for an uneven development curve which benefits greatly mature economies to the disadvantage of developing
ones.

This changing attitude of the official sector is showing up in the gold trading patterns. Fewer hedge funds and large
speculators are willing to hold net short positions in the gold market. Most of their sold futures and forwards are now
protected by bought call options, so if the market falls they will make some money. But if it rallies, they will be
protected from major losses. They are also gradually closing out long term forwards and replacing them with
short-term futures and forwards.

This change signals the beginning of an end of the declining gold price era. In my personal opinion, we will see gold
prices moving above $300 by the end of the quarter, possibly even within next few weeks. If the current trading
patterns are an indication of the nervousness of large traders and the general uncertainty in the gold market, then we
could have short covering rally develop in the next few trading session.

The technical picture is rather negative, so a major rally would be surprising from this perspective. However, if we
concentrate on fundamentals, the market is in a great shape. The gold auction constitutes around 2% of average
trading volume in London. Becoming concerned about the volume of the gold offered at auction is as unrealistic as
becoming worried that the turnover in a particular stock has gone up from 100 Mln to 102 Mln shares per day.
Hence, the desire of some parties to create a positive market sentiment by sending "dummy" bids to increase the
ratio of oversubscriptions has to be seen as little less than what it is. An exercise in generating positive "press" for
gold.

We will know tomorrow afternoon how the auction has turned out. But if the current market situation is anything to go
by, we should expect that regardless of immediate market reaction over the next 24 hours, prices would move higher
within days.


Date: Tue Jan 18 2000 23:13
resolute () ID#40778:
Copyright � 1999 resolute/Kitco Inc. All rights reserved
December 1999 gold imports into Taiwan were 7.7 tonnes, up 7.5% from a year ago. The latest figure brought the total for the full year 1999 to 83.9 tonnes, an increase of 27.3% over 1998. In the other corner of the world, the Swiss National Bank reported a small increase in the value of its gold reserves at the year-end. Gold reserves rose SF9.4 million, reflecting interest payments on gold. The Bank confirmed it had not increased its lending activity since it signed the Washington Agreement limiting gold operations in September

Another positive news came from India which has became the worlds' largest gold consumer in the last three years. Indians bought 815 tons of gold in 1998. Demand in the nine months to September 1999, was 659 tons, up 4 per cent year-on-year. The Indian economy is now well on the road to recovery after two years of slowdown. Gold demand in India should increase further in 2000 due to rising disposable incomes of population. It is expected that the demand will increase by 15 per cent in 2000 over the previous year.

The demand is likely to be further stimulated by innovative financing schemes, which offer interest-free loans to draw more customers. The anecdotal evidence of increased jewellery sales in India is confirmed by the World Gold Council reports, which indicates demand is already up. Domestic demand for gold is almost entirely met by imports, as production is negligible.
In addition to the Indian demand, the gold market demand is higher also thanks to the stronger East Asian economies and a more confident German and US investors. What is holding the price down, are the forward sales by the funds and the constant talk about more official selling and gold lending which is depressing the prices. The negative impact of the official sector sales is exaggerated by the secrecy surrounding the decisions about the gold lending volumes and the timing of the sales.
In another news, Germany has announced that it is going to mint 1 million gold coins to commemorate the 50th anniversary of the D Mark. The sales of the coins will depend to large extent on the investor demand for gold. The Bundesbank has been seen for years as the main supporter of the gold price. Germany was in opposition to the initial proposal to sell IMF gold last year, and to the increased mobilisation of gold reserves for lending seen in mid 1990's. The coin program will add to the already robust demand for gold bullion in Europe.

On top of this, the demand out of China appears to be exceeding my most optimistic expectations. The Caishikou Department Store in Beijing, which has started to sell gold bars on 10 December, has reported that it has "been drowned in an ocean of zealous gold buyers". It is the only sales agent of bulk gold in the capital. In December, more than 6,300 pieces of gold bars, weighing 600 kilograms, were sold at the store. More than 5,000 people sent their orders in while 8,670 people visited the store's gold department. The bars were priced at 104 yuan ( US$12.5 ) per gram.

Given that the gold was sourced from the official reserves and from the domestic production, which are both on the low side, it is likely that the Chinses intend to speed up the introduction of the proposed gold buying program. Chinese have announced late last year and confirmed early this year that they would like to bring the ratio of their gold reserves as proportion of the total reserves to the level comparable to that in US, Germany and France. This would require around 500-700 tones of gold imports in 2000 and another 9000-1200 in 2001. With global consumption already outstripping supply from all sources by around 500-700 tones, the additional demand would require a substantial shift in the distribution of gold holdings. This would mean higher prices to attract more sellers.

Beowulf
Reply to Gandalf
With all that copper in the new BRASSY $ shouldn't it be called the new brass colored penny?
she-gold
BOE gold auction news: Fraud
www.usagold.comThe BOE auction was bullish on POG, and spun to be Bearish. I hadn't believed there was that much Real manipulation, until today. They're good. Very good.

If you weren't insomniac ( been working nights recently ) and up most the night, you might have missed what transpired.

On Monday, the POG drifted lower from $288.75 toward an afternoon close of about $287.20. Overnight Monday/Tuesday, the POG inched higher but stay between $287.20 and $288.50. The London POG morning close was at its highest in a few days at $287.70, and by 11:16 GMT it had drifted even higher to $289.70/289.40. Hence the following report:


FOCUS-Gold fixed higher before British bullion auction
06:16 a.m. Jan 25, 2000 Eastern
By Marius Bosch
LONDON, Jan 25 ( Reuters ) - Gold held firm ahead of Britain's fourth bullion auction which analysts expected to attract reduced interest for the around 804,000 ounces on offer.
Analysts expected a modest oversubsciption, with prices then falling back from current levels.
``My feeling is it's going to be like the third auction, which is negative but nowhere near as negative as the first,'' Macquarie Equities Ltd analyst Kamal Naqvi told Reuters Television.
At the London morning fix, gold was fixed at $288.70 a troy ounce up from Monday's afternoon fix at $287.20.
Spot gold was last quoted at $288.90/$289.40 a troy ounce, up from the New York close at $287.40/$287.90.
Gold was quiet in early European precious metals business with little movement expected ahead of the auction result, due at 1215 GMT with bids closing at 1130 GMT.
Dealers said the Bank of England auction in November, the third in the series, was around two times oversubscribed and saw a $20 fall in the price. The second sale, in September, was eight times oversubscribed, which led to a rally of around $85.
MARKET EXPECTS PREMIUM OVER SPOT
Virtual Metals Research and Consulting said in a market commentary that the bullion market would want to see a good premium over the spot price.
``The market will probably want to see a good 40 to 50 cents over spot plus a respectable subscription ratio. For the dealers this is now a rather wearisome business which brings them very little gain,'' Virtual Metals said.
Traders Standard Bank London said in a report on their website ( www.standardbank.com ) , that the outcome of today's auction clearly held the key to the next major price move.
``If the lowest accepted bid is above $288 it would probably be seen as positive and lead to a break above the $290 resistance, while a result below $286 could spark a bout of fund liquidation and penetration of the $285 support,'' it said
Tuesday's auction is the latest in a series aimed at cutting the UK's gold holdings by 58 percent to 300 tonnes.
GOLD PRICE EXPECT TO FALL POST AUCTION
Analysts expected prices to fall after the results of the sale are announced at 1215 GMT ( BOE/GOLD01 ) unless South African miners or funds bid aggressively.
``There is a possibility the South Africans could buy back into the auction ( as they have in others ) . If we get a good subscription rate ( it could firm ) but resistance above $290.00 is heavy,'' Naqvi said.
After many tumultuous months of central bank sales and talk of sales, gold has returned to the $290 level at which it greeted news last spring that the U.K. would cut gold reserves to 300 tonnes from 715 and modernise its portfolio.
This time around, the gold price is seen near these levels, with demand just above the offer. Low volumes, narrow ranges, flat positioning, low gold lending rates and only modestly elevated options prices suggest a quiet sale aftermath.
Gold lending rates are also much lower than before previous auctions.
Lease rates for one-month metal were around 0.37 percent on Tuesday, compared with 2.5 percent before the November UK sale, 3.6 percent before the September sale and 2.9 percent before the first British sale on July 6. Then, was up about 3-4 dollars just before the announcement.
-----------------------------------------------------------------------

Now even if the "official" bids are placed at 11:30 GMT, considerable discussion and decisions by the bidding parties must be made. Bids drift in to meet the 11:30 deadline, based on the current POG. But suddenly, after 11:16 GMT, the POG starts to leap. By 11:30 GMT ( if we are to believe Reuters ) , the POG is $290.25/291.00; only 14 minutes prior ( 11:16 GMT ) it had been $288.90/290.40. But remember, Virtual Metals Research and Consulting has just told us that anything over $288.00 would be bullish. Considering the recent range of trading, this makes perfect sense.

The official results are posted. $289.50 and X4.3 oversubscribed. To people following the POG, this is extremely bullish. Clearly $289.50 is outside the recent range of trading, and is a full 80 cents over the London morning fix of $288.70. But something conveniently odd has occurred. "Someone" has pushed to POG up to $290.25/291.00 at precisely 11:30 GMT, when the bids are "officially" placed.

So, to those of us following closely the POG, the BOE results are a relief, if not encouraging. But those not following gold closely are about to here quite different spin:

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

Reuters Story - January 25, 2000 07:34
LONDON, Jan 25 ( Reuters ) - Gold eased by $1.25 per ounce to $289.00/$289.75 after the Bank of England's auction on Tuesday.

Immediately before the sale the price had been at $290.25/$291.00. The market's reaction was slow, with no change in prices until 1219 GMT, after the sale was announced at 1215 GMT.

The approximately 25 tonnes or 803,600 ounces of gold on offer were allotted in full at a price of $289.50 an ounce.

Gold had fixed on Tuesday morning at $288.70 an ounce.

By 1225 GMT spot gold was quoted at $289.25/$290.00.
--------------------------------------------------------------

And from Bloomberg ( note the headline )

U.K. Sells 25 Tons of Gold at Below-Market Price of $289.50/oz
By Mark Deen

London, Jan. 25 ( Bloomberg ) -- The Bank of England said it
sold about 25 metric tons of gold at $289.50 an ounce in the
fourth of a series of scheduled auctions designed halve the U.K.'s
gold reserves by 2004.

The central bank sold 803,600 troy ounces at a price that was
75 cents an ounce, or 0.3 percent, below the price for immediate
delivery in London at 11:30 a.m. when bidding closed.

The U.K. wants to reduce its gold reserves so it can invest
the money in more profitable assets such as bonds and currencies.
Gold climbed to a two-year high of $340.50 an ounce on Oct. 5,
after 15 European central banks, including the U.K., agreed to
limit sales, sparking a wave of buying by investors and producers.

Today, gold for immediate delivery rose as much as $4.025, or
1.4 percent, to $290.875 an ounce before the announcement. It last
traded at $289.25 an ounce.

The U.K. central bank said bids were submitted for a total of
3.45 million ounces, or 107 tons of gold, a bid-to-cover ratio of
4.3.

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

This is what the public reads. This is what will be reported by the New York Times tomorrow.

Now as we know, impressions are everything. When we follow block trades on the stock market, we immediately want to know: was it on an uptick or a downtick. Makes a huge difference. A big block trade on an uptick: someone wants in so much their willing to pay more than the going price. A big block trade on a downtick: someone ( BOE ) getting out of what they perceive to be a losing position. Those are the impressions we generally have about block trades.

The BOE results are bullish for gold. Period. The POG jumped out of its trading range between 11:16 GMT and 11:30 GMT to give the impression that the 25 ton block trade was made on a downtick. Period. The public and investors have been deceived and gold producers have been scammed, once again.
Farfel
SHE-GOLD, the market manipulation is worse than you imagine
Not only were the results of the BOE auction spun in the most negative manner today by the The Street, but one of the most notable participants in the gold shorting cartel - LEHMAN HOLDINGS - was prepared this morning with a list of gold stock DOWNGRADES, from Homestake to Battle Mountain, just in case market investors might be tempted to celebrate the positive gold auction results..

Of course, Lehman did manage to UPGRADE one gold company, namely Barrick, the leader of the gold shorting producers. Any surprise there?

It is amazing how these guys can operate in such a nefarious blatant manner. But they do and nobody seems willing to stop them. There are no honest upstanding regulators to regulate the fully corrupted regulators of America's markets. Therein lies the problem.

And America continues to tumble into a moral toilet, cloaked in a disguise of "material prosperity."

Thanks

F*
scp
Monetizing debt
As many of you know, starting in May the US is going to use the alleged surplus to start retiring their debt. I believe that means buying back bonds held by foreigners? Bottom line, the US is going to monetize the debt. Any thoughts on what effects this will have on stocks, bonds, the dollar, gold and oil? I believe that the rise in oil is in response to US dollar policy. Any thoughts or corrections are welcome.
Aristotle
Journeyman--23584
I've noticed a number of people mention the official enjoyment/benefit of seigniorage in recent day, most recent of all being yours--"I also want to check-up on the good doctor's assertion that most of the FED's profit goes back to the treasury. This doesn't jibe with the FED keeping the seignoriage from paper money -- of course this is just a small snapshot of the FED/US Government interaction."

Perhaps I could encourage some of you guys to embark on a thoughful conversation on the meaning of "seigniorage" in this age of fiat money. My contention, which I won't expand on at the moment, is that is a very subtle creature, if it can be said to exist at all. I'd like to see some other people weigh-in on the issue, though.

I'm making good progress on my "perfect monetary system" post, but it has sprouted branches that I didn't anticipate. I'm beginning to wonder what the patience of the Forum can bear. Should I try to present the entire body of thought, or should I trim it down to a sharp executive summary without the supportive explanations? If the call is made for the whole salami, should I post it over time in bite-sized portions, or else drop it on the Table like so much bad cheese?

Journeyman, you've proven yourself to be the master of notable quotes and their political or historical attributes. Maybe you or someone else can help me on this point. In the course of developing my commentary, I recalled the essence of a comment/prediction by some historical figure that I can't pin down with certainty. (Marx? Keynes? Other?) The gist of it was this individual's view that in a democracy the citizens would eventually realize that they could vote for themselves largesse from the public treasury, and thereby bring about their own collapse. Can you or somebody else help me with this somewhat famous statement? Who said it, and what was the exact quote?

G. Gys. ---A
jaydeevee
It's all a GAME . . . only you're not invited
http://www.usagold.com/cpmforum/tools/post.htmlI find the last few days market action in POG to be AMAZING. Continued hour by hour persistent strength in POG leading into the auction - giving the impression to any mathematically minded chart watcher that POG would break out to the upside after the BOE auction. This is the TRICK! This is the SLIGHT OF HAND!

Yes, 'hour by hour persistent strength in POG leading into the BOE auction' giving the distinct impression that the breakout would be to the upside notwithstanding the negative predictions by a host of market analysts! But I'v learned! I'v learned from this site not to to take any notice of this lot. Follow the math I'v said to myself. Don't be deceived! The math will prevail!

Yes again, the continued hour by hour persistent strength in POG in the few days leading into the BOE auction; and the XAU in consistent decline? What an uneasy feeling to those invested in the gold-mining sector!

I'm an economics graduate; and have taken many risks in many areas of my life. I'v been curious and have gambled in many areas. I'v watched the Kitco curves for hours each day for months, read all the 'posters' on this site and on others, analysed all the fancy arguments, was amazed at the intellect of many posters, tried to make sense of things. I'v learned from this incredible site; but made no sense of things, because THERE IS NO SENSE TO BE MADE OF THINGS.

Now, I can only come to ONE indisputable conclusion on my current understanding of things:

As well as all the big - the macro-economic arguments. As well as the many and varied, and totally necessary agenda (for them the manipulators), those controlling the POG are as interested in making short-term profits as is anyone else.

The GAME is to 'allow' small ($5-10) gentle run-ups in POG, knowing full well that there are good profits to be made when you crunch the price (of POG).

To 'mask' the MANIPULATION a little, you alternate the markets in which you do the crunching. Today the Aussie market, tomorrow the London market - then Comex. This gives the manipulators, and those who serve them, the opportunity to give many and varied excuses as to why POG did this or did that.

Those 'in the know as to what the GAME is' ditch their stocks in gold-mining companies when they know a CRUNCH is imminent. (Hence the recent decine in all gold-mining indices as POG rose!)

In this GAME, the MANIPLULATORS WIN, and the POG, and investors in the gold-sector LOSE. They LOSE again, and again, and, again, and again and again; and will continue to lose until this rotten game is exposed. It is the MOST CROOKED game I have ever had the misfortune to be involved in.
USAGOLD
she-gold, ALL
Here's some unsubstantiated rumors going around the gold trade about today's BOE auction:

1. Goldman Sachs bought 50% of the offer -- no reasons given.

2. Anglo bought 10% of the offer. I saw the mainstream press reports also that the South Africans were not buyers so who knows? That's what I was told. I retorted that the press had said the South Africans were not told. The rejoinder was "Anglo bought 10%." Flat statement. No explanation.

3. Ashanti is not playing ball with its lenders and has notified the bullion banks that they do not intend to make the margin calls. This would send the bullion bank consortium into the market to cover.

All from a good source close to the action. We'll see what surfaces. Thought you should know. These are rumors, not fact and were passed to me as "interesting" rumors. Don't trade on this info as it is very tentative and offered for discussion purposes only.
Beowulf
Name for new dollar coin
Actually Gandalf I've been calling the new coin the BRASS SQUAW since it is basically brass and Sacagwhatsherface was an indian squaw.
USAGOLD
Correction
The sentence in number two that reads:

"I retorted that the press had said the South Africans were not told."

Should read:

I retorted that the press had said the South Africans were not "buyers."
RossL
Aristotle
http://www.csupomona.edu/~rljohnson/toc.html
I believe you are referring to Alexis de Tocqueville, the book "Democracy In America." (1835) A quick web search turned up this link.
Jason Happy
Aristotle's upcoming "perfect monetary system" post
Aristotle: I would prefer that you leave nothing out of your analysis, and post the entire thing on the block in one huge chunk. I am already worked into quite a tizzy in anticipation of your efforts. Already, I spent 1/2 a day gathering all those scriptures on the subject that I posted several days ago, and the thought of a perfect society and/or monetary system has always not been far from my mind. I am eagerly curious as to the extent that those Bible quotes and ideas will be worked into your thesis.

If you were to spread out the posts, it just becomes that much more tedious to find them all and gather them together.
Give it to us all, in one block, but only when you feel the work is ready... But don't polish it so much that we have to wait another week, I don't think I could stand the wait.
If possible, try not to let paragraphs become so large that they fill the entire computer screen, those become hard to read from line to line, and the thoughts presented also become less coherent.

Besides, such a post will give me something to post about! If Biblical protections against oppression are not included, I'll wonder what other protections will be substituted...
Farfel
Michael, Why would Ashanti Honor Margin Calls?
When margin calls are not met (and they will not be met), then it will interesting to see how this particular "left field event" affects the gold market.

That is what the gold market needs right now, a good left field event to unmask the corruption and rot all around it.
It is just such a left field event that will send the hedge fund/bullion bank rats scurrying to cover their shorts.

We're almost there and I've got a front row seat.

Thanks

F*
Solomon Weaver
Farfel, what do you think of this theory?
The mines agree not to participate in the auction, and in exchange the bullion banks agree not to force them into margin calls.

Poor old Solomon
USAGOLD
Farfel...
Funny, you should say that since it's exactly my source's reaction: "Why should they?" Ghana certainly isn't going to stand by and watch its primary asset, source of income and employment go over to the bullion banks. To me that implies nationalization -- as an economic talisman -- which would just about put the gold industry into a state of shock. But what are the choices here? Were Ashanti's managers taken for a ride? It's all going to come out. I don't think the players want to see this in the World Court and become a publicity circus. Believe it or not, I think the best choice is for the bullion banks to take their losses and go quietly into the good night and, I'm starting to lean toward that eventuality. That means covering and more importantly further collateral damage to the carry trade -- possibly its Waterloo. To me the interesting thing about the Greenspan statement, (and I take him at his word believe it or not) is that it puts the onus for this mess directly with the bullion banks. It was like he was saying "Hey don't look around over here. We're not involved in this thing." I'll take that front row seat right next to you, Farfel. Pass the popcorn, dude.......
Aristotle
Farfel, Solomon, USAGOLD
In regard to Ashanti's margin calls, this whole affair strikes me as very similar to the situation when a heavily indebted country is unable to muster the funds needed to repay IMF loans. The default is rarely treated as such, but rather is rolled over, rescheduled, or renegotiated (as has been noted before.) This keeps the game alive, and in the case of the IMF loans it helps to preserve the notion that the currency in use hasn't failed in its primary show of value--performing loans.

The bullion banks are not playing "hardball" and sticking it to Ashanti because they don't want to bring the roof down upon their own heads by precipitating any kind of cascading failure of paper Gold contracts. It's better to renegotiate the terms--even if that typically isn't standard operating procedure in the Gold world--and to keep the company in the business of pulling Gold out of the Earth. Because that's the part that truly matters. It seems to me that Ashanti has the upper hand. Just like Ecuador when they say, "Hey, we can't pay. What you gonna do about it?"

I guess the point I'm making is that all of the cooperation and time extensions Ashanti has received from the banks is a good sign of how precious, and how precarious this Gold market has become.

Gold. Get you some. ---Aristotle

PS. Jason Happy, I hope you are not disappointed with the result. Due to my human limitations, I have laid out my views on this "perfect currency" based on my experiences in the world as I've found it. Anticipating your tack on the issue, I'm afraid you'll think that I came up short for not attempting to bring about a more perfect world. As such, I didn't feel it would be worth anyone's time to read about an abolutely PERFECT currency being forced upon an unwilling, imperfect world. I merely tried to arrange a marriage between the best that each could reasonably offer--current world conditions acting as the primary constraint on the give-and-take balance. Perhaps I'm pragmatic to a fault. But still, those with Gold come out as the big winner, and in truth, the euro could be seen as ushering in this very system I'll describe. (Like so much bad cheese, as is your wish.)
USAGOLD
Aristotle...
The bugaboo here is that somebody is owed the gold and I'm assuming its some central bank(s). If that be the case, the question becomes how comfortable the cb(s) feel(s) about having the gold owed, or do they want to force the bullion banks (the guarantors) to make good. Perhaps the bullion banks might decide to make good on their own since the price is probably about as low as its going to get (a guess!) thanks to the euro faction. This all gets down to credit analysis and management in the end and how overextended Ashanti is perceived to be. Then again, it could be the BOE is owed the gold and they don't care about gold anyway (after all it is a barbarous relic, you know) -- in which case Ashanti is safe and credit analysis is useless. If BOE is owed the gold, the question becomes "How long are the Little Old Lady from Threadneedle Street's fingernails?"

You know who's an expert on this sort of thing? Uptick aka Leonard Kaplan. I wonder what he has to say about this. He keeps threatening to post here; maybe this would be a good place to get a few words from him.

Who said gold is politics? They're right.

As you say, Aristotle. Gold. Get you some. I add: Before the bullion banks do.
Skip
BOE Auction and Apparent manipulation of POG
Today's BOE auction and POG action has certainly spawned some interesting posts in this forum. My thanks for some very thought-provoking postings from Jason, Aristotle, Farfel, USAGOLD, and others who make this forum far worth reading...even for lurkers like me who rarely post.

Today's activity, however, motivates me to add my two cents' worth...or my two gold-grams' worth:

In light of what has transpired, and in light of the media spin on today's activity, how can anyone with common sense have any further doubt about whether the POG is manipulated by certain circles? Truly today makes GATA far more credible than ever before in their allegations of gold manipulation.

Those of us who have been hurt and hurt and hurt repeatedly, over and over and over again, relentlessly for a number of years, hurt without end, must HANG ON and pray that the manipulators get totally exposed to the world for what they have done. It seems all too apparent to me that we are NOT playing on a level ballfield!!! IMO the deck has been stacked against the little people as well as against the gold mining industry...and it's about time that those who cause the hurt reap what they have coming to them. I do not personally wish them harm, only some enlightenment...but any financial harm that they receive when the scales are balanced will be the results of their own greed.

Am I a little upset and discouraged at what happened today? Yes...but I'm more upset at the fact that such manipulation has gone on for years under deep cover and kept secret from the investment world. Had I known what was happening earlier in the last decade, and known the extent of the DOW mania, my financial affairs would be totally different than they now are. The general public I'm afraid will someday be financially punished for "going along with the crowd" and with the media. Yet those of us who got out early and put our money into gold and gold stocks are ALSO financially punished...so either way, you lose.

Yet when all is said and done, it's better to lose early and win later than to win early and lose later.

As Aristotle says so often: Gold. Get you some.

--Skip
TownCrier
The GOLDEN VIEW from The Tower
Most of the day's details--particularly items related to the BOE auction--have been covered in the morning market report, so we won't repeat them here...except the notable fact that the gold was allocated at the lowest bid price (meaning there were higher bids offered) which came in $0.80 higher than the a.m. gold fix of $288.70. Again we ask, why not take your desired metal on the open market? Is there a problem with delivery in size?

After traders in NY got their turn to move the prices around, despite what can only be described as a very successful auction, spot was driven down $1.45, last quoted in NY at $285.75 per ounce. The February futures contracts were sold off by $1.50, closing at $286.60. David Meger, senior metals analyst at Alaron Trading, told Bridge News his thoughts on the auction: "It was pretty much what I expected--as long as it came in over 2-3 times oversubscribed, it was positive. I wouldn't call it overly bullish, but it was definitely supportive to the market--neutral to friendly." James Steel, analyst at Refco, said the auction was "quite bullish because prices were higher than the cash market," but said that the price level between $290 and $300 shows stiff resistance.

Bridge News reported from London that many market players were looking forward to any confirmation of who the buyers were, feeling that the more miners who were involved, the less bullish that would be. Anglogold noted that it picked up less than 10% of the offered gold, with previous purchaser Gold Fields saying earlier that it had "absolutely no plans to participate in this one." A European source believed that the bidding interest came predominantly from "a narrow list of bullion banks and speculative buyers." Traders noted that after the auction run up, heavy resistence was encountered that led to both trade selling and fund selling.

In other gold news on the continent, Bridge News reported from Rome that in keeping with 1998 European Union legislation to end the monopoly of the public exchange office Ufficio Italiano dei Cambi, Italy's government announced in the Official Gazette last Friday that it will open up the gold market to banks and other authorized intermediaries. This law becomes effective 15 days after publication in the Gazette as specified under Italian rules. Taken with China and the other actions we've seen coming out of Europe, it seems that a concerted effort is underway to make official actions transparent, and to return gold to a free market. The big prize, of course, would be the elimination of the adverse valuation effects brought about by derivatives trading and gold lending.

Turning our attention to some heavy vault action, there were 171,845 ounces checked into COMEX Registered inventory today. Together with the 112,168 ounces of total Eligible inventory, COMEX now holds under guard 1,388,197 ounces in sum.

OIL

A broker summed up the news driving the energy markets in a FWN report: "Weather, tightness, all the same stuff, OPEC comments, extending cuts and so on." March crude settled up 45� at $28.28 per barrel at the end of the NYMEX session. Analysts were anticipating the after-market release of American Petroleum Institute inventory data, expecting any reported declines of less than 6 - 7 million barrels in distilates to be troublesome for the market to handle. API data showed a decline on 3.004 billion barrels in crude stocks, while the distilate data--which includes heating oil and diesel fuel--didn't disappoint. It fell by a surprising 8.289 million barrels. In after hours ACCESS trade March crude has tacked on an additional 23� to $28.51 per barrel.

And that's the view from here...after the close.
Bonedaddy
Tally ho, Beowulf!
I've too have been seeking a handle for the new brass fiasco. I believe you've found it. The Brass Squaw, how delightfully irreverent. How politically incorrect. The PC crowd will wail in agony that anyone using the name is dishonoring Sacajaweha. To which we can reply: "If the mint had really intended to honor her, they would have made the dollar out of REAL GOLD, not some base metal look-alike."
Has anyone seen one of these yet? I was sure I had one the other day, but alas, it was only a car wash token.
Bonedaddy
Heard around the camp fire.....
I'll see yer two bits...and raise ya' a squaw....
ORO
Aristotle - Cheese
Being partial to Moroil (reads like more-wall), I suggest you plunk it down, and let us print it out and go over it at our leasure - that way each can cut it up to morsels of the appropriate size for himself.

Chris Powell
Gold's suspicion shifts to Treasury Department
http://www.egroups.com/group/gata/348.html?Latest analysis by Reginald H. Howe
of www.GoldenSextant.com.
Journeyman
Kudlow vs. Greenspan, my take

@Peter Asher, Al Fulchino, beesting, R Powell, Solomon
Weaver, TheStranger

Looks like The Stranger called my hand in the matter of the
Kudlow vs. Greenspan questions.

First, sorry Stranger, I only looked at answers that were
couched directly in response to the three I posed. Short
sighted of me. I did feel from many of the other general
posts that many here probably had answers. In fact, perhaps
the questions were too easy for some.

Anyway, here's my take for what it's worth:

TO STRANGER: First on Kudlow's CNBC performance: I've been
lazy lately, and didn't tape it. Thus, I'm stuck with
memory. Keeping that in mind, Kudlow specifically cited
that "inflation" is a monetary phenomenon, and explained,
showing he really understands. He then concluded that since
the price of gold was low and so were the core CPI figures
(released just that day), that there was no inflation. At
this point, it seems he "reverse engineered," and given
these factors, subconsciously concluded that the money
supply must be stable.

He then faulted Greenspan for not mentioning money supply or
CPI even once, tho Greenspan's speech was primarily about
technology and "inflation." Further, and not for the first
time, he chastised Greenspan for attacking an inflation
which, by the numbers just cited, Kudlow claimed doesn't
exist. (Stranger, Kudlow may have, as you suggested,
changed his attitude on the last point between the time of
his talk on CNBC and when he wrote the remarks your father
called to your attention?)

"QUESTION 1: Why would FOA, Oro, and probably TownCrier
disagree with Prof. Kudlow's take on inflation? What did
Kudlow apparently miss?"

MY ANSWER: First (and least important) Kudlow goes by the
price of gold and core CPI as indicators that inflation is
under control. The first thing he missed is that, as many
here believe, the price of gold has been held artificially
low just so folks like Kudlow will be misled. Ditto CPI
figures, which have been manipulated unmercifally as well.

Secondly Kudlow also apparently didn't recognize the stock
market balloon as the "inflation" symptom many of us believe
it is. Thus there IS inflation - - - in the stock market,
just not as much in the general economy --- yet. But the
"wealth effect" is leaking buying power into the rest of the
economy, which will prove inflationary.

Finally (and most importantly) Kudlow faults Greenspan for
attacking an inflation that doesn't exist. Well, since
Kudlow explicitly recognizes that currency depreciation
(inflation) is a function of money supply, he should
recognize the ~80% of the dollar supply that exists
"overseas" as the potential inflation it is. He apparently
missed that the money supply has already been "inflated,"
but the overseas 80%, _for the time being at least_, just
has a net "velocity" of near zero _with regards to the
continental U.S._

"QUESTION 2: If all the indicators (gold, CPI, etc.)
indicate no inflation, why DOES Greenspan talk tough about
fighting "inflation?""

MY ANSWER: Greenspan knows where the money is and wants it
to stay there. He knows gold and the CPI are being
manipulated and so doesn't pay much attention to them. He
gets his inflation rate reads elsewhere. He knows he has no
direct control over all those "foreign" dollar-holders. If
they believe there will be inflation, they will begin
repatriating the dollars and the belief will, as a direct
result, become self fulfilling. Therefore Greenspan knows
he must dutifully jawbone and hope everyone will invest him
with the power the jawboning implies, be satisfied with
that, and will thus keep their dollars where they are.

"QUESTION 3: Why doesn't Greenspan pay attention to money
supply OR the CPI directly in relation to "inflation"
anymore, and instead rely on something called the "personal
inflator numbers?"

MY ANSWER: Greenspan knows these indicators (POG & CPI) only
measure inflation after the fact, and that money supply
figures, even if calcuable, are unclear and irrelevant:

-"We truly have problems with respect of using M2
specifically in the way we used it in the past as a
reasonably good indicator of where the economy was
going or where spending was likely to go because the
relationsiip between the nominal value of the gross
domestic product and M2 was reasonably stable and
forecastable. That has changed." -Alan Greenspan,
semi-annual Humphrey-Hawkins testimony (Day 2) to House
Banking Committee, 24 Feb 1998

Greenspan knows that once the very public signs of
inflation, i.e. gold price rise & CPI, begin to indicate
inflation, it's too late for the FED to do ANYTHING. All
those overseas dollar holders will recognize these inflation
indicators too and will start dumping their dollars. (This
is probably why gold price and CPI are manipulated in the
first place.) This is the main inflation source Greenspan
fears, because the FED has almost no control over it. With
~80% of the money supply already created and in "foreign"
hands, most of the FED's tools and indicators have become
largely ineffective or, at best, post-active. At best, as
per above, all the FED can do is try to figure out what
"foreign" dollar holders are going to do with their
holdings. In a very real sense, the situation is way beyond
FED control.

My guess is that the "personal inflator numbers," being more
obscure, can for the time being, be more honest and thus
give Greenspan a more accurate and honest picture of what's
REALLY happening in the general economy, give him a better
sense of how much money supply is escaping into the general
economy.

TO: TheStranger, all ---- good answers from you-all!

Peter Asher: Still thinking about the points you raised that
perhaps "inflation" isn't purely a monetary phenomenon.

Regards,
Journeyman
Journeyman
Big Float & FOA, Kudlow and Greenspan

@Peter Asher, Al Fulchino, beesting, R Powell, Solomon
Weaver, TheStranger

This post began as a background to answer the three
questions I posed concerning Prof. Lawrence Kudlow and Alan
Greenspan about a week ago. From seveal posts, I realized
the existence of the overseas dollar glut wasn't "real" for
many readers here, and for that reason, might be worth
nailing down. Thus what began as background took on a life
of it's own, and became this post. Especially for anyone
who doesn't believe in the foreign dollar glut, doesn't
understand its significance, or doesn't understand what the
"current account balance" is, it's probably worth reading.
Alan Greenspan explains it. It ties in nicely with the
FOA/Another scenario as well.

As many who read this forum know by now, as a consequence of
the so-called trade deficit and measured more
comprehensively by the somewhat arcane and less understood
"current accounts balance," "foreigners" now hold a very
large and increasing percentage of U.S. dollars.

Although there's more to it, probably the easiest way to
understand how this happened is to realize that when
foreigners send us large amounts of goods, we send _them_
large amounts of dollars in return. As Greenspan explains:

"We're seeing a major increase of dollar holdings by
non-Americans, which is obviously the other side of the
trade deficit." -to Senate Banking Committee, 23 Feb
1999

Add the "more to it" from above, and you have a more
comprehensive measure of foreign-held dollars, which is
called the "current account balance," which grows everytime
there is a "current account deficit." Greenspan explains
the consequences:

"We've had a very substantial current account deficit
for a very protracted period of time which effectively
has moved us from a very large net creditor [nation] to
a very large net debtor. And we have a significant
amount of net interest payments that we pay on that
debt which are added to our trade imbalance and creates
still larger current account balances and still larger
net debt." -Alan Greenspan, Humphrey-Hawkins to the
Senate Banking Committee, 25 Feb 1998

Estimates are that the percentage of dollars held outside
the U.S. may be as high as 80%, that is, as many as four of
every five dollars may be "overseas." Since, as Case
Sprenkle of the University of Illinois explains, "Insofar as
the money remains abroad and is not used to purchase goods
or services from the country that printed it, it serves as
an interest-free loan from poor countries to the rich," some
people refer to this huge overseas dollar glut appropriately
as "Big Float." Big Float is the foundation of the
FOA/Another scenario, and the reality of its existence is
unassailable.

Big Float was spawned at Bretton Woods and orphaned when
Nixon, by "closing the gold window" in 1971, stranded
dollars overseas by no longer redeeming them in gold. As a
result, the main thing these stranded dollars were good for
at that point was buying stuff sold for "dollars" -- stuff
available chiefly in U.S.A.. Thus a lot of this original
Big Float began to come home in the late 70's, early 80s to
buy those things here. This increased the local money
supply which, by supply and demand, causes currency token
depreciation ("inflation.") Indeed U.S. "inflation" reached
about 20% in this period.

The question is, what staunched the flow? What stoped Big
Float from immigrating during this period? FOA/Another
suggest reasons, mostly involving oil for gold and the so-
called "Oil Royals" of the ME (Middle East) pricing oil in
dollars so there was soemthing else to buy with them, which
is the only reasonably sensible explanation I've heard. At
any rate, Big Float has continued to grow. And grow. And
grow!

Because of this huge supply of overseas dollars, what the
current _domestic_ money supply is at any given moment is
not only unclear, it is irrelevant. The reason the domestic
money supply figure is both unclear and irrelevant is that
it includes a dynamic and inherently unmeasurable component
composed of what can be viewed as the net dollar balance
among huge capital flows between the contintntal U.S. and
the rest of the world which occur at nearly the speed of
lignt and on an unprecedented scale. That is, given that
perhaps as much as four fifths of the already existent money
supply could theoretically show up on our doorstep and
become part of the _domestic_ money supply pretty much over
night - - -

The dollar at its low was down 11 yen, at 120.3 yen per
dollar from 132 yen per dollar yesterday. This is
better than an 8% drop in the dollar, the bulk of this
happening in about three minutes in the middle of the
night. This is an "astounding drop" in the world's
largest currency. -MSNBC etc., 7 October, 1998 -"This
is the biggest one day dollar drop in 25 years." -Kathy
Jones, Prudential Securities, 7 October, 1998

- - - any number you assign to the domestic money supply (a
shakey number even under the best of circumstances anyway)
at any given instant could suddenly become even more wrong,
theoretically at least, by a factor of 5 (the other 4/5ths
of the dollars migrate home electronically). That is,
dollars, whether in Tokyo, Sydney, Rio, or London, are only
fractions of a second away.

Thus while coming up with such domestic money supply figures
may be historically pleasing and good training for budding
macro-economists, they are, as Greenspan knows, pretty much
irrelevant for the U.S. in its current context. Even if it
weren't being manipulated, CPI is an even worse "inflation"
indicator, since it _normally_ lags money supply increases
by about 12 months (it used to be 18.)

The FED is therefore reduced to attempting to keep those
overseas dollars overseas, or, in forecasting, to attempt to
anticipate if foreigners are deciding to unload them and
send them, in various ways, back here to the U.S. where they
would then become part of the domestic money supply, bidding
for goods and services and, through the operation of "supply
and demand," causing dollar currency depreciation
("inflation") _here_.

"It's just that the [current accounts deficit]
arithmetic over the very longer run creates a big
question mark as to whether that is sustainable
indefinitely in the future. And I must say to you that
that is one of the issues that the Federal Reserve has
been spending in recent years a considerable amount of
time thinking our way through to make certain that if
we spot any material erosion that suggests that this
stability is subject to unwinding, that we will have
some significant advance notice on it." -Alan
Greenspan, to the Senate Banking Committee, 25
February, 1998

"The problem that we run into unfortunately, is that as
our net foreign debt rises, that the amount of interest
we must pay and indeed dividends as well, continues to
rise, and that process itself creates a type of
situation that if at some point foreigners stop wanting
to continue to accumulate dollars, it creates a major
reverberation back on the American economy ...And the
question is, what does that mean, where is the end of
that rise, and the question we have addressed ourselves
to in some considerable detail. We have not yet been
able to answer it effectively." ...The continued
increase in our net external debt and its growing
servicing costs clearly are not sustainable
indefinitely." -Alan Greenspan to House Ways and Means
Committee, 20 January, 1999

That is, Big Float makes it nearly impossible for the FED to
predict inflation or to do anything significant should it
develop, and if something isn't done, eventually something
_will_ develop. Thus Grenspan's main tactic must be to
jawbone inflation in hopes this will be enough to reassure
those foreign dollar holders. This is the context the U.S.
and any dollar holders anywhere are dealing with.

The question is what could cause all these dollars to come
back to the U.S.? FOA/Another suggest just such a return
has been planned by those tired of absorbing all these
dollars -- every time you see a new set of USA trade deficit
figures, for example, this documents another net transfer of
more dollars overseas, and lately the size of the trade
deficit sets a new record every month. The launch of the
euro was necessary to provide an alternative to the dollar.

Regards,
Journeyman
Canuck
BOE #4
Let's cut right to the chase.

New York brought the POG back down on Monday and from 2:30pm
eastern the price began to rise; through Sydney, Asia and back to London, cresting just below 290 minutes before end of bid. Suddenly, presumably nanoseconds after the 'closing bid' and co-incidentally just before New York opening the POG dropped into free fall.

For 17 hours gold looked like it was in a free market (check the graph) and then at New York opening it looked like gold was the cause of a terminal disease.

This is the second or third or 80th ranting and raving of mine. I don't get it. I simply don't understand this crock of bullsnot. Why is this allowed to happen? Are there no laws? Who watches over this mess? The USD is debt burdened and the POG is trying to tell the world this, it is trying to tell common, everyday people to slow down, get a grip, gain control of your personal debt and affairs but it is not being ALLOWED to do that. What is New York trying to tell us, finance every red nickel that we have, borrow to our credit limit, smash the piggy bank, cut off the kids allowance, buy tech.com and wait until the planet explodes into a zillion fragments.

This is history in the making. I'm been saving posts and graphs and comments. When this thing pops its going to be the biggest and ugliest fiasco man has ever witnessed. When my son turns into a man I will show him the destruction and carnage that humans bestowed upon themselves.

My brother-in-law's brother has been to Japan several times
in the last couple years. Ask John Doe in Japan what 'irrational exubarance' is. It's winding the clock back 20 years.
ji
Aristotle - Quote
The following was written by Professor Alexander Tyler shortly before the original 13 colonies gained their independence from Great Britain. He was speaking of the Athenian Republic some 2000 years before.

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves a part of the public treasury."

"From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship."

"The average age of the world's greatest civilizations has been 200 years. These nations have progressed through this sequence:
From bondage to spiritual faith;
from spiritual faith to great courage;
from courage to liberty;
from liberty to abundance;
from abundance to selfishness;
from selfishness to complacency;
from complacency to apathy;
from apathy to dependence;
from dependency back again into bondage."
THX-1138
New Brassy $ name


From my dictionary:
Lets start with the coins color.
Brassy:
1)made of or covered in brass. 2) resembling brass. 3) harsh and metallic. 4) brazen; bold; loud. 5) noisy; clamorous.

The coin has an indian woman on it.

Squaw:
North American Indian woman; especially a wife.
(Sacagawea was married to a French man, or possibly sold to him.)

Also on the coin is a baby in a sac.

Papoose:
a North American Indian baby or young child.

I think there is also an Eagle on the back. Not sure since I haven't seen a real coin.
****

Therefore the new coin could be a Brassy, a Brassy Squaw, a Squaw, or a Brassy Papoose, or a Papoose. Could also call it a Brass Eagle.




THX-1138
Reply to Bonedaddy
I'll see your squaw and raise you a papoose.


(what is the plural of papoose?)
Journeyman
Perfect Money System, Seigniorage, quote @Aristotle
Aristotle,

I too am looking forward to your pragmatically perfect money system post/posts!!! Relax, when it's ready you'll know it -- and we'll appreciate it that much more for the seasoning.

Seigniorage is indeed ephemeral as you suggest I think, as is all accounting --- sometimes even when you have the whole picture. Thinkin about it! Seigniorage was much more straight forward in the old days.

As for your request for a quote,

"The gist of it was this individual's view that in a
democracy the citizens would eventually realize that they could vote for themselves largesse from the public treasury, and thereby bring about their own collapse."

I believe, off the top of my head, that was from Frederick Bastiat's "The Law." I have a copy somewhere. It's relatively short and searching an electronic version would be much more efficient. Will see if I can come up with a URL later.

Regards, J.
beesting
How to create an Illusion.
Sir Canuck BOE # 4.
After much thought today I have come to the conclusion that BOE sale # 4 was a carefully orchestrated illusion created by the the big paper Gold players to try to fool the world into believing there is an over supply of physical Gold, when there isn't.

It's really simple how they did it,remember these are world wide players. They simply put in orders to buy(futures contracts)paper Gold right before the auction, driving the price up slightly(they may have already known the bidding prices)(some of them may have been the bidders!) as soon as the auction was over, they want the world to think 25 tonnes of Gold entering the "supposedly" free Gold market would drive the "spot" price down'so they sell paper Gold contracts( it may have been some of the same contracts they just bought) just enough to force the price down a few dollars.
A way to make money in this scenario and not draw attention to yourself is short Goldmining stocks you know will fall in price as the price of "spot" Gold drops. As Sir Farfel pointed out today negative press releases released, concerning Gold mining companies, AFTER the BOE auction insuring a down market in stocks.Can any of this ever be proven- I doubt it very much! Do we have a "free" market? I doubt that very much also!!

Journeyman #23625 Big Float;
Excellent work!! One thought came to me as I was reading #23625 << 80% of U.S. dollars are in foreign hands>> My thought, could some of these foreign held U.S. dollars be pumping up the stock markets?? Some(dollars) are in U.S. Government debt obligations held by foreigners, but I would bet a lot of it is being pumped into the bloated stock-markets also!...Thank You for reading....beesting.
lamprey_65
New Dollar knick-name
Saw it on Kitco, so I can't take credit - but I do like the name and I WILL use it...

The new dollar should be called --

"The Phoney"...because that's what it is.

Lamprey
Simply Me
The New Game Token!
Noticed today's comments on the Sacagewea Dollar and had to throw in my two cents. I call it "The Game Token". It looks to me just like the tokens you buy to put in the machines at the Video Arcades. Just wait till "little Billy" gets caught pilfering Dads First Strike Rolls of Sac Dollars to take to the Mall!!
Too busy working to join in lately.

PH in LA: Sorry to take so long with response. About the State Quarters and your daughters collection. It's a great thing to teach your daughter about coin collection. I'm sure you'll teach her what's valuable and what's not. Too many daughters in the past were left out when such knowledge was passed along parent-to-child.
The ironic thing is that in the short term, rolls of BU Penns and Dels (the early '99 Quarters)are bringing as
much as silver! It's all because of the popularity of collecting these quarters! Valuable or not. Like the Beanie Babie fad, demand is driving the market. And there are more parents than kids collecting, or I'd wouldn't be so busy.

Simply Me
Crash Index Dropping Again
http://www.wwfn.com/crashupdate.htmlStock Market Crash Index now at -8. It was at -10 (Crash Alert) a little more than a week ago...on a scale of -10 to +10. Built back up to a +0 a few days ago. And has since been dropping a couple of points a day.

If you go to the site be sure and read the link on how to interpret the number. In a nutshell, -10 is a signal to short stocks and not to go long again in till it gets back up to +6. It hasn't been higher than a +4 yet this year. Several bounces on -10 over a week or so mean "get out now...crash is imminent." But don't take my word for it, read it for yourself... "cause you know sometimes words have two meanings" (Stairway to Heaven, Led Zeplin).
FWIW
simply me
Simply Me
Felix the Cat? Are you still here?
Haven't seen Felix the Cat for a long time. Felix, if you're lurking, I enjoyed reading your posts with a Hong Kong point of view! Please come back!
Simply Me
Addition to last post.
Hit the button on the last post before I remembered to add.....
Xie Xie
simple me
Jason Happy
The new phony token trinket gewgaw bauble Squaw...
I got bored, and had to add my two cents in on the topic:

The question: "why doesn't this coin have ridges?" reveals
the worthlessness of this phony token trinket gewgaw bauble
Squaw.

The phony gewgaw bauble Squaw game token has no ridges because
there is no liklihood of people "shaving" its valueless edges!
HA HA!!!

I bet it would be fun to shave the edges off of one, to reveal
the copper inside... Imagine how worthless these coins would
feel by weight if the things were made out of zinc like the
new 20% lighter pennies!

pho�ny
Etymology: perhaps alteration of fawney gilded brass ring used in the fawney rig, a confidence game, from Irish f�inne ring,
from Old Irish �nne
not genuine or real: as a (1) : intended to deceive or mislead
(2) : intended to defraud

trinket 1 : a small ornament (as a jewel or ring)
2 : a small article of equipment
3 : a thing of little value; trifle

tri�fle Etymology: Middle English trufle, trifle, from Old French trufe, trufle mockery
1 : something of little value, substance, or importance

bau�ble
Etymology: Middle English babel, from Middle French
1 : TRINKET
2 : a fool's scepter
3 : TRIFLE

bab�ble1 a : to talk enthusiastically or excessively b : to utter meaningless or unintelligible sounds
2 : to make sounds as though babbling
transitive senses
1 : to utter in an incoherently or meaninglessly repetitious manner
2 : to reveal by talk that is too free

gewgaw: ('g(y)�-(")go) (Pronounced like yugo, with a g?)
a showy trifle : BAUBLE, TRINKET

gimcrack: a showy object of little use or value : GEWGAW

kickshaw
1 : a fancy dish : DELICACY
2 : TRINKET, GEWGAW

KNICKKNACK : a small trivial article usually intended for ornament

How about?

Squaw Bauble?
Phony Token Trinket?
Gewgaw Phony Squaw?
Kickshaw Squaw?

By the way, if anyone wants it, I'm at

jason_happy@excite.com
ORO
Note on China gold sales - RESOLUTE repost - SDRer
From RESOLUTE repost:
"On top of this, the demand out of China appears to be exceeding my most optimistic expectations. The Caishikou Department Store in Beijing, which has started to sell gold bars on 10 December, has reported that it has "been drowned in an ocean of zealous gold buyers". It is the only sales agent of bulk gold in the capital. In December, more than 6,300 pieces of gold bars, weighing 600 kilograms, were sold at the store. More than 5,000 people sent their orders in while 8,670 people visited the store's gold department. The bars were priced at 104 yuan ( US$12.5 ) per gram."

------------------------------------
This comes to $389 per ounce.

The SDR based gold price in the Chinese Yuan rendition is simillar ($370 to $390 through 1999) and has not changed course.

SDRer, in the posts below, gave the details of the various prices of gold.

Notably, the Japanese SDR conversion price is $208.227 - the value the BIS uses to balance the books in converting $ denominations into gold denominations. The "public" Chinese currency price has nearly the same value, (this is the book keeping gold price in dollars for the Chinese monetary authorities - so far as I can tell).

In this weird world of multiple prices for the same thing, the BIS contract dollar of $208 or so, is mirrored in today's SDR gold price at 208 SDR per ounce gold. (1.4 dollars per SDR, 285 dollars per ounce).

--------------------------------------------------------------
SDRer also notes that the currencies align nearly perfectly in palladium terms, implying that the international settlements are done in/with palladium rather than in gold alone. The price of palladium is set in this hypothetical settlement structure to adjust for settlement requirements.

A theoretical pile of hypotheticum, a monetary metal, sits in each country's hypothetical vault. The hypotheticum is moved between the hypothetical vaults to settle the cross currency obligations traded among the settlement banks (for the US it would be the NY Fed) according to the flow of currency trading among the banks that are members of each Central/Reserve bank system.
Now imagine that the largest trading partner has an empty hypothetical vault and nothing can be transferred from it at any given fixed (or floating) rate, because at any rate of exchange, something has to paid out. So what do you do in order to make things continue? At first, the trade is settled with IOU hypotheticum notes bearing an interest. But after a while operating this way, the IOUs are no longer accepted because the IOUs exceed the amount of hypotheticum that can come out of the ground within their maturity. Now assume that a backup is not ready, and a new way of settling things must be created to settle the payments temporarily.
Answer to the problem comes in separating the streams into two types of hypotheticum - the outgoing hypotheticum, and the incoming hypotheticum from the perspective of the empty vaulted country. Adjust the price of the out-hypotheticum to the point at which the flows of currency out of the empty-vaulted country are set to equal the flows of currency into it when measured in exchange for in-hypotheticum - where the balance must be 0 - because no hypotheticum is left in that country's vault to pay off the difference, and no more IOUs can be accepted. Let's call the outgoing currency's metal hypalladium, and the incoming currency's metal hypogold.
Say, the flows of currency out of the empty vaulted country, say the Kingdom of Spades, were 1090 Spades and the flows into it were 1000 Spades when measured at market exchange rates of each currency when converted into Spades, how can we have settlement? Answer: the outgoing spades are in a different monetary metal hypalladium and the other currencies are exchanged into hypogold so that the 1000 Spades coming into the Kingdom of Spades as other currencies, once they are converted into hypogold, will be equal to the 1090 Spades coming out, once exchanged for hypalladium. But that would mean that within the settlement bank, hypalladium equals X hypogold, whereas in the markets, the exchange between them might be different. However, the exchange rate of Spades to hypalladium may be put to the public so that it is known to those who need to know what it is at any time, and the exchange rate for hypogold is out there for all to see that Spades are superior in demand to that for hypogold.

For any CB wanting to exchange their Spades into hypogold, however, they will be quoted the converted hypalladium price. Smaller trades and market exchanges would be done in the official hypogold prices set by the markets.
---------------------------------------------------------------
In the second quarter of 1997, the huge pile up of gold derivatives, after having doubled in the preceding two years to the point where they exceeded future gold supplies, could no longer be used to settle trade and imbalance of payments problems. Yes, I believe that London's problem was an outgrowth of the need to supply part of the imbalance of payments of the US in private market gold bonds and equivalents. Since in today's world it is impossible to collect from a government in any way, if it does not see a benefit to doing so, the only way to make sure that there is sufficient gold to cover trade imbalances when the gold vaults are empty is to have the private markets do the work required - produce trades that have dollars at one end, and an obligation to supply gold at the other. All CB lending and guarantee policies in gold and dollars must be set up for that purpose.
-------------------------------------------------------------
Volcker essentially put it in these terms: there is a problem of degrees of freedom in setting currency exchange policies, if there are N major currencies, then there need to be N-1 currency policies and one major Passive currency, the one used in reserves and trade - like gold was. The parallel problem is the Triffin dilemma (see his 1960 book) that states that the country who's currency is used for reserves, must see its trade position deteriorate as the rest of the world develops and trade grows in volume. Needless to say, Dexter White and JM Keynes had exactly this in mind when their Bretton Woods system was set up. However, the keeping of the gold redeemability was a back door for the non-reserve-issuers to call a halt to the deal.
When the fixed exchange system fell through repeatedly once the gold window was closed, the problem of settlement at floating exchange rates had to be solved. There was a need for balancing the dollar supply (treasuries included) discrepancies with gold at daily inter-central-bank settlements with something other than US government securities. No CB wanted more of them, meaning that the floating exchange system required active trade of dollars for gold for settlement due to the exchange markets not being able to adjust currencies to the precise needs of daily settlement (or settlement at all). Obviously, the persistent problem was that of the dollar being in over-supply. Till 1980, this continued through market settlement with physical gold. Since then, the US bonds were accepted with parallel private market gold obligations, as settlement. In 1987, after the debt trap sprung on the Emerging Markets was done working its magic for the US, and a new set of record trade deficits, the dollar was under pressure and the US dependence on OPEC oil reappeared as the oil output from the Gulf of Mexico and Alaska was not sufficient to meet US demand. The current gold for oil deal was a product of this and relied on the Oil Royals taking a risk in adding some of their own gold into the gold derivative pool and trading oil futures for gold futures. This allowed settlement till the system could be replaced. FOA and ANOTHER paint for us a portrait of the concepts involved - there was the beginning of Yellin's reverberant doubt (also can be read at the online copy of Human Action at Mises.org) that put the world currency and banking system in danger. The 1987 crash was triggered by the news of Germany being unwilling to "fix" the exchange rate with the dollar by lowering interest rates to well below US level. Similar pressure was put to bear on Japan, which took the bait. Two years later, the Nikkei was rocketing to make a double in record time and real-estate prices became completely absurd. The crash that followed was enormous. Japan is still trying to get out of that hole one full decade later.
-----------------------------------------------------------
Just in case somebody happened to miss the point, I'll call the Spade a Spade - by its name, Dollar.

-----------------------------------------------------------
Date: Fri Aug 27 1999 09:26
SDRer (Parity Update-) ID#246299:
Broad view of the data suggests that they simply won't 'make it' to 1.03/.96xx ~ gold 251.xx. [This assumption supported by the re-positioning of the pm links.]

However, the palladium algorithm 8/26/99 now puts gold at 251.5258 -eur; 251.9808 -usd; 251.5255 -dem; 251.3819 -jpy; 251.980 - cny.
The question arises: will the smoke and mirrors pog suffice?

Also of interest-the public price of Chinese gold, sans arbitrary markers, now touches the USD Rule of 35 pog --209.972. The JPY Rule of 35, translated into usd is at 208.227. Interesting, yes?



Also from SDRer:

Gold's guardian dragon is CNY*SDR which, on 8/13/99 is -- translated to $ = $374.6456.

In November of 1994 the 'Chinese Dragon POG' was [in $] 328.8766; in August 1996 it was $347.6441; in August 1997 it was $377.7795; in August 1998 it was $384.1138. [Figures computed from IMF/SDR quotes for days in question.]

The central banks and princes and barons of Davos price of gold 8/13/99 is in the $340 to $350 range.



ORO
Journeyman - Kudlow Greenspan
Marvelous piece of work.

I have a reply to an old message of yours in the works. Your discussion of a return to gold led me to ask myself a few questions and hit the books for some thoughts.

By the way, my thoughts as to the Big Float size are that the ratio is 23 $T to 6.5 $T - which is, by the way, the ratio of the US economy to the rest of the world economy when adjusted for PPP.
Hipplebeck
(No Subject)
The pog of the last two days makes sense to me.
If there are buyers out there in the spot market, the price rises as it was before the BOE auction. Some of those buyers got their gold at the auction, therefore removing that demand from the spot prices, making the spot price fall a little. That 25 tons got absorbed pretty easily I think, which should be good for pog in the long run.
RossL
Journeyman, Oro, all

Fascinating posts. A question: what is holding the central bank / balance of trade system together? Threats of force? Threats of financial panic? Journeyman hinted that "jawboning" by Greenspan was about all he could do. Another question: If CPI and gold are manipulated, then why not M* figures and current account balance figures also? Is anything real? (other than hard money, of course)
Twice Discipled
Newmont earnings headlines ...
Alert: Newmont Mining Q4 Oper Shr $0.30 Vs $0.05 (options, NYSE:NEM)
Alert: Newmont Mining Q4 Revs $430.6 Mln Vs $356.5 Mln (options, NYSE:NEM)

Maybe those in the know, knew about this and knew that if they didn't squash the price of gold yesterday there would be a big jump today.
Just guessing ... looks very suspicious.
Journeyman
Duh!

CNBC's Kathleen Hays says Greenspan's reconfirmation hearings will be postponed till 2pm Eastern time, and HE'LL BE GRILLED ON WHY IN THE WORLD HE'S RAISING RATES WHEN THERE'S LOW INFLATION.

Is Greenspan the ONLY American, other than those reading this forum, to understand the significance of the current account balance (all those overseas dollars) or is it just that most of those who know simply assume "foreigners" will be very happy to continue to collect them? I'm looking forward to Greenspan's answers (if the hearings are broadcast.) How candid can he afford to be???

Regards, J.
Julia
Aristotle
Your thoughts:
"I'm making good progress on my "perfect monetary system" post, but it has sprouted branches that I didn't
anticipate. I'm beginning to wonder what the patience of the Forum can bear. Should I try to present the entire
body of thought, or should I trim it down to a sharp executive summary without the supportive explanations? If
the call is made for the whole salami, should I post it over time in bite-sized portions, or else drop it on the
Table like so much bad cheese?"


Please, drop the the whole salami on the table, Sir. I should like to take my fill of bite-size portions from the entire serving which I have cut just right for me, and savor each bite until I have ingested and digested the whole meal served by the "Master of Thoughts" at our esteemed table.

Please, Sir, served the sprouts. Sprouts make the salami easier to digest due to their archtypal characteristics. One's mind can then draw nutrition from their resources and grow stronger as harder to digest bites of salami are consumed.

I remain fasting and vigilant until your meal is served.

Thank you for inviting me.
Julia
Cavan Man
To Aristotle
Please send the whole salami intact (at your convenience).
Journeyman
"Voting for benefits leads to dissolution of democracy" quote @Aristotle
http://www.lexrex.com/informed/otherdocuments/thelaw/thelaw.htmHi Aristotle!

Looked for the quote I remembered in Bastiat's "The Law," which you can download from the above link. Also dug out my hardcopy booklet from FEE.

I thought I remembered something like "Democracy is in trouble when men learn they can vote themsleves things they would otherwise have to obtain through hard work."

Well, I couldn't find it from either form -- doesn't mean it's not there, just that I couldn't find it.

The Prof. Taylor quote from ji seems pretty good??

Regards, J.
ORO
RossL- M numbers and a blurb on banks
A couple of points.

1. M numbers are important, particularly to the bankers.

2. The Big Float is pretty much an unknowable figure - a number for which, after a few years of searching I could not find. No authoritative numbers are available. Many estimates are done, but most of this is of the "smoke screen" type, where elaborate excuses are made to make the numbers seem smaller.
This is THE important M number.

3. "Money" substitutes. As the variety of Money Supply definitions indicate, the people in control don't know which numbers to track. The Economist had a wonderful article on the nature of Greenspan's job less than a year ago. The article described it as piloting an airplane with instruments that are allways off the mark, with some working some of the time, sometimes not.

4. As any Austrian economist would tell you, the quantity of money changes nothing of its own, it is the fact that it increased in one place and decreased in another that makes the difference. In order for the quantity of money to matter, one needs a crisis of confidence. During the whole of the inflationary period, the Swiss saw no significant price rises. This in spite of their currency being in great supply internationally. Their Big Float is greater in proportion to their internal float than is the US dollar's.

5. Jawboning is not the only thing he can do. The growth figures in the Ms show what he does. The Ms range in 8 week annualized average growth rates anywhere from -2 to 25% ever since Volcker decided to bring the dollar more heavilly to the demand side using liquidity limits and high interest rates. Greenspan can, and does change interest rates to drive the dollar up and maintain confidence in the Big Float.

6. Mises pretty much said the word - confidence. A con game can survive for great periods of time. Often, the people running it fall for their own lies. The yes man economist, as Lord Norman said, is supposed to tell him (the Central Banker) why what he did was good for the economy. Sometimes, even Norman listened to his yes men.

-----------------
Another problem is the "problem of the currencies" that Mises describes;

Conditions: gold redeemability for the currency world, any money for a bank.

Banks A, B, C each issues its own loans and "fiduciary" (ha ha ha) money (the money created by the loan). In the case of CBs, they issue currency.

If one bank, say B, leverages itself well beyond the leverage of the other banks, it will have issued more notes per each unit on deposit than the others have (e.g. Continental Illinois 1986, BOE 1931, FRB 1933). This means that upon daily settlement, bank B will be faced with more withdrawals by the other banks than bank B has to withdraw from them. If the rate of return from bank B's investments is not greater by a greater proportion to its leverage than returns of the other banks, then the higher leverage will end with the gradual deterioration of the bank's balance sheet as upon each settlement it loses an additional portion of its reserves. As the reserve falls, the proportion of reserves to liabilities falls further, making the bank's risk of insolvency greater with each settlement.

The ways out
1. Stop further new lending till reserves build up. Downside: eliminates earnings growth.
2. Sell some loans/bonds to another bank/investor. Downside: lowers earnings, usually ends up with the sale of the best loans, leaving worse loans on its books.
3. Arrange a credit line from another bank that can be drawn upon when needed. Downside: You may find that when you need it, the competitor bank will withdraw the credit line in order to push you over and eliminate you as competition.

4. Join with the other banks to form a cartel and twist politicians hands, once their palms are thoroughly greased, to make these banks, and only them, part of a central bank system that dictates the levels of reserves required and provides lending when necessary, according to decisions of your own representatives at the central bank.

Otherwise bank B will be known as bankrupt before long.

This last option is obviously the choice to be made, as in "good work if you can get it..." (marry the king). In this case, we have a banking "system" acting as one bank. Not having to provide for defense against excess leverage because all banks have the same level of leverage, that level can be raised to the point of "no return", where the loan market is tapped out, as the economy can no longer produce profitable business, and high priority demand from creditworthy consumers has been satisfied since loans were so plentiful.

To show the effect of the Federal reserve's creation on banking, we need only look at reserve levels. Before the FRB was created, bank reserves were typically 25% to 40%. Once the system was up it took only one decade to get reserves down below 3%. At this point, the economy had passed the point of no return and no more effective lending could be made to creditworthy customers.
TownCrier
Today's Market Report
Market Report (1/26/00): Gold gave up another dollar in overseas disappointment on the oddly weak New York performance following what many analysts described as a "positive" or "neutral to bullish" auction by the Bank of England. However, this trade was particularly thin with Australia closed for National Day, and gold meandered in a tight range until re-entering the NY market where gold broke briefly to the upside, climbing above yesterday's closing mark. Currently spot prices for the yellow metal have returned to levels near $285.

While we reported that prior to the auction AngloGold Marketing Director Kelvin Williams told Reuters that "the company may or may not participate," Anglogold confirmed afterwards that it had in fact successfully bid for less than 10 percent of the offered metal. Some analysts had been looking for indications of the level of auction support coming from the miners, seeing less participation from this sector as more bullish. Bridge News reported that a European source believed that the bidding interest came predominantly from "a narrow list of bullion banks and speculative buyers." As yesterday's price quickly rose the bidding deadline in what was said to be nervous anticipation of the auction results, as it climbed above $290 resistance was encountered. One broker told FWN "This seemed to get progressively tougher as it climbed higher." But even as gold was sold off in subsequent COMEX action, the trader's loss was the physical buyer's gain...Reuters reported this morning that "gold was well-supported by physical buying after slipping from around $290.00." That's precisely the only strategy we recommend in this climate, unleveraged physical acquisition. For those noticing the large addition to COMEX stocks, the entire gain was to the Registered inventory, with only 112,168 ounces residing as Eligible stock.

Speaking of physical buying, the head of the Central Bank of Russia's gold and precious metals division said today that the CBR bought about 100 tonnes of gold in the past year from Russia's commercial banks, and plans to buy all gold offered by these banks in this present year. In Russia, the domestic commercial banks buy gold directly from the domestic gold miners, and are expected to purchase over 70 tonnes in the year 2000. Meanwhile, the sale of 23 tonnes under terms of the Washington Agreement by the Dutch central bank leaves only 36 tonnes to be placed through the BIS over the next ten months in reaching their pre-announced intention to sell 100 tonnes this year. Also under terms of the Washington Agreement not to increase gold lending activities, the National Bank of Belgium told Reuters in an interview today, "We are still lending gold although only with the best guarantees regarding the security of our operations." With the gold prices now near the levels at which the Washington Agreement was first announced, we can't help but think that they are destined to move higher as the physical effects of the sales and lending curbs from the European central banking sector begin to work their way through and come to be felt by the spot marketplace.
That's it for today, goldmeisters. We'll see you here tomorrow.
Peter Asher
Journeyman (01/25/00; 21:23:38MDT - Msg ID:23625)

Ultra professional, superb analysis. Must go in the HOF!

The "Big Float" could be the key to solving the prediction mystery. We could now pick up where you left off and peruse what those dollars might buy if they did seek domestic purchases in quantity.

For a start, I dug this out of the Archives: (Follow up to --Peter Asher (4/3/99; 19:36:07MDT - Msg ID:4173)
"The Final Battle"; Led by the ### 5th Horseman, OIL ### ---- The allegory of Oil as Darth Vader)

Peter Asher (4/8/99; 21:37:26MDT - Msg ID:4486)
Michael
"Some familiar, some fantastic". You said in your gracious award post. I reviewed my piece and
concluded that by fantastic you meant this part??

collapsed stock prices and deflated properties go begging for the crumbs we will trade for
them.">

I recall awhile back, that the Japanese were using their strong Yen to cheaply buy all sorts of
American businesses and real estate, including about half of Hawaii. There was some clamoring
in congress to pass laws against foreign ownership of real estate, and maybe more.
Whatever it was, it faded away because after all it was MONEY. About the same time the
British financier Goldschmidt, bought out Crown Zellerbachs' timberland (A substantial chunk if
Oregon) and later sold it back to us for triple the value. I'm a little vague on all the details of this
but that's the general idea of what I recall.

So, if the dollar tanks and Overseas Investors have inflated buying power, they're not going to
buy Chevys are they? What I'm suggesting is that if a situation occurred whereby we were
substantially more susceptible to our assets being acquired than the time of the poor Dollar-Yen
ratio, well than a massive asset takeover could threaten. Especially if the price of corporate
shares had fallen drastically. Now maybe that would be scarey enough to actually create some
legislative protection!

What I was trying to do with that allegory (aside from the irresistible urge to have fun casting
Oil as Darth Vader) was take the chain of events further into the future than the return of Oil fed
Inflation.

What might turn out to be really fantastic is what Greenspan & Co. will come up with to try and
prevent this.
TownCrier
Fed adds $1.069 billion in permanent reserves via coupon pass
http://biz.yahoo.com/rf/000126/4u.htmlFed adds this billion dollars of permanent reserves to the banking system through the outright purchase of coupons maturing Nov 2021 to Nov 2027 for delivery on Thursday.
YGM
Just a Hello!
Good to see all the familiar faces still here.....Been away for awhile so I have alot to catch up on in the shady world of Gold...........manipulation still seems very apparent....sad huh? Almost makes one wish Y2k wasn't such a non-event....Oh well, our lives are much better than Martin Armstrongs I suppose. :-))
Later....YGM.
TownCrier
Remember our earlier discussion of *non-monetary* gold exports?
We already discussed that U.S. non-monetary gold exports were reported last week to be up over 150% in November versus October (rising to $1.008 billion versus $400 million in the previous month), and we now get a peek into what has gone on in Japan...

Bridge News reported that Japan's Ministry of Finance announced that non-monetary gold imports cleared through customs rose in December by 24.2% on year with 12.8 tonnes for the month. The total figure imported for 1999 was 108.5 tonnes, up 26.0 percent.
schippi
HUI Gold Index Chart
http://www.SelectSectors.com/hui.gif This Chart shows a resistance level that MUST hold.
scp
Paying off debt
I through this out for comments yesterday, but received no responses. Greenspan mentioned paying off the US debt in his speech today. In effect, the US plans to start retiring bonds. They say they will use the surplus to do it...but we
all know that they will monetize the debt. This means a flood of dollars leaving the US starting in May. These dollars will cause inflation in all forms...real estate, financials, etc.... Can anyone explain what happens if the dollars are exchanged for other currencies, yen, euros, etc? How does the US acquire the currencies needed for conversion without a trade surplus?
ORO
scp - debt etc.
Greenspan was talking about retirement of US debt by paying it off with funds from taxes. This would reduce future obligations of the US and would imply a lower interest expense in the furure for the US government.

The bulk of debts of the US government are denominated in dollars. Therefore, there is no need for their exchange into another currency. The hope is that as bonds are retired, the dollars payed out would go to purchase either some of the remaining bonds on the market, or be used for purchase of private market securities.

Where this gets interesting is that the foreign exposure of the dollar has a trade structure like this: someone - a bank or a corporation or a government - that lent dollars that were created against a different currency, or were exported out of the US. The dollars taken by foreign holders of T bonds when the bonds are retired can go back to US assets, or can be traded for foreign currency. The result of the trade for foreign currency would be either one of the following:
1. Dollar falls as the dollars are exchanged for other currency.
These dollars are used by the person on the other side of the exchange to
1a. Pay a dollar debt - reduces the number of dollars - sothe net effect is 0
1b. Buy US assets - increases US asset prices while lowering dollar exchange rate
1c. Lend the dollar - increases the number of dollars lowers dollar exchange rate (increases prices)
1d. Buy US goods - increases US goods prices (same for services)

Most likely would be a contnuation of the trend since 97, where the foreign bond holder is selling slowly and using the proceeds to buy US assets and to pay down dollar debt - 1a and 1b
2. The dollars simply go back into a US bank or other US assets - exchange rate is not affected and the price of assets continues to rise.

The funny thing is that the bond pay down should lower interest rates. Instead, they are rising. This would be a market interpretation along the lines of the US debt pay down being done with newly created cash. Which would raise price inflation, lower dollar values and cause the "real" return on bonds to fall - hence the rise in interest rates (fall in bond values) when the bond is supposedly in short supply.
nickel62
I Think this article by Mr. Norland answers many questions about how the stock markets keep only going up!
STRONGLY SUGGESTED READ !!!!

Doug Noland
The Prudent Bear Fund
ticed@prodigy.net
January 21, 2000

The Credit Bubble Bulletin
A Theory on Money & Credit Creation

Unfortunately, we will have to admit that our earlier view that some rationality was going to return to the marketplace has proven little more than wishful thinking. We certainly saw little in the way of rationality this week, at least in regards to the most speculative sectors of the market. For the week, the AMEX Biotechnology index surged 15%, increasing its January gain to 25%. The NASDAQ Telecommunications index jumped 7%, and The Street.com Internet index 5%. The small cap Russell 2000, clearly led by the more speculative issues within this index, surged 5% also. For the week, the NASDAQ 100 gained 4% and the Morgan Stanley High Tech index increased 2%. Semiconductors came under a bit of selling pressure, declining 1%. This sector, however, still holds a 14% gain for the month. For the bluechips, however, it was a rough week. The Dow sunk 4%, although the S&P500 declined less than 2%. The economically sensitive issues underperformed with the Transports down 5% and the Morgan Stanley Cyclical index dropping 6%. The Morgan Stanley Consumer index declined 2%, while the Utilities rose 1%. The financials were once again under heavy selling pressure as 10-year Treasury yields jumped another 9 basis points. For the week, the S&P Bank index dropped 7% and the Bloomberg Wall Street index fell 5%. In sum, speculation ran absolutely rampant while ominous storm clouds gathered on the horizon. With expiration now behind us, next week could be interesting.

We live in extraordinary times, so we will take extraordinary measures. Beginning today, and continuing on Fridays, Doug Noland will present market commentary and analysis under the title "The Credit Bubble Monitor." The goal is to focus attention clearly on the issues and ramifications of unprecedented money and credit creation. It is our view that this subject matter is not being adequately addressed today, and that conventional analysis completely fails to explain the current environment. It is our hope to raise some points and encourage thinking; it is our goal to provide insightful and valuable analysis. We don't, and Doug doesn't claim to have all the answers, but we do have plenty of determination. Importantly, there have been many great economic thinkers that have addressed money and credit issues throughout history, and Doug will work to learn from and share this wisdom. We expect that a truly amazing story will continue to unfold, and we plan on telling it.

Of course, it is our strongly held view that we are in the midst of a momentous financial and economic bubble fueled by unprecedented money and credit excess. It is also our belief that, unappreciated by the vast majority of analysts, non-banks have developed into the leading propagators of the credit bubble. In this vein, this week Freddie Mac reported that it expanded its balance sheet by $22 billion during the fourth quarter, a 25% annualized rate. Freddie Mac and Fannie Mae combined to increase assets by $46 billion during the fourth quarter, and $155 billion for the year. After moderating growth during the first half of the year, Fannie and Freddie came on strong to increase assets by $94 billion during the second half. For the year, Fannie and Freddie increased assets by 19%. Interestingly, money market fund assets also increased by about 19% during 1999, expanding almost $260 billion. Also noteworthy, money market fund asset growth slowed during the first half but also came on very strong during the second half of 1999. Mere coincidence? We don't think so. After all, it is Fannie and Freddie along with the aggressive non-bank lenders such as GE Capital, GMAC, and the Wall Street firms, that borrow from the money market and finance the bubble excesses. As goes their borrowing and lending, goes the fuel for the bubble. This was particularly the case during the second half of 1998, and again during the latter months of 1999.

Actually, we almost have the sense that "the wheels are moving," that a few "independent thinkers" within the economic and financial world are coming to a clearer understanding as to what has exactly transpired. A couple of analysts have recently focused on the powerful role that Fannie Mae and Freddie Mac have played in fueling the US bubble, although the vast majority hold firm with this strange notion that these institutions are only "intermediaries" and do not provide credit. Interestingly, in yesterday's market commentary, the always insightful Don Hays discussed MZM, the St. Louis Fed's index of "Money at Zero Maturity." This index is basically M2, which includes retail money market funds, plus institutional money market mutual funds, but excludes bank time deposits. Quoting from his report, "If you look at the chart of MZM, you will see that every time it has moved above a 10% year-over-year growth rate, it in effect cocks the hammer on the bullish gun. It causes extreme, excessive speculation�" Our response, "Precisely!!! The fuel for the bubble is within MZM."

There is, however, nothing magical or mysterious about MZM. In fact, to simplify the analysis we suggest that one focus instead directly on money market fund assets. This is the key, the "fountainhead" for the US bubble. In fact, during 1999, about 70% of the increase in MZM is explained by the growth of money market mutual fund assets. And, after expanding about $60 billion during the first half, money market fund assets surged almost $200 billion during the second half. Is there a relationship here between money market fund assets and stock market speculation? Well, we see that during the first half of 1999 the NASDAQ Composite gained 493 points. During the second half, the Comp rose 1,383. Again, is this mere coincidence? We see that margin debt increased $36 billion during the first half and $52 billion during the second. Is there a relationship between margin debt and money market fund assets? Does heightened money and credit growth fuel rising stock prices that exacerbates speculation leading to additional stock market leverage and further money and credit creation? When brokerages borrow in the money markets to provide customers funding for stock purchases, does this create money? When derivative players borrow in the markets to purchase securities, say if they have written call options and the market is rising and these options are moving into the money, does this create money and credit? If not, why not?

Before deregulation, the money and credit creation process was dominated by the banks. "Money" was basically currency and bank liabilities/deposits, and money expansion was restricted by prudent bank lending and reserve requirements. Economists studied bank reserve data to judge the banks� potential for expanding lending. Bank lending completely overshadowed credit creation in the capital markets. But times have changed, and the structure of the financial system has gone through a momentous transformation. Today investment bankers, brokerage firms and the money markets are kings of credit creation and the banks just follow along. Security issuance and financial sector borrowing governs the credit creation process. The business of lending has opened up to virtually any company that wants to try to earn a buck making a loan or providing financing. All one need do is lend the money and get a securities firm to bundle it, securitize it, and sell it. If you are big enough, or have a government guarantee, you can borrow cheap money in the money markets and balloon your balance sheet with loans and leases. Obviously, many major US corporations have recognized it is much easier to meet Wall Street earnings growth targets through "financial services" than it is by manufacturing products. And if Wall Street likes your "growth prospects," it will go out of its way to help you become a "player" in the lending game. Lending to risky credits has for some time been a growth story.

As such, bank credit has become a very poor indicator of credit growth in a world with a proliferation of non-bank lending, and, besides, even the banks now securitize and sell a big chunk of their new loans. At the same time, bank deposits have become a woefully inadequate measure of what functions as money in the real economy and, importantly, in the financial sector. In the age of brokerage accounts, credit cards, home equity loans, lines of credit and mutual funds, bank deposits are virtually useless as an indicator of available buying power.

For an example, let's say one cashes in on some company stock options and now has $100,000. We hear this is not an uncommon situation. Well, this money could be placed in a bank account at Chase Manhattan. At Chase, one might choose a money market fund or a savings account, although they make it much more attractive to choose the money market fund. Or, more likely, this $100,000 is placed in a money market fund at a new online trading account opened at Charles Schwab. Either way, it doesn't really matter much as these accounts serve virtually the same "monetary" function for the financial system. But, surprisingly, much of the world views that money creation only occurs with the deposit into a bank account at Chase. Yet, today the vast majority of what functions as money are simply entries on a vast electronic ledger system. Money is electronic and created simply by additional electronic entries. Importantly, the Fed is certainly not the only institution that can create money by making electronic entries and the banks certainly don't have a monopoly on the process. To be a player in this electronic financial landscape, one just has to borrow and lend money in the markets � create a balance sheet of entries on the vast electronic ledger of debits and credits. It doesn't take much to get in the game, as is being proven with the proliferation of companies providing financial services on the Internet.

All the same, most analysts take as an article of faith that only banks create credit and that the Fed is the master of money creation. We see this is an intellectual trap that is not only erroneous, but severely hampers sound real world analysis. Today, any sensible analysis would certainly expand the definition of what functions as money to include other liquid financial assets, such as holdings in money market funds. The Fed understands this, and therefore includes retail money market funds in M2 and institutional money funds in M3. So, if we accept that money market fund assets are money, then who creates it? Is it the Fed? Is it the banking system? No. The creators of this money are those institutions that create the financial liabilities that are the assets of these money market funds. The creators of this money are predominantly those institutions that borrow in the money market, create additional liabilities, and then use these funds to either lend or purchase financial assets, such as mortgages. Let's say Fannie Mae borrows $100,000 from a money market fund to provide financing for a home equity loan. Fannie simply creates an electronic IOU, and exchanges this IOU with the money market fund as "money" is electronically transferred to the borrowing homeowner. Here, money market fund assets indeed remain the same, as "cash" is credited, IOU from Fannie is debited. However, the difference is that the homeowner now has $100,000 to deposit into a Charles Schwab money market account to play the market, as well as $100,000 more debt. There need not be a bank anywhere involved in the transaction. And as far as the original money in the money market fund that began the process, it could come from myriad of sources, including the sale of company stock or options. The key point is that electronic money is multiplied instantaneously and, we will add, without any restriction of reserve requirements.

Think of it this way. Bank credit is created not by depositors, but by the lenders. It is the act of bank lending that creates additional deposits, or new money. A similar process works to create credit outside of the banking system. In fact, this borrowing and lending process works with the same "multiplier effect" that is taught in Econ 101. There are differences, however. In the economic textbook example, a bank takes a deposit and makes a loan, hence increasing deposits and multiplying money within the system. The problem with this teaching, however, is that it fails to take into consideration the transformation of our financial system. Today, the non-banks borrow in the money and capital markets and make loans, hence increasing total credit within the system. And while the belief is that only the Federal Reserve and its member banks can "multiply," this is not true. In fact, the idea of "multiplying" has been discussed at least as far back as 1690. Today, money and credit are created by Fannie Mae and Freddie Mac when they borrow and balloon their balance sheets and lend "money." Money and credit are also created by General Motors Acceptance Corp., GE Credit and other captive finance companies when they borrow in the money markets and lend for credit card purchases, auto loans or new mortgages. Money and credit are also created when Charles Schwab or Merrill Lynch borrows in the money markets to fund margin debt when their customers borrow money to buy stocks. Indeed, money and credit are created by a long list of lenders within and without the banking system. Moreover, we see this mechanism of borrowing in the money markets and financing the purchase of financial assets working much as "high powered money," creating money and credit unrestrained by reserve requirements � we see it as an "infinite multiplier effect."

Today, it should be considered the financial sector that creates money and credit, not the Fed and banks exclusively. We know this analysis is going to drive conventional thinkers crazy, but we will stick with it nonetheless. Conventional analysis will try to stick with a narrow definition of "money," arguing that only banks create bank deposits. Well, it is hard to disagree with such a statement but such analysis completely misses the point. We think in today's world the functional definition of money is becoming ever broader, almost to the point that there is increasingly less differentiation between money and credit. In a world of fiat money and a growing mountain of marketable securities, credit is virtually money, and certainly money is little more than credit. But to those who insist that only banks create money and credit, we ask why and how can this be the case?

Recently, a leading American economist stated to us that Fannie Mae and Freddie Mac are only "intermediaries," just like insurance companies. Well, we very much disagree and see a very critical difference. Insurance liabilities do not function as money, like much of Fannie and Freddie's liabilities. If an insurance company aggressively expands its liabilities, this does not immediately increase purchasing power throughout the financial system and economy. Insurance liabilities do not provide additional financial market liquidity, fueling higher stock and real estate prices as well as a bubble economy. Others say that these non-banks are simply intermediaries, taking money from one person and giving it to another. Well, as far as we are concerned, this is precisely the essence of lending and credit creation. And others see the non-banks as champions of free markets, effectively allocating savings and in no way being factors in inflationary credit. We disagree and, beside, what savings? Let the debate begin!

While keeping in mind the preceding discussion and the fact that household sector savings has deteriorated to insignificance, think about the following statement - and the financial and economic ramifications - from Charles Schwab's recently released fourth quarter earnings report:

"Our customers brought a record $33 billion in net new assets to the firm during the fourth quarter, which pushed net new assets for the year to $107 billion, up 35% from last year. Net new assets per new account equaled $40,000 during the fourth quarter of 1999, up 18% from the same period last year. Customers opened a total of 1.5 million new accounts during the year, and we had 6.6 million active accounts by the end of 1999. We crossed the $700 billion milestone in customer assets during December, and ended the year with $725 billion in customer assets, an increase of $234 billion over year-end 1998."

Wow, there is obviously something very extraordinary going on here. Clearly, all this "money" did not come from savings. And, since this is just from one brokerage firm, this is but the "tip of the iceburg" in what was another bout of runaway money and credit creation last year. Over the past two years, M3 has grown more than $1 trillion, with $600 billion being an increase in money market fund assets. Over this same period, the three largest GSEs, Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System have increased their assets by almost $600 billion. Stock market speculation has exploded, margin debt has exploded and derivative trading has exploded. Corporate debt issuance has exploded and household mortgage debt has exploded. Our financial system has run completely out of control and it is about time that this is recognized and addressed. We don't claim to have all the answers but there is absolutely no doubt that there is a big problem here. We strongly urge the US economic community and the Federal Reserve to "get with the program" before it is absolutely too late.

scp
Thanks Oro
This was posted on the Prudent Bear thread by Mr. Moto:

The Fed will conduct the reverse auction via its dealer network. No one else is permitted involvement.

Don't think of the transactions from a trader's perspective. View them from the vantage of accounts activity. Treasuries around the world all have accounts at the Fed. The NY FRB, in particular, conducts hundreds of billions of dollars in settlements each day.

The U.S. Treasury will, in all probability, execute interfund transfers into an FRB sub-account which will be debited by the Fed. The Fed could then, upon receipt via their broker/dealers, credit the participating foreign accounts for which it has custodial license. Those
redemptions by other than official foreign entities would be facilitated via the accounts of Fed member banks that are also qualified dealers. The exchange rate adjustments would, of course, be an element in the process -- an automated one, no doubt.

Whenever one of the credited foreign accounts, denominated in U.S. dollars, is drawn-down, the Fed will create the debit which will then be processed through the dealer network in a direction opposite the redemption. I believe the Fed's dealers (banks) will facilitate the currency exchange via their ongoing participations in the money markets. It is there, in the money markets, where the newly created dollars produced by foreign redemptions will find their destination.

My concern is for an event in which a chartered U.S. commercial bank redeems USG bonds for the cash settlement, then uses the deposit to expand their assets by increasing loan activity; or any of a number of other revenue-producing activities. Banks don't make money sitting on cash. They'll put it to work somewhere.
RossL
schippi - HUI Gold Index Chart

If Ashanti defaults on their margin calls (which was the speculation heard here yesterday) that could become a trigger (excuse) for a broad selloff of the gold stocks. Likewise for a move to nationalization by the government of Ghana.

Some of these manipulators would just love to push the index across a few TA lines on the charts. One little push by a manipulator, then the momentum traders and TA's take over and finish the job.
Cavan Man
Investments
http://www.prudentbear.comTice has something new. He must be an avid reader of MK's forum?

Let's see, which came first; the chicken or the egg?
Bonedaddy
Town Crier, and all, on Gold Exports
The amount of quality information one can receive at this site is amazing. Thank you for keeping us posted on the GOLD export topic. When we were first alerted to this mass exodus of real money, I began to ponder who? Why? I seem to recall a comment made by a Japanese Minister of something,(I don't believe it was the gospel) to the effect that Japan may be forced to begin selling dollars and buying GOLD. It may have been two years or so ago. Does anyone recall the circumstances or context in which this statement was made? My read on the "Prudent Bear" post we just shared points out that anyone caught holding dollars, anywhere in the world, holds a rapidly depreciating asset. Big holders of dollars, and the Japanese are both big and smart, will want to "trade in" the dollars for things of real value. Large purchases of GOLD from America for dollars may signal that Japan is cashing out of the casino. Perhaps we are beginning to see the "Footsteps of Giants"?
Matrix
Question on Swiss "Big Float"
Oro,

I have followed your post's to this site with great interest and find them of enormous value. I have a question with regards to your last post.

If Switzerland has a higher ratio of external float to it's internal float than the USA, why is the SFR also not in a similar danger to that of the dollar?

I also note that with the recent announcement by the Swiss to sell down their gold holdings it comes at a time when AU is bottoming. In 1980 when AU was peaking, they were one of the last Central Banks to stop buying. It is maybe more than coincidence, that the actions by Swiss Central bankers in relation to gold seem to coincide with either a major top or bottom!

Thanks
schippi
Spacing Of Up spikes on the XAU chart
http://www.SelectSectors.com/xau.gif The below chart suggests that a spike Up may be just ahead.

Solomon Weaver
japan buying gold
FOA has mentioned that The USA and Japan have been engaged in a mutual process (post WWII) where they will sink or swim together.

There is of course the massive trade deficit/surplus but there is a massive gold imbalance too.

Is is possible that the US Treasury is actually selling large quantities of gold to Japan so that they can improve the "non-dollar" backing of Japan...?

If a "war on reserve currencies" between the Euro evolves, will not the yen pool create the largest unknown? Can it be that the US is trying to support the yen quietly now with gold so that it can be used to go with the dollar. Instead of a dramatic shift into Euro, a tripartate system of USD/Dollar/Yen would evolve, giving USD a chance to swim out the transition.

Poor old Solomon
SHIFTY
new coin/bad coin
I got to see my first new phoey gold coin today. I was not impressed. It was light weight with smooth edges,like a nickel, and it did look like a token from a fair.
SHIFTY
new coin/bad coin
I got to see my first new phoey gold color coin today. I was not impressed. It was light in weight with smooth edges,like a nickel, and it did look like a token from a fair, Only cheaper. Please excuse my corrections.
TownCrier
The GOLDEN VIEW from The Tower
Pressed for time, so here are the vital statistics to serve as the permanent record for the day's closing numbers...

Traders are somewhat frustrated that the results of the UK gold auction did not give them compelling reasons to push the price one way or another, leaving them thinking hard but doing nothing of substance. February futures on the COMEX drifted toward yesterday's closing value, ending down 10� at $286.50. Spot prices were last quoted in NY off 15� at $285.60. Bill O'Neill, director of futures research for Merrill Lynch indicated to Bridge News that gold was close to testing its COMEX moving averages which could cause some "short-term technical problems" for traders.

There was no change to COMEX inventory today.

NYMEX energy traders dismissed the crude inventory data today in which DOE numbers on crude fell 2.4 million barrels and the API showed a 3.0-million-barrel decline. On the day March crude lost 44� to settle at $27.84 per barrel.

And that's the view from here...after the close.
Leigh
Steve H
Dear Steve H: Your article, "An Open Letter to Congress on the Euro, the Gold Market, and the Dollar," is wonderful! It makes a very complicated subject crystal clear. Thank you for writing it.
SteveH
Leigh
Thanks. Obviously some of the quotes are from folks here. They are the ones to thank and we all know who they are, eh?
Cavan Man
Bonedaddy 23660
A reference to the Japanese PM's remark is made in Aristotle's five part series; i.e., selling US Treasuries for gold. Kind of ironic we should be joined at the hip with Japan isn't it?
Cavan Man
SteveH/Leigh
Would you please tell me where I can find this "open letter"? Thanks.

PS to SteveH: Joining the NRA.
SteveH
Cavan Man
Bravo on the NRA.

www.lemetropolecafe.com. You need to sign up or get a trial membership.

Leigh,

Feel free to repost it here.

Leigh
Steve H
I'd love to repost it for everyone, but I don't know how to cut and paste. Maybe someone else can help.
JCTex
Leigh: SteveH's article
http://www.lemetropolecafe.comSteve Hickel
smhickel@iserv.net
January 26, 2000


An Open Letter to Congress on the Euro, the Gold Market, and the Dollar


Executive Statement

The US routinely purchases and manages items in dollars. The US dollar has enjoyed a long history as the world reserve currency. It is the author's opinion that the Euro is directly challenging the dollar in its role as the world's reserve currency and stands behind oil's recent rise. The net effect of the Euro replacing the dollar as reserve currency would be a return of foreign-held reserve dollars into circulation. Should that happen, the following could be a direct result of this:

Dollar to devalue relative to Euro possibly by 200% or more.
Foreign goods, especially oil, could change from a dollar-based exchange to a Euro-based exchange.
US goods purchased overseas or with oversea components would see a significant price increase (100% or more).
US fuel purchases would see a dramatic rise in price (100-1000%).
US strategic commodities (precious metals) would see a dramatic rise in price (100-4000%).
US existing inventory would see a dramatic rise in market value, if revalued to market.
US petroleum-based goods surging in price in proportion to the rise in the price of oil.
The author's purpose is to point out the possibility of the Euro replacing the dollar as the world reserve currency. The author believes the wheel for this is already in motion and demonstrates numerous events and indicators that shows this might just be the case. This paper is not meant to convert, convince, or construct the Euro as the better currency or that the Euro is the replacement for the dollar; rather, it is to merely demonstrate a phenomena that can be observed once one is aware of certain facts, events, and principles. Being Euro-aware is the point. With this awareness, then, certain long-range business decisions can be made that would allow the US to position itself better for a possible significant dollar devaluation. This paper discusses the dollar's spar with the Euro. Finally, the author offers alternatives and possible postures the US could take if the Euro continues to replace the dollar as the world's reserve currency. Ultimately, the author merely wishes to point out a significant financial event that could take most people by storm unless they become Euro-aware.

Dollar Twice Defaulted

Internal Default

To understand the Euro and its potential as the future reserve currency, one must first understand the role that gold has played in monetary policy from the early 20th Century. From the late 1800's through 1933 gold traded at a fixed rate of $20.67 per ounce. During the stock boom of the late 1920's, not dissimilar to the present stock boom, many credit excesses came to pass. Margin requirements for individuals, unlike today, were not limited to 50%. Stock leveraging was high. When the well-known crash came, the dollar suffered a loss of confidence that resulted in many bank closures in the ensuing years. See chart 1.





Chart 1

Note: Figures for 1932 were not available.

As Chart 1 indicates, bank failures increased through 1932. In 1933, President Roosevelt, in an unprecedented move, defaulted on the dollar gold backing for US citizens. He used an emergency power Executive Order to declare a bank holiday effective March 6, 1933. He ordered all American's to turn in all their gold at the official rate, except special numismatic coins. As this gold confiscation was internal to the US, it did not affect settlement of gold and dollars between countries. Following the gold confiscation, the dollar price of gold rose to $35 per ounce and remained there through the Bretton Woods agreement after World War II through 1971. The net effect of the confiscation was to make more gold available to the US for international settlements. De-linking gold from the dollar prevented bank runs due to exchange of dollars for gold as this was no longer permitted. It allowed what is called fractional reserve lending and the printing of sufficient dollars to provide the needed bank fund liquidity to curtail and prevent bank failures. One could say that the excesses of the 20's led away from the discipline that a gold standard set and forced a liquefaction of dollars to meet demand and prevent financial failures. In part, this was because there was a fixed international price of gold and not a floating price of gold. In that fixation of the price of gold, liquidity could not be maintained.

The author intends to prove that a recent myth, to wit: gold is no longer at the center of the financial universe, is a false myth and that it actually remains at the center world finance, albeit more opaque than in the past. It is seeing around the corner of that myth that allows one to see how the Euro may actually be well along the road to replace the dollar as the reserve currency. The impact on the US and its mission could be significant. It is this potential impact that warrants understanding the birth of the Euro and its potential impact on the dollar.



External Default

Post-World War II, the Bretton Woods agreement created the IMF (International Monetary Fund), whose role it became to manage the currency exchange markets with gold backing of the dollar at the rate of $35 per ounce. At that time, circa 1950, the US produced 50% or more of the world's oil production. Chart II depicts the production of Saudi Arabian (SA)oil over a period of decades up until 1973, when the US defaulted on its external gold debt. As can be seen by the chart, SA oil production, the cheapest in the world, soon ramped up to supercede the percentage of oil production in the United States. Because the Texas Railroad Commission had set a higher price for US oil, that also raised the price for SA oil. The SA oil always has netted a much greater profit percentage than US producers have been able to enjoy.




Chart 2

As the US entered its Vietnam era, it was forced to spend greater and greater amounts of dollars that resulted ultimately in President Nixon's defaulting on its external gold debt in 1971. It just couldn't keep up with the demand for its gold as these dollars worked their way home to exchange gold for dollars. President Nixon made it again legal for Americans to own physical gold but no longer honored the exchange of foreign dollars for gold bullion. It was quickly draining the US gold reserve.

"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."

"In the mid 1970's, the finance ministers of both Kuwait and Saudi Arabia stressed that their needs were only to provide for the welfare of their citizens, and that oil in the ground is better than paper money�. So in 1971, while the Texas price of oil was $3.45, OPEC re-priced their Middle Eastern oil up from $1.80 to $2.20 only to see the market price due to demand in 1973 overtake the official posted price, at which point OPEC saw the writing on the wall, and in October raised the price per barrel to $5.12 while curbing production. By December, the Shah of Iran called a press conference to announce the official price would now be $11.65�. And so began the First Oil Crisis of the 1970's." Understanding the Mid-eastern strong affinity to gold and not dollars is critical. As long as they could get gold with dollars from their oil, they were content. Later, when the size of paper gold loans increased such that 14K metric tons were sold forward, serious thoughts of contract default changed the nature of the paper gold market.


The SA oil generated huge profits for the SA and Kuwait and other cheap oil producers. They used these profits to buy infrastructure, weapons, and aircraft. The magnitude of the profits also netted a continual and huge net profit above and beyond the systems capacity to absorb these petro-dollars. These profits were largely placed into gold. From 1973 until 1980, these dollars largely bid for gold on the open market and resulted in an increase in the price of gold from $174 to $852 per ounce. This open bid for gold by oil caused a near failure of the dollar, it caused gas shortages at pumps across America, it caused the highest interest rates, set by the Volker Fed, and the largest run on commodities and real estate in the later half of the 20th Century. Something had to be done to restore faith in the dollar and return the US to a stable currency.



Jamaica Accord

Little is know about a secretive meeting of the IMF in 1976. It met in Jamaica of that year. The Accords that came about ratified a year or two later resulted in the de-monitization of gold and an arrangement that would remove gold from the limelight. It was a way for the SA and other cheap oil producers to buy their gold with cheap dollars in a way that wouldn't bid the price of gold higher and higher. The result of the Accord was to ultimately start a 20-year bear market in gold prices and to allow the price of oil to actually get cheaper in real-dollars during this same period. To rephrase, the reason gold became cheaper and cheaper over the past twenty years wasn't because it didn't have significant monetary value, rather, a little bit of gold was set up to bid with each dollar for a little bit of oil. This is called "oil bidding for gold" and is the very reason why oil and gold have dropped together: more gold could be purchased for less dollars. At some point, however, the designers of this plan must have known or expected that gold would rise in value. It would seem, therefore, a stopgap measure to keep the dollar in place until an alternative could be created that would not be in a position of defaulting on its debt. Since the dollar had now defaulted twice on its obligations, many nations doubted that the dollar would last forever. That was 1976, it is now 2000.



Oil for Gold



Chart 3.
Since 1980, the dollar price of gold fell from $852 to $252 per ounce. It is the complex paper-gold arrangement as depicted in chart 3 that shows how gold was removed off the radar screen but continued to provide the impetus for cheap oil for cheap gold. The majority of these contracts are cut on the LBMA, a secretive, non-public gold market based in London. Every day over 1,000 metric tons of paper gold are traded.

Chart 3 depicts a contract relationship commonly called 'paper gold� or 'gold leases.� Paper gold is the process of a Central Bank acting as a guarantor of a gold loan by a bullion bank to a mining company. The bullion bank sells the contract to a Foreign-oil interest (FOI). The FOI now receives payments in gold from the mining company. The paper gold contracts can be paid in gold borrowed from private holders of gold or bought from the open market too. Hedge funds including Long Term Capitol Management (LTCM) have recently allegedly become involved in paper gold contracts. Since Hedge Funds are not gold mines, they must obtain their gold from alternative sources as they can not produce it. It is hedge fund involvement and other gold players other than mining companies that have created the systemic risk to the dollar that may have accelerated a potential move to the Euro. Bullion Banks and hedge funds have now written paper gold contracts totaling upwards of 14,000 metric tons of gold or more. In some case, mining companies have sold forward their annual production up to 10-years. THE REASON GOLD HAS FALLEN IN PRICE SINCE 1980 IS NOT BECAUSE OF A LACK OF POPULARITY. IT WAS BECAUSE OF THE 10,000 to 14,000 metric ton FORWARD SALES OF PAPER GOLD CONTRACTS. In other words, what seemed to be a simple solution to extend the dollar payment system as a reserve currency in 1976 (without bidding up the price of gold through the use of paper gold contracts) has now become seriously close to a third default of the dollar on its gold obligations. From recent events and news reports, this does not appear to sit well with the FOI. In other words, SA and other FOI put more credence in physical gold. It seems they may consider the paper gold arena at risk from failure and this is what ultimately may cause the LBMA (the London Bullion Market Association) and COMEX (Commodity Exchange � the New York-based gold market) to default � a third default. Finally, one could construe it is this very same risk of a third default that is moving the FOI's to the Euro and permanently driving the price of oil higher in US dollars.



Birth of the Euro

Jelle Zijlstra said, while with the Bank of the Netherlands in regard to the 1971 severing of Gold from the dollar, "When we left the pound, we could go to the dollar. But where could we go from the dollar? To the moon?"

This would suggest that the Euro was created not as competition to the dollar, rather as a replacement for it. As hard as this might be to swallow, one must consider the possibility. Foreign nations having seen the dollar twice defaulted, once internally and once externally, may have simply concluded that "once burned, never again." When the Euro was created in January of 1999, it represented the culmination of years of planning. Further, it was backed by 15% gold � backing in the sense that the gold set aside as backing wouldn't be available for trading Euro's for gold. Rather, the gold would be held in reserve (not sold) and would be marked to the market value of free-trading gold on a quarterly basis. When viewed in this light it becomes clear that the Euro is potentially being staged as the place to go from the dollar and not the moon as Mr. Zijlstra suggested.

Is the dollar really in threat of default? Evidence of that can be seen in the above paper gold chart. If total gold holdings of the world's Central Banks totals 32K metric tons and forward contracts amount to 10k to 14K metric tons, with annual production at 2500 tons and annual demand at 4,000 tons, then one can see the paper gold scheme is in extremis. In other word, the music is playing and the Central Banks are looking for their seats and who will be left standing when the first one runs to gold when the music stops. The dollar is subjected to risk as the bullion banks involved in these contracts are some of the largest in the world (J.P Morgan, Goldman Sachs, Credit Suisse/First Boston, Republic). LTCM was bailed out on advice of the Federal Reserve by 12 creditor banks. This was a few years ago when LTCM was on the wrong side of currency hedging. What would be the risk of one or more or all of these banks finding that they can not pay their gold loans because the gold to repay them will remain in the ground for 10 more years? LTCM almost brought the entire US financial system down. It was but one hedge fund. The gold lease shortage of 10K to 14K tons threatens the entire dollar-based economy as these contracts are all in dollars. The Euro may offer the only alternative to the dollar that won't cause a systemic failure.

Current Events

Is there proof of the above in terms of a grand plan or written scheme that could be produced? No. In terms of indicators that in the intelligence field would be called OPSEC indicators? Absolutely. The below list in order of importance the indicators that strongly suggest that the Euro (with 15% gold backing) is being positioned as a potential replacement of the dollar as a reserve currency. The implications for the US are immense.

EMU (European Monetary Union) Washington Agreement to only lease (leasing is the terms often used to describe the paper gold market) 2000 tons of gold over five years and subsequent rise in the price of gold $85 from its 20-year low just after the announcement.
Ever increasing debt burden of the Euro in bond issuance now surpassing the US bond market.
Ever increasing long-term US bond yield now above 6.70%
Ever increasing price in dollars of crude oil now above $29.00 per barrel.
Ever increasing monthly trade deficit now above $26Billion. Leading export sought from US is now physical gold. Ode de 1933 and 1971.
Recent practice of IMF to loan gold at $42 per ounce to third-world countries, remark same gold to the market value of $290 and take back the newly valued gold. The difference is used to wipe the debt off the books. This is significant because it is the first time since 1973 that gold has been used in direct payment of international debts.
Ever increasing M-3, which was increased by $76Billion in last year.
Extremely negative press on the Euro and gold last two years (a counter indicator).
Increasingly bullish reports (recent) on gold and the Euro.
Robert Mundell was given the Nobel Prize for Economics in 1999. He is known as the Father of the Euro.
Alan Greenspan's comments regarding the difficulty to predict the new economy and his discussion of the Euro ten years from now will be looked upon as having been good for the dollar (possibly meaning "saving the dollar?")
Increasing stock market bubble that is likely liquefied by excess balance of trade dollars from overseas.
Increasing verbiage of the European Central Bank leaders who speak of the Euro as a reserve currency (see their web pages).
Inflation is rearing its ugly head. Common measurements of inflation such as the CPI appear to be improperly measuring the effect of the gold-lease position and the excess printing of dollars to provide stock market liquidity.
Bank of England auction of one-half of all their gold over a period of a few years. Some pundits believe this is an attempt to hold the gold market down while more important banks unwind their paper gold or gold leases. This provides liquidity while this takes place.
Kuwait's recent lease of 79 metric tons of gold in exchange for $200million of military aid. This is believed to have bought time for the paper gold market, also.
The near bankruptcy of two major mining companies (Cambior and Ashanti) upon the recent $85 rise in the price of gold who were convinced by Goldman Sachs to hedge production with margin requirements.
Rumors of a large Swiss gold sale, whose real reason appears to be to make the Swiss Franc more competitive in world trade and possibly allow time for a smoother transition to the Euro. The Swiss sale is likely to be done through the Bank for International Settlements.
Recent rumors that the Euro might become the defacto payment standard for oil vice the dollar.
The complete lack of visibility of the gold market (not on anyone's radar screen), so if the paper-gold market did collapse and physical gold were then to trade in a purely physical market, we could see an even more severe rise in the price of gold than we saw in 1979-80.
Bank for International Settlements (BIS) office opened recently in Hong Kong.
China's recent announcement to purchase 1000 tons of gold.




The physical supply of gold to satisfy large gold contracts appears non-extant. The gold market is one on edge. Certain gold pundits believe that the London Bullion Market Association and COMEX are in immanent danger of default. The ratio of physical gold to COMEX gold contracts on the NYMEX gold exchange is 100:1, that is 100 contracts for every 100 ounce of gold (100 ounces per contract). If the paper gold markets in London and in New York default on their dollar gold paper contracts, this may be the ammunition to move SA oil into the Euro for settlement. Certainly it will cause a major banking failure or require a major banking bailout, whose minimum net effect would be higher inflation. If the dollar has to convert to Euro's for oil purchases then by default the Euro will have become the world reserve currency. The ramifications for US would be a loss of the use of dollars without first converting to Euro's except for US-made products. This would make US an equal bidder for Euros equal to all other countries. The defense implications of this are immense.



The Future

"The ECB can now slowly phase out dollar reserves as the Euro assumes more of the world trade settlement function. A function in and of itself, that will further lower the dollar's world need, use, and therefore, value. Because the US still runs a trade deficit, it still ships a surplus of dollars to most countries. In tomorrow's potential new Euro world, the dollar exchange rate will eventually be forced to fall enough to balance this flow. Further, a falling dollar will release ECB dollar reserves as fair game to buy physical gold from any and all entities. However, this buying will most likely be through the BIS and member CBs, not the over leveraged LBMA [London Bullion Market Association] or world gold paper [market]. In addition, because the Euroland external debt is very low compared to the US and they posses a positive trade balance, a rising price of gold reserves (in Euros or dollars) will support their currency with extra reserve value. Their policy of marking gold reserves to market (on a quarterly basis) and eventually establishing a "true physical" marketplace offers every enticement to get the dollar (and Euro) price of gold higher. Because this process creates a unique reserve benefit, not used in the old gold standard, they will never officially back the Euro with gold. Rather, allow a new "free market" in physical gold (not paper) to supplement their currency operations. The efficiency of modern trade requires a digital currency. That need alone will always support the use of a currency. If gold can trade beside paper money, neither will drive the other out of circulation (as old money gold coins did to paper gold money) as long as they can each seek their own values�."



Conclusion

This paper's goal was to inform the reader of the potential of the Euro becoming the world reserve currency. The author believes it represents a high enough possibility to make the US Government aware. The Euro and its relation to gold is on very few of our radar screens. Because the dollar has defaulted twice in the last century on its debt, first internally and lastly externally, the Euro may have been developed to replace the dollar, when it became too burdened with debt. The paper gold market or gold leasing scheme that developed after the Jamaica Accords in the late 70's was a way for gold and oil to remain inexpensive for the cheap-production oil countries, while keeping the dollar from defaulting a third time. The time would appear to be drawing near in which the dollar may default a third time against the very paper-gold scheme that saved it after the second default. The implications to the US are immense because it purchases most all its goods, including oil in dollars. Were the Euro to become the world reserve currency in place of the dollar then the US would compete with the rest of the world for Euro's. Should that happen, the cost of defense just rose dramatically. In planning for the future, one can not allow the US to be side-blinded by a similar monetary phenomena that surprised pundits when the USSR disbanded or when the Berlin Wall fell. If even a remote chance exists for the Euro to replace the dollar in world commerce, which appears to be well along that path already, then plans should be made now accordingly.

Certainly, the following are factors to consider.

Strategic precious metals should be hoarded not sold, perhaps increased.
Oil stockpiles need to be topped off.
Foreign strategic parts, commodities, or goods considered essential should be stockpiled.
Finally, the Achilles� heal of the US dollar would appear to be the international gold market practice of paper gold excessive forward hedges (estimated at 14K metric tons) and the record supply-demand deficit of 1,500 tons per year. That physical gold was the largest US export in dollars in December 1999 (103 metric tons) reminds one of the large exports of gold before the 1971 external gold default. Everyone's eyes are on the stock market. No one is watching the gold markets. The Euro is down from its initial offering and so people believe it is week. All may appear not what it seems.

JCTex
SteveH
Well done.........as usual.
Twice Discipled
SteveH
I suggest sending this letter to each presidential candidate asking them to address this issue. My instinct tells me that there might be a couple of candidates (potentially Forbes, Keyes, Bauer) which would see the significance and bring it to public attention. This "might" give it more focus than an open letter to congress which gets added to their never ending stack of "important" issues.
Just a thought ...
Usul
Jamaica Accords- George Washington University
http://www.gwu.edu/~ibi/minerva/Spring1999/Henrique.Jereissa/Henrique.Jereissa.htmlOn January 1976, with the Jamaica Accords, the IMF made a series of changes that were incorporated into IMF's Articles of Agreements altering officially the international monetary system. The most important of these changes were:

1.Each member country was free to adopt its own preferred exchange rate arrangements

2.The role of gold was downgraded in the international monetary system. By these measure the IMF itself sold one-third of its gold holdings.

3.The role of the SDR (unlike gold and other international reserve assets, the Special Drawing Rights-SDR is a paper asset created by the IMF to provide additional world liquidity to the international monetary system) was to be enhanced. It was anticipated that SDRs would become very important in the reserve assets portfolios of central banks, although this objective has not been achieved.

4.The IMF was to maintain surveillance of exchange rates behavior. In general terms the IMF would examine all aspects of the members economy willing to avoid exchange rates manipulation, to prevent effective balance of payments adjustments and promote an orderly economic and financial conditions and a monetary system that does not tend to produce erratic disruptions.
Usul
Jamaica Accords- University of Houston College of Business Administration
http://www.cba.uh.edu/~rsusmel/7386/ln1.htmIn January 1976, the IMF convened a monetary summit in Jamaica to reach some agreement on a new monetary system. The Jamaica Accords formally recognized the managed floating system and allowed nations the choice of a foreign exchange regime as long as their actions did not prove disruptive to trade partners and the world economy. Gold was demonetized as a reserve asset. The Jamaica Accords were ratified in April 1978.
Usul
Oil bidding for gold
"a little bit of gold was set up to bid with each dollar for a little bit of oil"

Where's the beef?
Felix the Cat
LONG time no post
I was in the final of the projects in these few weeks. I just finished all of them at last weekend. Unlucky, after that, I caught cold and cough. Just feel better at today.
Thanks for Simply me missed my post.

In these few weeks, I noticed the going of POG of Hong Kong. The "99 gin" is up a lot and so fast! --- Now, the Panda coins were disappeared (The new products will appear at 8/2). Maple Leaves just still have a very few quantities.
BUT I discovered that ---most of the "Gold shops" (that sell the gold ornament and jewel---they are using the price of "Sie gin" about US$393.8+ per "Liang") of Hong Kong, not too many customers are in there. (Sometime, I only saw only their staffs in the shop when I passed by the gold shop).
And the other point is--- the price of "Sie gin" (0.9999 purity gold) is quite a large different with the price of Maple Leaves and Pandas. ---I have a peculiar idea---IF I melted a ML or Panda coin into a ring or something, then sell to the gold shop, MAYBE I will get more profit than waiting the raising of the coins.
Anyway, it just is an idea, I haven't do it. <:-)

Xie Xie

F. C
ORO
Matrix - the SF float
The major point of the SF is that the Swiss were the only ones to maintain a fixed ratio of gold to currency. It was written into their constitution. This made their currency fundumentally different from the from that of the other countries and made this the leading hard currency. That had changed with the constitutional referendum that would allow the separation of gold from the currency.

It is a necessary step on the way to the Euro filling the hole left by the dollar. Had the gold market been let go while the Swiss hold on to their gold peg, the Swiss industries would have been stranded with their goods priced in gold, while the rest of the world had a 6 fold revaluation in "real" Euro (after discounting of price inflation). This would have become a dangerous economic situation. No industry can survive a six fold price differential with its competitors. The only way out was to remove some of the backing (2/3?) from the SF. Otherwise, the Swiss would have turned into net importers on an incredible scale relative to their tiny population. This would have damaged their competitive position in all industries - particularly in pharma and scientific instruments. In these industries, once you stop you can not restart. The equilibrium levels reached eventually would allow industry to resume exports, but in the meantime the Swiss would be losing the human capital and leadership positions in their key non-financial industries till pay scales were adjusted downwards to the international gold based labor costs. FOA likes to point out that in the post gold standard world, inflationary expectations mean that currency can not be allowed to appreciate to the point where rigid (especially in Europe) labor contracts do not allow a lower nominal (rather than "real") drop in wages. Can you imagine the contracts of the whole country being renegotiated for lower wages? Can you say "major instability"...
Journeyman
U.S. Government aware of importance of oil being priced in dollars:

@SteveH, ALL

"What would happen if the Saudia Arabians said they
didn't want to be paid in dollars anymore, but wanted
instead, to be paid, say in yen. There would be
inflation that would make the 15 to 20 percent
inflation in the early 80's look good. This would
happen because the price of imported oil would triple."
Sen. Pete Domenici, R-NEW MEXICO, C-SPAN II, 18 May
1995 ~12:33:55 PM

Regards, J.
TownCrier
Today's Market Report
Market Report (1/27/00): Today's over-the-counter gold option expiry in London (with the nearest major strike interest at $285) had market participants mindful of the potential for related volitility during London Trade, but many expected gold to remain comfortably in the middle of its $280 - $290 trading range. Technical analyst's charts show gold currently to stand neutrally at 49.5 on the Relative Strength Index. A financial instrument or commodity is said to be oversold at an RSI reading below 30, and overbought at levels above 70. As we go to fetch this over to the server, the 9:30 ET expiration has passed, and gold is trading at $285.80. Dealers said there was some light short covering and fund buying ahead of expiry, and accordingly, the London AM Gold fix was $286.50, up from yesterday's $284.90. Sources in Europe were indicated by Bridge News as saying rumors of potential producer buy-backs were "causing some fear that the market could spike higher," with one source saying with this in the wings " perhaps players won't want to aggressively short the market right now."

Reuters quoted one dealer as saying, "The easiest way of summing up the gold market is still to say that it is directionless and the big players seem to be disinterested." When you couple that with the drop in COMEX open interest for gold futures to the lowest levels seen since December 1995 (142,913 on Tuesday,) it would seem to point toward some follow-through on developments which we had cited last Autumn in regard to the post-Washington Agreement price-shocks. As you will recall, the September 26th announcement that 15 European central banks would curb selling and leasing operations resulted in a sharp short-covering spike in which many hedge funds, traders, and speculators, (as well as producers,) were caught in their postions--suffering "disastrous consequences" according to a report by Salomon Smith Barney. As a consequence of that painful lesson, a number of these have moved to scale back or to eliminate their speculative bullion operations. Perhaps we are seeing an important return to prominence of the spot, rather than the futures market.

You will recall in our Friday market report that U.S. November exports of nonmonetary gold rose by $0.6 billion over October levels. We now have Japan's preliminary indications of their gold imports from Bridge News. The Ministry of Finance announced preliminary numbers Wednesday that Japan's customs had cleared 12.8 tonnes of non-monetary gold for the month of December, while the value for 1999 totaled 108.5 tonnes...up 26% over the previous year.

On that note, we'll leave you with this exchange from yesterday's Q&A session as Federal Reserve Chairman Alan Greenspan appeared before the Senate Banking Committee, testifying at his confirmation hearing for a fourth term as chairman...

SEN. WAYNE ALLARD (R-COLORADO): "Do you have any concerns about the current trade balance?"

GREENSPAN: "...Since the current account deficit is a broader concept of the trade deficit, the current account deficit must also be equal to the amount of capital flows into the United States. Indeed, if there is an imbalance between the demand for capital and the supply of capital, it's that which causes the dollar's foreign exchange value to change.
In view of the fact that the exchange value of the dollar has been relatively flat for quite a while, it is suggestive that both forces are at play here. That is, the significant increase in imports is being driven by the demand that has been in part created by the so-called wealth effect. But the capital inflow is also indirectly created by the same forces that create the wealth effect, namely the very high rates of return on new capital. Over the very long run, it is probably not credible to presume that we can continue a current account deficit or trade imbalance at the levels we currently have because it obviously means that our net debt or the net claims on the United States by foreigners is accumulating, because indeed the current account deficit is basically the net change in the debt. And ultimately, the interest service on that very large external debt will create serious problems. So that everyone who looks at this process knows that somewhere -- it could be an extraordinary number of years, possibly, I don't really know, and I don't think anyone else knows -- but it is true that it cannot persist indefinitely. The question is, what are the forces which will eventually bring it down?"

That will do it for today, goldmeisters. We'll see you here tomorrow.
beesting
News Release by Anglogold!
http://biz.yahoo.com/ccn/000127/x.htmlWe are delighted to welcome the worlds largest Gold producer, AngloGold(NYSE-AU), as our partner in the Red Lake Gold District, said J. Garfield MacVeigh. Full news release at above URL.

Comment: Placer Dome is also mentioned in this news release in a complicated lending, financing, scheme.
Bottom line, AngloGold is moving into Canada's Gold mining industry, in a big way.....beesting.
TownCrier
Fed adds $10.8 billion to the banking system today (wow!)
http://biz.yahoo.com/rf/000127/0g.htmlOn this first day of the new two-week reserve-maintenance period for the banking system, the Fed added temporary reserves through combined operations. $8.0 billion was added using 4-day fixed-system repurchase agreements, and an additional $2.8 billion was added with overnight system repos.

The less-desired mortgage-backed securities were put to use as the collateral for nearly $3.7 billion of the $10.8 billion repo total, comprising the bulk of the overnight RPs.
TownCrier
Interesting thoughts...
http://biz.yahoo.com/rf/000127/1n.htmlToday the euro has fallen 1.25% below Wednesday's closing level of $1.0009 to break through 99�. That in itself is nothing, but here's where it gets interesting. We will wait until next Tuesday's release of the ECB's weekly financial statement to see our projections are validated that they have moved to a bi-weekly gold revaluation schedule. If gold's dollar price holds at these levels, the euro valuation of the ECB's gold assets will increase. And if it is true, as the European Central Bank contends, that price inflation is being held at bay within the euro region, the euro-holders are not being adversely affected by the falling exchange rates, while at the same time the European gold holders are seeing their gold enjoy a net increase in purchasing power. It seems that all is as it should be in Euroland, whereas the dollar-denominated gold market is made to look suspicious by comparison. Perhaps the Euro is happily building on this fundamental difference in performance, giving the currency markets all the rope they need to hang themselves.
TownCrier
Should have been mentioned in the previous post...
that the next gold revaluation under the suspected new two-week schedule would occur tomorrow.
ORO
Town Crier - Fed and Euro drop
Take note of the coordination of the Fed money pumping and Euro drops.

Again, the creation of international ExEU Euro debt instead of dollars makes banks and the credit markets short of the dollars needed to pay interest on older dollar debt, and increases the supply of Euro. We must remember that bonds are carried as money substitutes even at longer maturities than one day (what constitutes MZM - the money market).
ORO
Town Crier - Fed and Euro drop - second point
The other side of this is the relative weakness in the ten year note relative to the 30 year bond. CBs hold large tranches of 10 year notes rather than T bonds. If these are traded for sovereign Euro bonds, the process would be:
(TNX ten year bond yield index used to symbolize the ten year note, TYX to symbolize the T bond)
1. TNX holder sells in NY or Londre, lowers bond price, raises yield. Also absorbs the dollars.
2. Euro bond is sold in Europe and a bank (or the ECB) creates Euro to buy the bond. Otherwise, currently outstanding Euro are used to buy the bond. The Euro bond is now part of the money substitute supply, lowering Euro value and raising Euro interest rates.
3. The sovereign issuing the bond spends the Euro it has received and these reach the markets, joining the Euro money supply, lowering Euro value.
4. The dollars from the TNX seller are converted to Euro, Euro price rises,
5. Euro used to buy Euro bonds, Euro bond yield falls.

Thus we have a rise of 2 Euro (one currency the other a bond) and no change in the number of dollars. Is it a wonder that the Euro is falling?

Note that in the case of the Euro bond buyer buying an existing bond rather than a new bond issue there is no drop in the Euro relative to the dollar because no fresh currency is created. What does happen is that both the dollar and the note drop in value and both the Euro and the Euro bond rise in value. We know that that is NOT what is happening because both Euro bonds and US notes are dropping in value, while the Euro is falling relative to the dollar.

Lets look at the other type of transaction with Euro denominated bonds - debt roll over from dollars to Euro.

Indebted country or company has a bond or a bank debt denominated in dollars coming due. It is going to issue debt in Euro in order to join the EU trade circle, or because rates are more favorable, or because the Japanese or EU bank than are owed the money will not roll over the debt into new dollar debt but insists on rolling it over into Euro debt.

1. Debtor collects/saves dollars over the period prior to loan coming due, and hold this in US ten year notes and dollar accounts.

2. Debtor sells TNX on the market and takes the dollars. TNX yield rises, price of the ten year note drops

3. Debtor returns dollars to bank or to bond holder. If the dollars are returned to the lending bank, then the dollars are extinguished. If the dollars are returned to the bond holder, there is no net change in the number of dollars - the dollar supply, but for the portion of the short term bond held as part of the short term bond dollar money substitute supply. In any case, dollar liquidity is reduced.

4. A bank issues a new loan to the debtor by creating the simultaneous loan and Euro cash. The cash is spent (probably in part by conversion to dollars - which is bullish for the dollar - to be spent on oil). If a bond is issued, new cash Euros would not be issued but for the portion purchased by banks. The bond itself, nonetheless, will add to the Euro money sustitute supply.

In this process we have:
For bond rollover from $ to Euro:
1 $ substitute eliminated, 1 Euro substitute created,
if a bank held the bond, and the same bank bought the new bond we would have the same effect as a bank loan rollover, as below.

For a bank loan rollover from $ to Euro:
1 dollar eliminated, 1 Euro created.

No wonder the Fed has to add so much, and no wonder the Euro is falling.

Journeyman
30 yr. bond now "trading like a commodity." @Oro & TC
[backwardation in 30 yr. bond] ~"The days of the 30-yr bond being a benchmark may be over. It's trading almost like a commodity now." -Rick Santelli, CNBC, 2:15 PM 1/27/2000

J.
CoBra(too)
Euro weakness ... @TC & ORO
Sirs, I tink both of your latest posts are interesting and merit value.
In my simple mind I rather fear, that the mundane fact of an
ever expanding corruption scandal in Germany's CDU/CSU, involving the monument Kohl and probably the turmoil in my small country, where right wing liberals may form a coalition government with the old conservative party, is shaking up the complacency in the EU.
As people start to suspect that democracy, human rights and liberty are victimized on the altar of economic success
under all circumstances,the only new paradigm seems to be - the more unscrupulous, the faster the success -, a maxime not only big business has adopted, but also infiltrated governments. As the most successful ventures today are organized crime, I sometimes wonder if governments are striving to fight this phenomenon by aiming to overcome this menace by excelling the quest of the usurpers by becoming the usureres.

Coincidentally, there seem to be willing allies to fight this plight on the official side, getting more entrenched in the guerilla tactics of their foes until any difference
between correct (political, economic or otherwise) has evaporized.
Historically, a phenomenon already described by Plato's Politicos - which lead to "intellectual" theocraties of the dark middle ages in Europe. This new theocrats worship at the altar of technocracy in complete abandonment of any though to nature, humanity or compassion.
If that's what this brave new world predominantly has to offer - then this really is the time to run for cover!
Gold and land - pick and shovel - supports both and sometimes venting elps too. Thanks CB2







SteveH
for the record
The quotes in my piece are from folks here and in the original were footnoted with proper credit: FOA, ORO, and Aristotle. The footnotes did not make it apparently.

Change Week to Weak at the bottom and gold wasn't the largest export last year, rather, if I understand this, it was the largest growth export.
TownCrier
Sir ORO, thanks for walking me through your thoughts
The summary in particular was crystal clear, and as an explanation of what we are seeing it seems highly likely.

On a related, technical point, (but one that doesn't materially affect your case) you said:
"2. Euro bond is sold in Europe and a bank (or the ECB) creates Euro to buy the bond. Otherwise, currently outstanding Euro are used to buy the bond. The Euro bond is now part of the money substitute supply, lowering Euro value and raising Euro interest rates."

It was my earliest impression/understanding that one of the distinguishing characteristics of the euro/EVB system was that the Maastricht treaty disallowed the ECB from purchasing sovereign debt...they couldn't act as the lender of last resort (as our own Fed) to allow the national governments to be fiscally irresponsible. The various euro-member govts will have to peddle their bond issues (if taxes come up short) to the free market. The eventual "selling point" of the euro in the eyes of the world market is that the ECB won't be able to "cheat" the currency holders for the benefit of a spcific national government (as is arguably done with all other currency systems.)

Am I wrong about this Maastricht limitation on the ECB?
TownCrier
Suggestion for Sir SteveH?
"The quotes in my piece are from folks here and in the original were footnoted with proper credit: FOA, ORO, and Aristotle. The footnotes did not make it apparently."

Out of respect for those gentlemen and their appreciable efforts, perhaps you could push toward the reinstatement of those footnotes. And of course, an anonymous posting handle in cyberspce means nothing unless it is accompanied by the web location at which interested readers could find and converse with these generous gentlemen. Otherwise, the footnote might as well credit Tom, Dick, and Harry.

...just the view from The Tower...if the efforts of these men radiate outward without the accompanying means to attract and direct conversational energy back here to fuel their efforts, at what point to we lose their presence as they chase after their attempt at dialog into the scattering wind? Truly, it is the feedback that makes a discussion forum endure. Your good effort shouldn't lose the chance to help fuel their continuing efforts for the benefit of us all who gather at this Round Table.
ORO
Town Crier - ECB & bonds
Town Crier - I think you are right.

The distinguishing difference and another sign of the ECB/BIS being a government cash based system rather than a bank based system. I really do hope they are as they appear. I'm still working on that question.

I'll go look for this in the treaty on the weekend, assuming I can still find my copy.

Thanks for pointing that out.
RossL
Fed and Euro drop

I not sure if I understand this situation correctly. I am not an economist, and thinking too hard hurts my head... I was educated at publik schools, you know. So...

Replacing dollar debt with Euro debt will reinforce the current trends for some time. The current trends being Euro falling, dollar interest rates rising, FED creating new liquidity, USA current account deficit widening. How long can this go on? Will a balance be reached somewhere? What is the trigger for the FOA/Another scenario where the Euro strengthens against the dollar? So what is the force that will turn the tide?
Cavan Man
Town Crier 23682
Is it possible to nominate Mr. Greenspan's quote referenced in your market report to the HOF?

Also, the FOA "overviews" received three seconds for the HOF. Can these now be included? Thanks!
Cavan Man
SteveH
Brilliant summation! Thanks! Also, thanks Leigh very much.
Cavan Man
On Legacies and Hubris
I took this tiny snippet from an editorial by Paul Kennedy in today's WSJ. This is a bit off topic but worthy of post here methinks:

"When the greatest statesman of the 19th century, Otto Von Bismarck, retired to his estates a century or so ago, he was frequently visited by admirers who wished him to talk of his role in changing the map of Europe. But the great man always demurred saying, 'One cannot make history; one can only cling at the cloak of The Almighty as he passes by'."
ORO
RossL - tred reversal
http://www.oecd.org/std/gr.pdfThe trends will reverse when Euro denominated debt starts demanding interest and principal payments in excess of those of the US dollar debts.

The process tends to raise interest rates in dollars more quickly than it does in Euros, thus the process drives itself to accelerate the move towards a Euro reserve system.

The thing to look at is the bond and equity markets. For an example of what it looks like on the charts take the URL above and go to pg 6. -Korea - on the bottom left hand chart you will see the charts for the financial markets. On the bottom right you can look at the BOP chart. The top left hand chart shows industrial and gross product. The middle right chart shows prices - both PPI and CPI.

The signs of trouble:

1. BOP/current accounts go into record low territory, in their case a negative $4 billion, about 1% of GDP (ours is heading to 4%.

2. In the financial chart - The short term rates are at higher interest rates than the long term (5 year in their case) notes. Indicating a Volcker like attempt at killing off the expansion. Right now we are still maintaining in the US a slight positive spread (long rates less short rates) but the difference is not great. This is also (perhaps mainly) an attempt to keep the currency from dropping against the dollar - retaining the peg.
The result is that the local banks find it cheaper to borrow abroad than at home and so do corporations. The government had lost control of its banking system because the lowest cost funds come from abroad (aka Japan and Europe).

3. Industrial production is flat-ish while GDP rushes up as goods from abroad are sold within Korea (as in the US) at a higher gross margin than the base price, so that import replacement (and addition to) of local production throws the people off because it causes a net addition to the economic production statistics rather than a drag. Some people were just starting to talk of a service economy (I scratch your back you scratch mine, I'll give you a buck you give me one too and we have raised GDP).

4. CPI grows way more quickly than PPI. Because producers are competing for market share with foreign goods PPI is lower. In local services and retailing prices rise as the economy runs out of people to be shop keepers/clerks and gross margins continue rising even as retailing's net margins fall (the latter is not in these charts. In the US, the PPI fell away from the CPI in Jan 1997. In Korea it was in Dec 1995, it took Korea just two years till prices started climbing and the currency collapsed. The 1995 break of PPI and CPI matches exactly the sharp acceleration in the trade deficit at the same time.

5.It also matches in timing the beginning of the high spreads between short term and long term interest rates (from -1% going to -3% and finally to -6%). The stock market fell as these spreads increased, but rose like a rocket the moment the spread crossed back into positive territory - where long rates are higher than short rates.

6. The CPI started dragging below the PPI after the initial shock of the devaluation was over, and the currency started to stabilize. Before that, the PPI grew quickly towards the CPI and a short while later shot up through it as the prices of imports and industrial inputs (most of the imports) shot through the sky.

Since the US $ floats, it will not have quite the same effect as it falls in value. However, most of what you see in the crisis chart for Korea is just like it is going to be for the US. The lines for the US will be smoother and the values less extreme but also more persistent.
Cavan Man
Japan Economic Data
This was gleaned from todays's FT:

"Personal bankruptcies in Japan are running at record levels as the country's protracted recession continues to bite."

Well, if you look at the small six figure number you say, so what. I would agree. Read further.

"......retail and wholesale sales fell for an unprecedented 30 consecutive months in December sliding 2.9% year on year." "Department stores and supermarkets continued to bear the brunt of the pain with large store sales slipping 5% year on year."

"Retail sales fell 2.6% in 1999, the third straight year of decline, while wholesale (prices) fell 6%; their eighth consecutive fall."

Note: $860 billion is schedule for fiscal stimulus this year in Japan.
tedw
Steve H letter to congress
http://www.usagold.com
Sir Steve:

Thank you for your excellent post on the Euro,Dollar, and Gold.It was clearly written and easy to follow.


Here is a question for anyone to answer:

The Euro backed by 15% Gold I believe,but is none redeemable. What good is the backing if the the notes are not redeemable in gold?
Cavan Man
To ORO
Thanks for your recommendation of the Von Mises' site and corresponding chapter on manipulation and credit etc.

What is you take in layman's terms on the current and near term economic and monetary outlook? Thanks (not effusive).
Cavan Man
tedw
That's a good question. Tice says the Euro is "the best of a bad lot". I agree. The Euro is not a surrogate for sound money IMHO. However, I am happy to invest in Euro denominated assets in addition to $USD.
Cavan Man
On the 17 year "Bull Run"
"Does this mean we're in a new economic era? Perhaps. But neither the laws of economics nor the fundamentals of human nature have changed. It is useful to read the economic commentaries of the 1960's when the last, "new economic era" dawned. The hubris of that period's intellectuals and policy makers led directly to the policy blunders of the 1960's and 1970's. A stock market that haad risen almost continuously-to 1000 in early 1966 from 170 in late 1946-was about to enter a 16-year period of no nominal increase ad a 66% decline in inflation-adjusted terms."

"The intellectual faith we now have in the markets provides hope for the future, but also holds a risk. Markets are not perfect, even though they beat any alternative form of economic decision-making. They do so because they unite the concepts of risk and reward. They put economic decision-making power in the hands of the person who will suffer if something goes wrong. This concentrates the mind of the decision-maker, forcing him to focus on the business at hand. It also diffuses power among many decision makers."

"As in the 1960's, the greatest risk we face todayis hubris. Already we hear demands that ever more of the economic rewards prosperity has generated should stayn in Washingtonm for use by politicians, not the people who earned the money by risking their time and capital. After 17 years of almost continuous prosperity, it is easy to think that the inherent risks in economic life have vanished and that prudence is passe. Politicians come to think that society can afford the luxury of having more resources allocated for political rather than economic uses".

________ Lindsey, Former FED Governor
1-27-00 WSJ (Didn't see first name. Apologies to all)
Cavan Man
To canamami
http://www.goldensextant.com"Gnomes and kids; they say the strangest things."

RE: SNB comments about "small window of opportunity"
RossL
ORO

Thanks for the explanation in message #23699. The CPI/PPI/BOP numbers on page 2 of the PDF file look worrisome to me.
RossL
ORO
http://www.oecd.org/std/gr.pdfOops I meant page 3 - USA
lamprey_65
From Fleck...
http://www.siliconinvestor.com/insight/contrarian/index.gspFrom Fleckenstein's Market Rap tonight:

Currency wars... Away from stocks and bonds, the euro finally did it and broke convincingly through par - the classic example of currency debasement. This particular currency is about 15 months old and is down over 16-17 percent. It will be interesting to see what kind of success they have when they decide to try to stabilize it.

It's particularly amazing when you notice that the euro is weak against the dollar, which is weak against the yen. When you see what they're doing in Japan and the fact the dollar can't rally against the yen, you realize that all of these currencies are, in essence, a battle of wits amongst unarmed opponents.
Someday that fact will put a big bid into precious metals, although as I've been saying that probably won't be until stocks stop being riskless, 30-percent-a-year ways to make money.

Speaking of precious metals, silver snapped out of the doldrums today. It was up about a dime, attempting to break out of the trading range that it's been in. We'll have to see what happens there.
THX-1138
Platinum horse pulling ahead today. Silver was not far behind
Silver was up 12 cents in NY.

Looks like the Golden horse has stalled at the gate. (Vision of "The Black Stallion" movie.)
Stop using your spurs you stupid jockey, you're making him mad.


Number Six
Hmmmm ...this ***could*** be big, Silver up 14 cents today, Gates/Soros, new fuel cells, new lead-free solder standard...
This from www.Gat.com

Today's action: silver shot up 14 cents. Is that long awaited silver rocket ride upon us?

Perhaps of interest:

*Warren Buffet bought silver

*Buffet owns Gillette stock

*Gillette is researching fuel cell technology that will use silver

*Warren Buffet and Bill Gates are friends

*Gates bought Pan Am Silver

*Gates has invested in a utility company that is doing research on fuel cell technology

*Comex silver stocks are dwindling and near decade lows

*A big, big buyer has shown up in the silver pits

[check out the stock action recently with fuel cell tech. companies... - Andy]

And then this sent in today:

SOURCE: National Electronics Manufacturing Initiative NEMI Group Recommends Tin/Silver/Copper Alloy as Industry Standard for Lead- Free Solder Reflow in Board Assemblies

HERNDON, Va., Jan. 24 /PRNewswire/ -- The National Electronics Manufacturing Initiative (NEMI) today announced the alloy its Lead-Free Assembly Project is recommending for use by industry as a ``standardized' lead- free solder alternative.

For reflow applications (which represent at least 70% of all board assembly production), the NEMI group is recommending Sn3.9Ag0.6Cu -- a predominantly tin-rich alloy with 3.9% silver and 0.6% copper. For wave solder production (which requires larger amounts of solder), the group is recommending either Sn0.7Cu, a less expensive tin/copper alloy (0.7% copper), or Sn3.5Ag (tin with 3.5% silver).


TownCrier
Sir Tedw, assuming this wasn't intended as a rhetorical question...
"The Euro backed by 15% Gold I believe,but is none redeemable. What good is the backing if the the notes are not redeemable in gold?"

The European Central Bank was originally subscribed with nearly $50 billion in total foreign exchange reserves by its member nations as its "very own." The decision was made after much deliberation that of this reserve amount, 15% of the value would be provided in gold...747 tonnes from the CB's of the member nations. That much is clear. However, on the ECB financial sheets, they list their forex reserves as the sum of all the Euro Member Central Banks' forex reserves...which lifts their gold asset total to 116 billion euros in value, while the international currency assets are approximately double that value. In total, then, the gold assets of the euro system amount to about 30% of reserves. But as you point out, the currency is not structured to have a fixed convertibility. The term "backing" is not appropriate..."reserves" is better. What "good" are these gold reserves if the currency isn't directly convertible? No central banker will argue against this response--the gold assets held in reserves are not only "good," they are the best reserves to have. The paper reserves can be used as needed (never a good circumstance to find yourself in as a central banker) to "dirty" the float of your currency's exchange rate in the international money markets. But in the event that your currency fails to stand on its own (on the strength of your banking system's loan performance,) then the gold is what allows you to rebuild on a foundation of credibility. And should your neighbor's currency crash and burn, the gold portion of your reserves would still retain its value for use as needed.
The Traveler
Steve Hickel's Open Letter to Congree
I have been out "kicking the tires" and logging two new wells since my introductory post (22788). So I desire to first address some old issues and then comment on the FINE macro post of Steve Hickel referred to us by JCTex (23673).

First, warm thanks to Strad Master (22790) and FOA (22819) for their kind welcome of me into this Forum. I count you both as two new friends.

Strad Master - As to your question regarding "perceived net worth". Your teachers here previously commented on "knowing the price of everything but the value of nothing". Simply answered, does three ounces of gold at US$ 900 have the same value as two shares of Yahoo at US$ 900? Perhaps, perhaps not. Utility defines value. As to the other four profiles we are evaluating, they are not directly related to gold so I will respect the rules of this Forum and the sanctity of contract by and between myself and my partners and thus comment only that a calamitous "End Game" is at the heart of each profile.

Next, a principle. A brilliant mind that lacks civility has nothing to teach me! Rather than run down the isles of the big convention hall and stick out your tongues at the volunteer speaker, I suggest that those who have contrary viewpoints sit in their chairs quietly (no shouting down the speaker) until it is their turn to speak. Once at the podium, a gentleman would not call another names but would simply say that - IMHO, I deem the possibility of that opinion to be low - remote- or improbable and then logically rather than emotionally explain why.

To scoff at an opinion of another when the poster has little to no relevant knowledge about the subject matter and further has made little to no effort to research - verify - cross check or comprehend the complexities of the subject matter, then said poster's post must be considered lacking in intellectual prowess. To further slander another demonstrates an absence of civility. Post 22809 in response to post 22789 is but one of many examples of this shrill noise.

Now for new business -----

Steve Hickel's macro viewpoint by and large mirrors our profile (Yes, we predict that the Euro, warts and all, will become in time the primary reserve currency. The permutations of this eventual reality offer prepared capitalists many prosperous opportunities). Naturally, most innocents will dismiss Mr. Hickel's viewpoint on a day that the Euro fell 1% verses the US$ and by almost 20% YOY.

Less understood by many gleeful goldmeisters of the Americas and Japan is the calamitous fallout from this eventual reality. Simply put, dollarized economies will go the way of Mexico, Brazil, Argentina, Indonesia and Russia to name but a recent few as the world goes to the Euro and a free market in physical gold. Consider this basic equation:

Now: US$ 300 = E$ 300 = 1 ounce AU = 15 barrels of crude = 1 man's new suit

Eventually, after the US$ devalues internationally and hyperinflates domestically in order to find its intrinsic equilibrium (Read: true value), the equation will look much like this:

Later: US$ 3,000 = E$ 300 = 1 ounce AU = 15 barrels of crude = 1 man's new suit

The US$ variable is largely controlled by foreigners who each will decide their affection for the many US$ that they have endlessly accumulated for the goods and services that their sweat has produced.

The equations state that holders of dollar paper claims (particularly creditors and common shareholders) will become poorer as the US$ devalues internationally and hyperinflates domestically while holders of E$, gold, crude or other hard assets will experience no increase or decrease in their current purchasing power. In certain circumstances, however, those prepared for this calamity will reap a significant increase in their net worth. Read this again and give it more thought. Its a key to understanding your financial future if you hold significant dollar denominated paper claims.

More specifically, suppose I owe the holder of my residential mortgage US$300,000 (or the equivalent Now of 1,000 ounces of AU or 15,000 BO). If I bought 100 ounces of physical AU Now, I could Later sell my AU at $3,000 per ounce and payoff my mortgage. I am ahead (for I received a $300,000 house for $30,000 in gold) while my creditor is behind for it received in full satisfaction of my mortgage 10% of the purchasing power that it originally lent to me. Thanks to the US Supreme Court for supporting FDR's fraud by striking the "gold clause" from debt instruments in its decision dated 2-18-35 (294 U.S. 240, 55 S.Ct.407). This only works if you have a fixed rate mortgage or a floating interest rate with a contractual or statutory ceiling.

Similarly, my oil well will payoff my mortgage Later with only 1,500 BO. The next 15 BO will still buy just one man's suit.

Aggregate this to the many mortgages and other loans held by banks, insurance companies, GE Credit, Ford Credit, your money market fund and the like. As a result of outright defaults (I need my all of my salary to buy food - a sirloin steak Later will cost $100 per pound) and payoffs by the prepared, their capital ratios will evaporate and many will go insolvent. This means that the common shares held in your IRA, 401(k), pension plan and so forth are now nearly worthless.

As a holder of paper claims (CDs, bonds, annuities) against these financial intermediaries, you will receive 100% of your principal back (in the best case) but it will have 10% of its former purchasing power. Yet a suit now costs $3,000 not $300. Thus begins the death spiral of the dollarized economies.

My last comment for this post considers the impact on gold mining shares as the Euro gains acceptance and physical gold trades as settlement alternative in a free market. FOA has essentially stated that these unique organizations will experience a unique set of adjustment problems (nationalization, confiscation of their production two name but two). Thus they will not be fruitful investments. While I agree with their share value at the end, I differ somewhat in their value while in the process of getting to the end.

We believe that as gold triples from US$300 to US$ 900 on its way to (pick your number), unhedged gold producers - not exploration companies - which have fixed rates or capped rates of interest on their mine loans will experience a 10 fold or better increase in their share prices. However, Later the share prices will sink below their price Now due to government theft. Holders of such shares could also payoff their mortgage or other secured debt for a fraction of the purchasing power originally received if they sold soon enough.

I am exhausted as I am certain you are if you made it this far. Thanks for your indulgence. Perhaps I will post again soon.

Best regards to all.
Number Six
Thanks due
To SteveH and The Traveller - many thanks, much to mull over, the arrows are hitting the bulls eye in my honest opinion. Thank you and all the other fine contributors to this forum - the game is a foot [wink].
PERMAFROST
Cavan Man, tedw, lamprey_65, RossL, Town Crier; Forum...
I had advised I'd not post again barring changing circumstances.

I got a lot flak from most of you when I rebutted your gurus. I presented you historical/logical/factual evidence which was right under your collective noses if you only cared to see. I stated that the euro was just another carry-trade ploy devised to continue the fiat money extortion game. You said, 'let's put FOA in the HOF.' You came up with rationalizations to the effect that it was the lesser of two evils, a "transitional" device to another ["better"?]
paper gold-based scheme (...)

No reasonable man or woman would ever convert any of their hard-earned wealth into euros after SEEING how they let the thing slip to monetary purgatory! EVEN if it shoots back to 1.18, or 1.81 for that matter, on Monday....

ORO's answer to Town Crier yesterday:
"Town Crier--I think you're right.
"The distinguishing difference and another sign of the ECB/BIS being a government cash-based system rather than a bank-based system [Alluding that they cannot print euros a la Fed to buy bonds; another way of saying institutionalize inflation]. I really do hope they are as they appear. I'm still working on that question."

--Missing the forest while still fuzzy about the "trees" as well, ORO? Isn't cash another word for fiat currency which is an euphemism for debt? Isn't "cash" created out of thin air by the very banks you dismiss? ORO; THE SYMPTOM (fiat currency) IS BETTER THAN THE DISEASE (the banks)?

The dollar and the euro are the tokens of the same Casino. Granted, the Casino has branches on both sides of the Big Pond.

I'll tell you a short story after lunch...parce que Monsieur est servi!
PERMAFROST
(Bon app�tit, Monsieur. --Merci, p'tit gars!)
Oh, before the story...

Someone was asking Leigh if I was TZADEAK and had any good leads that would presumably help him/her make a buck or two. Well; here's my "predictions" for 'you'...

Check out a movie called the 120 Days Of Sodom. It's an Italian production; forgat the name of the director. "That"'s what I predict...Incidentally, if you live close to Beverly Hills--yes, in the City of Angels(!)--you can rent it at the Beverly Hills Public Library for a couple of bucks. AND ANY KID WITH A LIBRARY CARD CAN DO AS WELL! [Please don't sue the Library over it; they have a nice CD collection and I intend to visit the place when I have a reason to go to LA.]

You lucky California dudes and dudesses; don't forget to share my "tips" with the forum.

--SERIOUSLY SPEAKING: Gold is physical testimony to beauty and honor and justice. Thus; categorically incompatible not only with the present financial system but most of humanity as well.

IF gold wins--'you' stand to lose.
PERMAFROST
Now the story...
A man was standing at the gates of hell. He saw an old man holding a book. The old man turned to him and said: "Could you please hold my book for me while I open the door?" Presumably, you know, you need two hands to open the door. The man thought to himself, 'This must be a reprieve! a last chance of some sort!'
Next thing you know, they exchanged a few platitudes and the man was being shown into hell.
PERMAFROST
Town Crier...
I just read your commentary on how ECB gold revaluation is keeping inflation at bay in Europe.

According to what I gleaned from local BBC radio a few hours ago; Import prices went up more than 8% in Germany last month; and more than 10 billion dollars of capital left Europe for "greener pastures" [a.k.a. NASDAQ].

Leigh
PERMAFROST
Dear PERMAFROST: I can't understand what it is you have against FOA. His message from the beginning has been for us to invest in physical gold. He is not telling us to go out and buy Euros. The reason we are grateful to him is that he is giving us a behind-the-scenes look at what the financial future holds.
Cavan Man
PERMAFROST
Why not give us a quick review? I lost my library card?
PERMAFROST
Leigh...
Dear Leigh;

FOA has stated in his own words that he and his mysterious allies would NEVER allow gold "to take control" [his words]
or, in other words, become the finacial yardstick that determines economic--and, consequently, political--issues.

OK?
PERMAFROST
Cavan Man...
No. The chase is better than the catch?!...

I'll tell you this much though: it leaves "Caligula" in the dust!
Black Blade
Blood Bath on the street today?
s&p futures suddenly down -13.50, and gold rebounding! Hmmmm......
Leigh
PERMAFROST
Would you mind posting a reference for that quote so that we can read FOA's words in context? Thank you.
PERMAFROST
Leigh
Will do.
My Net link usually goes haywire this time of day; so maybe not today.

Latest Monday!
Black Blade
Here it is!
NEW YORK (CBS.MW) -- S&P 500 futures took a dive on news that the U.S. economy is growing at a torrid pace and that wage inflation is picking up as a consequence.The fourth-quarter employment cost index, the broadest measure of wage inflation, rose 1.1 percent in the fourth quarter, more than the expected increase of 0.8 percent. Within the number, wages and salaries rose 0.9 percent while benefits climbed 1.3 percent.
The advance reading of fourth-quarter gross domestic product, meanwhile, climbed 5.8 percent, more than the expected 5.0 percent rise. The GDP deflator, an inflation gauge, climbed by a higher-than-expected 2.0 percent. View economic calendar and forecasts and historical economic data March S&P 500 futures slid 13.50 points and were trading about 11.00 points below fair value, according to HL Camp & Co., pointing to a sharply negative open for shares.
Turning to shares trading before the official start of trading, Gillette inched up 9/16 to 40, according to Madoff Investment Securities in London. After the close Thursday, the company posted a fourth-quarter profit of 32 cents a share, in line with the First Call estimate.
In the bond market, the long bond plunged after five straight sessions of hefty gains. But intermediate Treasurys were again the hardest hit by selling following this morning's strong data. The 30-year Treasury bond tumbled 29/32 to yield 6.588 percent.
In currency markets, dollar/yen changed hands at 105.26 up 0.2 percent from the previous close, while the euro remained below parity, with euro/dollar off 0.4 percent to 0.9846. The U.S. currency gave back some of its earlier gains as U.S. asset markets slipped following the release of Friday's spate of stronger-than-expected data.
Black Blade
There's that word...."Inflation"
NEW YORK (CNNfn) - The U.S. economy finished off 1999 with its strongest quarterly advance of the year while labor costs and prices crept higher, the government reported Friday -- signs that record levels of employment and resilient consumer spending may be starting to ignite inflation.
Gross domestic product grew at a 5.8 percent annual rate in the fourth quarter, above forecasts of a 5.5 percent increase and the 5.7 percent rate recorded in the third quarter. GDP, reported by the Commerce Department, is the broadest measure of the nation's economy. The GDP price deflator, a key inflation gauge, rose at 2 percent annual rate, above forecasts of 1.5 percent gain and the 1.1 percent increase registered in the third quarter.
Labor costs, meanwhile, rose at a 1.1 percent annual rate in the final quarter of the year, the Labor Department reported, above the 0.8 percent gain registered in the third quarter and economists' forecasts of a 0.8 percent increase. The seasonally adjusted employment cost index, closely watched by Wall Street, measures companies' wage, benefit and salary costs over a three-month period.
Bonds and S&P futures both plunged following the numbers as investors concluded the Federal Reserve will likely lift its benchmark lending rate by at least a quarter point at next week's policy meeting -- possibly even a half-point, as some economists have forecast. The Labor Department's report on employment costs was slated for release Thursday but was postponed by a day due to snowstorms in the Washington area earlier this week.
Usul
Is there evidence for "Gold For Oil"?
http://www.cairns.net.au/~gunbury/ANOTHER21.htmlThe Traveller posted: "To scoff at an opinion of another when the poster has little to no relevant knowledge about the subject matter and further has made little to no effort to research - verify - cross check or comprehend the complexities of the subject matter, then said poster's post must be considered lacking in intellectual prowess..."
This is wise advice. Along similar principles, I have looked for evidence supporting the gold-for-oil deal proposed by Another (see link, and USAGOLD's special report http://www.usagold.com/ANOTHER_PAGE.html at 5/22/98)

We have seen this assertion:
Sun Oct 05 1997 21:29:
"Oil went from $30++ to $19 + X amount of gold! Today it costs $19 + XXX amount of gold!"

At lemetropolecafe, "An Open Letter to Congress on the Euro, the Gold Market, and the Dollar" (by SteveH)
states that the 1976 Jamaica Accords set the scene whereby "a little bit of gold was set up to bid with each dollar for a little bit of oil. This is called "oil bidding for gold" and is the very reason why oil and gold have dropped together".

SteveH's article at Gold Eagle puts a slightly different slant on this: The demonetisation of gold allowed the price to stay low... This enables the oil suppliers to obtain gold at a low price... This need not therefore be done in the form of a contract to exchange oil for dollars + a bit of gold directly.

One or two sources have mentioned rumours (predating Another) of gold-for-oil deals. But as yet, I have seen no proof that the flow of gold to major oil producers at advantageous prices in exchange for their oil is a prima facie requirement for the continuation of that oil flow. If evidence is forthcoming to prove this, the implications will be great, not the least in support of GATA's case. Especially if gold-for-oil was discussed at Jamaica in 1976.

The notion of exchanging gold for oil was certainly considered by
Mordechai E. Kreinin, who is today University Distinguished
Professor in the Department of Economics, Michigan State University, in 1974. This can be verified in his letter of March 18th to the New York Times titled "If We Gave Gold for Oil". (See my 1/9/00; 15:47:49MDT - Msg ID:22594 post). The fact that this predates the Jamaica Accords by 2 years is very interesting indeed. Some delegates there very likely had read the New York Times in that period of the Oil Embargo- or possibly engaged in private discussions thinking along the same lines as Professor Kreinin. Indeed, if Professor Kreinin's letter turns out to be the first to articulate the gold-for-oil notion, it could ultimately prove to be so influential as to become famous as the "Kreinin letter".

I have to conclude that more research is needed into this matter.
Jon
US$ vs Apparent Price inflation
I believe we all agree that POG is being restrained by a strong dollar. What I can't understand, however, that in the face of very obvious price inflation [in spite of gov't denials]the dollar remains strong! Can anyone explain this?
she-gold
prices and CPI
www.usagold.comTradition holds that as money supply expands (inflation), currency devalues (increased prices), for obvious reasons. I propose that,today, the expanding money supply has been partly responsible for holding DOWN prices.

Much of the expanded money supply has gone into funding internet venture capital (ie internet retail firms such as Amazon and Buy.com) which hold large amounts of cash and operate at losses in order to gain market share. They sell below cost putting pressure on traditional retail firms to not raise prices. People keep buying more and more things so the traditionals (ie Sears) show good earnings. So while the "wealth effect" (more money floating around to buy things) and the expansion (dilution) of money supply should yield higher prices in our daily living, the internets maintain competitive pressure to hold down prices. Greenspan's dream. The wealth effect is held in check. CPI remains relatively steady. Everybody is happy.

Everything depends on endless increases in money supply, and the scam is up when the external debt reaches dangerous levels and foreigners stop financing ridiculous money-losing endeavors. The market tumbles, and investors return to value, but are strapped with huge debts. Some internets remain to compete, but without the luxury of continually selling below cost. Prices are able to rise, but the wealth effect is no more. What's more, recession/depression sets in. The dollar may or may not devalue (would be death as a reserve to significanly devalue). And it's anyone's guess what happens to prices.

I suspect I am stating the obvious...
Journeyman
FOA rules-out gold @PERMAFROST, Leigh, Cavan Man

This may be the FOA excerpt PERMAFROST has in mind. The
excerpt is verbatim.

"In none of our meetings have we heard where a fear was
expressed that the governments will lose control of
digital currencies and give it (that control) back to
gold. That is simply not going to happen, no matter how
severe a down turn the loss of the American dollar
system creates. Believe it." -FOA (1/19/00; 8:53:32MDT
- Msg ID:23197)

Regards,
Journeyman

P.S. PERMAFROST, not to rain on your parade, but you are neither the first nor the only poster here to point out that the euro is just another fiat currency. You have, however, been willing to be the point man.
TheStranger
L'Inflazione Ritorno
Here is the PCE series (Greenspan's favorite inflation indicator) for the four quarters of 1999:

Q1 - 1.4
Q2 - 1.8
Q3 - 2.2
Q4 - 2.5

Much has been made of the disproportionate contribution of oil in recent inflation numbers. It should be remembered, however, that rising prices are more a symptom of inflation than a cause. It is the inflation of the money supply, after all, which allows the economy to grow in spite of higher oil.

Also, some have pointed to the long bond rally as evidence that the quarter point increases by the Fed are nipping l'Inflazione in the bud. Don't you believe it. The long bond is a useful investment vehicle for big insurance companies, and it is slowly being retired by the U.S. Treasury. As such, it has supply demand characteristics which now differ from those of the rest of the yield curve. For this reason, Wall Street has already begun switching benchmark status to the more relevant ten year bond. It, by the way, has been anemic by comparison.

Lastly, The Fed is WAY behind the curve. As Greenspan has said, himself, if you wait until you see inflation, you are too late. Well, as you can see by the number series above, they waited. Worse than that, they have continued to throw more paper on the fire.

**********

Intel, IBM, Gateway, Dell, Amazon.com, Lexmark, Compaq... these are a few of the tech giants showing either losses or dramatically reduced growth rates, of late. In November, Dell management told the analyst community the slowing was due to Y2k. Once we got into January, they said, sales would recover. Well, not quite, fellows. Once we got into January, sales got even slower, forcing Dell to reduce their future growth forecast from 50% to 30%. Most analysts immediately exhorted the public to get in there and BUY. These are the times in which we live.
TheStranger
she-gold
Marvelous post. You are wrong about one thing, however. You were NOT stating the obvious. Thanks for a valuable insight.
Journeyman
Oil for gold @Usul
I noted your work, yesterday was it? Good! The question is, once $ weren't redeemable for gold, why did the "Oil Royals" from the middle east decide to require payment in dollars exclusively, rather than in each individual country's currency (i.e. pounds when British bought oil, etc.) This isn't a trivial consideration because SOMETHING arrested the extreme depreciation of the dollar that had already begun in the late 70s. A hush-hush deal, such as "oil for gold" would explain the stoppage of a depreciation which should otherwise have gone much further.

I for one appreciate your research on the OFFICIAL versions of what happened in Jamaica. These versions COULD be accurate, but the nature of a synopsis is they obviously leave out many things. Further, official versions wouldn't be the place to find mentions of hush-hush behind-the-scenes agreements.

This doesn't mean that this agreement did happen -- but some very astute folks who post here seem to accept it as plausible at least.

Regards,
Journeyman
TheStranger
Catch 22?
There must not be any inflation because gold is not rising. Yet, one should not buy gold because there is no inflation.

The problem with this paradox is that there IS inflation and gold has risen 13% in the past 8 months. Yet, Wall Street wants you to buy more Dell.
TownCrier
Today's Market Report
Market Report (1/28/00): Having survived yesterday's OTC options expiry in London and finishing with strength in NY, overnight gold traded steady in a tight range of $1.00 -- mostly below the New York closing mark. As we prepare this report, spot gold has shown some strength in Late London / Early NY trade, currently at $286.80. Physical demand has been been reported on the price dips in these past days along with some short covering. But while the price remains between $280 - $290, gold is off the radar screens of the Funds--turning their attention to the white metals instead. The latest data shows COMEX open interest to have declined further, reaching 140,990 contracts--the lowest level since 1995.

Contrarian investors looking for those telltale signs that declare with much fanfare that the given performance of a market has become infalible will rarely find such signs to be more spectacular than this one. For the State of the Union Address, the President stood at the podium before Congress yesterday and with the opening words of his address he declared before the world that everything in America was coming up roses..."We are fortunate to be alive at this moment in history. (Applause.) Never before has our nation enjoyed, at once, so much prosperity and social progress with so little internal crisis and so few external threats. Never before have we had such a blessed opportunity -- and, therefore, such a profound obligation -- to build the more perfect union of our founders' dreams. ... And next month, America will achieve the longest period of economic growth in our entire history. (Applause.) We have built a new economy."

But lest you find yourself swooning under the heady spell of this promise of perpetual Good Times, we'll conclude as we did yesterday with a small reality check, courtesy of Fed Chairman Alan Greenspan during his Wednesday appearance before the Senate Banking Committee.

SEN. SARBANES (D-MARYLAND): "What do you think about the importance of the 'Too Big to Fail' question...?"

GREENSPAN: "Senator, you raise an issue which clearly bedevils monetary policy not only in the United States but throughout the world ... To the extent that there are financial institutions which are perceived by the marketplace as too big to fail, you create a misallocation of capital specifically in their direction and the normal market forces, which punish mistakes and constrain inappropriate extensions of credit, are subverted. The broader question (is) what economists and insurance people call moral hazard, where you get actions that relate to the specific notion that you will not be allowed to fail no matter how many mistakes you made. We at the central bank, and indeed all of our colleagues in the regulatory area, are working assiduously to make certain this issue is kept to as minimal a level as we can. We don't deny that there are certain large financial institutions that if liquidated very quickly would create some distortions in the system, and we try to avoid that. But in no cases should we be involved in creating a more organized liquidation of an institution that is in trouble. In no cases would the shareholders get anything. In many instances, many of the creditors would also find they were getting haircuts so to speak."

That will do it for today, goldmeisters. We hope your weekend is golden.
beesting
Fundamentals balance Gold, Funds on slide-Goldman(Sachs)
http://www.barney.co.za/reuters/jan00/gold27.htmJan. 27 Reuters:--Some excerpts:
New York falling open interest suggests Gold futures speculation is evaporating,...
Open interest on Tuesday, hit a 4 year low, indicating a dearth of fund interest.....
My take is that no investor interest,....

Comments:
http://www.kitco.com/gold.graph.html
Kitco's graph chart confirms this(many straight lines indicate no trading).

So, since the "Spot" price of Gold is currently measured by activity in the worlds futures markets(paper Gold), how is Gold going to be priced worldwide when trading on the futures markets is not an accurate barometer?
We know from news releases(thanks to T.C.) Gold is being bought and sold in off market transactions already(Japans 1999 purchase)FOA predicted this would happen.
Any comments on this?....beesting
she-gold
Dell
http://www.siliconinvestor.com/insight/contrarian/Watching Dell has been almost as illuminating as watching the POG, when it comes to watching the manipulators. Yesterdays upgrades of DELL by "analyst" after "analyst", after DELL warned of earnings exactly flat from Jan 1999, was nothing short of amazing. Bubblevision talks as though the news was priced into the stock price already, hence the worst is over. Time to upgrade the stock.

Complete crap. If the news was priced in already, why were analysts STILL predicting 0.21 when DELL now warns of 0.16? How can anyone calling him/herself an analyst call DELL a strong-buy with P/E of 62 (with no earnings) and year to year earnings growth of 0.00%.

"Investors" today have done well following Bubblevisionaries. But Dell is dead meat, and the action yesterday by the so-called analysts strike one as being nothing short of desparate. Dell makes half it's money through the ESOPs scam. Allowing Dell to fall and not bounce-on-the-dip would mean heavy losses for funds, but more importantly, would mean an unwinding of the ESOP scam as DELL business model is revealed for what it is: a stock trading company that happens to make box-computers to generate cash flow (ie the MSFT, Bill Parish thing). Losses beget lower stock-prices, beget losses, etc etc.

The end of an era may be near (at least for Dell). Time will only tell if people finally 'get it'.

Bill Fleckenstein (above link) writes beautifully about Dell and the market. I can only give my two bits connecting Dell with Oro's remarkable work on ESOPs.
Journeyman
Big Float & FOA, Kudlow and Greenspan @TheStranger, She-Gold, Usul, TC, ALL

The following is a repost from Jan. 25. Since TheStranger is
here, and because of some of his comments, She-golds
excellent post, Usul, etc. -- not to mention Greenspan's
comment as posted by TC, it is once again relevant.

REPOST from Jan.25:

Big Float & FOA, Kudlow and Greenspan {posted January 25,
2000}

This post began as a background to answer the three
questions I posed concerning Prof. Lawrence Kudlow and Alan
Greenspan about a week ago. From seveal posts, I realized
the existence of the overseas dollar glut wasn't "real" for
many readers here, and for that reason, might be worth
nailing down. Thus what began as background took on a life
of it's own, and became this post. Especially for anyone
who doesn't believe in the foreign dollar glut, doesn't
understand its significance, or doesn't understand what the
"current account balance" is, it's probably worth reading.
Alan Greenspan explains it. It ties in nicely with the
FOA/Another scenario as well.

As many who read this forum know by now, as a consequence of
the so-called trade deficit and measured more
comprehensively by the somewhat arcane and less understood
"current accounts balance," "foreigners" now hold a very
large and increasing percentage of U.S. dollars.

Although there's more to it, probably the easiest way to
understand how this happened is to realize that when
foreigners send us large amounts of goods, we send _them_
large amounts of dollars in return. As Greenspan explains:

"We're seeing a major increase of dollar holdings by
non-Americans, which is obviously the other side of the
trade deficit." -to Senate Banking Committee, 23 Feb
1999

Add the "more to it" from above, and you have a more
comprehensive measure of foreign-held dollars, which is
called the "current account balance," which grows everytime
there is a "current account deficit." Greenspan explains
the consequences:

"We've had a very substantial current account deficit
for a very protracted period of time which effectively
has moved us from a very large net creditor [nation] to
a very large net debtor. And we have a significant
amount of net interest payments that we pay on that
debt which are added to our trade imbalance and creates
still larger current account balances and still larger
net debt." -Alan Greenspan, Humphrey-Hawkins to the
Senate Banking Committee, 25 Feb 1998

Estimates are that the percentage of dollars held outside
the U.S. may be as high as 80%, that is, as many as four of
every five dollars may be "overseas." Since, as Case
Sprenkle of the University of Illinois explains, "Insofar as
the money remains abroad and is not used to purchase goods
or services from the country that printed it, it serves as
an interest-free loan from poor countries to the rich," some
people refer to this huge overseas dollar glut appropriately
as "Big Float." Big Float is the foundation of the
FOA/Another scenario, and the reality of its existence is
unassailable.

Big Float was spawned at Bretton Woods and orphaned when
Nixon, by "closing the gold window" in 1971, stranded
dollars overseas by no longer redeeming them in gold. As a
result, the main thing these stranded dollars were good for
at that point was buying stuff sold for "dollars" -- stuff
available chiefly in U.S.A.. Thus a lot of this original
Big Float began to come home in the late 70's, early 80s to
buy those things here. This increased the local money
supply which, by supply and demand, causes currency token
depreciation ("inflation.") Indeed U.S. "inflation" reached
about 20% in this period.

The question is, what staunched the flow? What stoped Big
Float from immigrating during this period? FOA/Another
suggest reasons, mostly involving oil for gold and the so-
called "Oil Royals" of the ME (Middle East) pricing oil in
dollars so there was soemthing else to buy with them, which
is the only reasonably sensible explanation I've heard. At
any rate, Big Float has continued to grow. And grow. And
grow!

Because of this huge supply of overseas dollars, what the
current _domestic_ money supply is at any given moment is
not only unclear, it is irrelevant. The reason the domestic
money supply figure is both unclear and irrelevant is that
it includes a dynamic and inherently unmeasurable component
composed of what can be viewed as the net dollar balance
among huge capital flows between the contintntal U.S. and
the rest of the world which occur at nearly the speed of
lignt and on an unprecedented scale. That is, given that
perhaps as much as four fifths of the already existent money
supply could theoretically show up on our doorstep and
become part of the _domestic_ money supply pretty much over
night - - -

The dollar at its low was down 11 yen, at 120.3 yen per
dollar from 132 yen per dollar yesterday. This is
better than an 8% drop in the dollar, the bulk of this
happening in about three minutes in the middle of the
night. This is an "astounding drop" in the world's
largest currency. -MSNBC etc., 7 October, 1998 -"This
is the biggest one day dollar drop in 25 years." -Kathy
Jones, Prudential Securities, 7 October, 1998

- - - any number you assign to the domestic money supply (a
shakey number even under the best of circumstances anyway)
at any given instant could suddenly become even more wrong,
theoretically at least, by a factor of 5 (the other 4/5ths
of the dollars migrate home electronically). That is,
dollars, whether in Tokyo, Sydney, Rio, or London, are only
fractions of a second away.

Thus while coming up with such domestic money supply figures
may be historically pleasing and good training for budding
macro-economists, they are, as Greenspan knows, pretty much
irrelevant for the U.S. in its current context. Even if it
weren't being manipulated, CPI is an even worse "inflation"
indicator, since it _normally_ lags money supply increases
by about 12 months (it used to be 18.)

The FED is therefore reduced to attempting to keep those
overseas dollars overseas, or, in forecasting, to attempt to
anticipate if foreigners are deciding to unload them and
send them, in various ways, back here to the U.S. where they
would then become part of the domestic money supply, bidding
for goods and services and, through the operation of "supply
and demand," causing dollar currency depreciation
("inflation") _here_.

"It's just that the [current accounts deficit]
arithmetic over the very longer run creates a big
question mark as to whether that is sustainable
indefinitely in the future. And I must say to you that
that is one of the issues that the Federal Reserve has
been spending in recent years a considerable amount of
time thinking our way through to make certain that if
we spot any material erosion that suggests that this
stability is subject to unwinding, that we will have
some significant advance notice on it." -Alan
Greenspan, to the Senate Banking Committee, 25
February, 1998

"The problem that we run into unfortunately, is that as
our net foreign debt rises, that the amount of interest
we must pay and indeed dividends as well, continues to
rise, and that process itself creates a type of
situation that if at some point foreigners stop wanting
to continue to accumulate dollars, it creates a major
reverberation back on the American economy ...And the
question is, what does that mean, where is the end of
that rise, and the question we have addressed ourselves
to in some considerable detail. We have not yet been
able to answer it effectively." ...The continued
increase in our net external debt and its growing
servicing costs clearly are not sustainable
indefinitely." -Alan Greenspan to House Ways and Means
Committee, 20 January, 1999

That is, Big Float makes it nearly impossible for the FED to
predict inflation or to do anything significant should it
develop, and if something isn't done, eventually something
_will_ develop. Thus Grenspan's main tactic must be to
jawbone inflation in hopes this will be enough to reassure
those foreign dollar holders. This is the context the U.S.
and any dollar holders anywhere are dealing with.

The question is what could cause all these dollars to come
back to the U.S.? FOA/Another suggest just such a return
has been planned by those tired of absorbing all these
dollars -- every time you see a new set of USA trade deficit
figures, for example, this documents another net transfer of
more dollars overseas, and lately the size of the trade
deficit sets a new record every month. The launch of the
euro was necessary to provide an alternative to the dollar.

Regards,
Joruneyman



Kudlow vs. Greenspan, my take {posted January 25, 2000}

@Peter Asher, Al Fulchino, beesting, R Powell, Solomon
Weaver, TheStranger

Looks like The Stranger called my hand in the matter of the
Kudlow vs. Greenspan questions.

First, sorry Stranger, I only looked at answers that were
couched directly in response to the three I posed. Short
sighted of me. I did feel from many of the other general
posts that many here probably had answers. In fact, perhaps
the questions were too easy for some.

Anyway, here's my take for what it's worth:

TO STRANGER: First on Kudlow's CNBC performance: I've been
lazy lately, and didn't tape it. Thus, I'm stuck with
memory. Keeping that in mind, Kudlow specifically cited
that "inflation" is a monetary phenomenon, and explained,
showing he really understands. He then concluded that since
the price of gold was low and so were the core CPI figures
(released just that day), that there was no inflation. At
this point, it seems he "reverse engineered," and given
these factors, subconsciously concluded that the money
supply must be stable.

He then faulted Greenspan for not mentioning money supply or
CPI even once, tho Greenspan's speech was primarily about
technology and "inflation." Further, and not for the first
time, he chastised Greenspan for attacking an inflation
which, by the numbers just cited, Kudlow claimed doesn't
exist. (Stranger, Kudlow may have, as you suggested,
changed his attitude on the last point between the time of
his talk on CNBC and when he wrote the remarks your father
called to your attention?)

"QUESTION 1: Why would FOA, Oro, and probably TownCrier
disagree with Prof. Kudlow's take on inflation? What did
Kudlow apparently miss?"

MY ANSWER: First (and least important) Kudlow goes by the
price of gold and core CPI as indicators that inflation is
under control. The first thing he missed is that, as many
here believe, the price of gold has been held artificially
low just so folks like Kudlow will be misled. Ditto CPI
figures, which have been manipulated unmercifally as well.

Secondly Kudlow also apparently didn't recognize the stock
market balloon as the "inflation" symptom many of us believe
it is. Thus there IS inflation - - - in the stock market,
just not as much in the general economy --- yet. But the
"wealth effect" is leaking buying power into the rest of the
economy, which will prove inflationary.

Finally (and most importantly) Kudlow faults Greenspan for
attacking an inflation that doesn't exist. Well, since
Kudlow explicitly recognizes that currency depreciation
(inflation) is a function of money supply, he should
recognize the ~80% of the dollar supply that exists
"overseas" as the potential inflation it is. He apparently
missed that the money supply has already been "inflated,"
but the overseas 80%, _for the time being at least_, just
has a net "velocity" of near zero _with regards to the
continental U.S._

"QUESTION 2: If all the indicators (gold, CPI, etc.)
indicate no inflation, why DOES Greenspan talk tough about
fighting "inflation?""

MY ANSWER: Greenspan knows where the money is and wants it
to stay there. He knows gold and the CPI are being
manipulated and so doesn't pay much attention to them. He
gets his inflation rate reads elsewhere. He knows he has no
direct control over all those "foreign" dollar-holders. If
they believe there will be inflation, they will begin
repatriating the dollars and the belief will, as a direct
result, become self fulfilling. Therefore Greenspan knows
he must dutifully jawbone and hope everyone will invest him
with the power the jawboning implies, be satisfied with
that, and will thus keep their dollars where they are.

"QUESTION 3: Why doesn't Greenspan pay attention to money
supply OR the CPI directly in relation to "inflation"
anymore, and instead rely on something called the "personal
inflator numbers?"

MY ANSWER: Greenspan knows these indicators (POG & CPI) only
measure inflation after the fact, and that money supply
figures, even if calcuable, are unclear and irrelevant:

-"We truly have problems with respect of using M2
specifically in the way we used it in the past as a
reasonably good indicator of where the economy was
going or where spending was likely to go because the
relationsiip between the nominal value of the gross
domestic product and M2 was reasonably stable and
forecastable. That has changed." -Alan Greenspan,
semi-annual Humphrey-Hawkins testimony (Day 2) to House
Banking Committee, 24 Feb 1998

Greenspan knows that once the very public signs of
inflation, i.e. gold price rise & CPI, begin to indicate
inflation, it's too late for the FED to do ANYTHING. All
those overseas dollar holders will recognize these inflation
indicators too and will start dumping their dollars. (This
is probably why gold price and CPI are manipulated in the
first place.) This is the main inflation source Greenspan
fears, because the FED has almost no control over it. With
~80% of the money supply already created and in "foreign"
hands, most of the FED's tools and indicators have become
largely ineffective or, at best, post-active. At best, as
per above, all the FED can do is try to figure out what
"foreign" dollar holders are going to do with their
holdings. In a very real sense, the situation is way beyond
FED control.

My guess is that the "personal inflator numbers," being more
obscure, can for the time being, be more honest and thus
give Greenspan a more accurate and honest picture of what's
REALLY happening in the general economy, give him a better
sense of how much money supply is escaping into the general
economy.

TheStranger, all ---- good answers from you-all!

Peter Asher: Still thinking about the points you raised that
perhaps "inflation" isn't purely a monetary phenomenon.

Regards,
Journeyman
she-gold
oops
www.usagold.comDell has a P/E of 62 and no DIVIDENDS (rather than earnings, obviously).

I think our minds are converging, Stranger.
TheStranger
Journeyman
Excellent. Thanks for addressing some of your post to me. I always enjoy your stuff.
18KARAT
She-Gold, Stranger
Re: she-gold (1/28/2000; 8:21:30MDT - Msg ID:23729)

This raises a fascinating question.
If shareholder's funds are used to prop up companies running at a loss
and hence to hold down prices
(i.e. a form of subsidy for the users of those services); Is it deflationary?

This is like arguing that charity is deflationary/deflationary.
If I give money to someone to subsidise their spending, they spend more but I spend less.
Obviously all that money going into the market is going somewhere, most of it is going to the seller who puts it back into the market.etc.etc.
A significant portion is wasted as stock options and wages to management and staff, bidding up their wealth and supporting their general spending. A considerable amount is going to the lender - as interest on the money borrowed to buy the stock at inflated prices.
Some goes to the user of the services who buys that service at a subsidised price. This distorts the price in that commodity.

My conclusion FWIW is that redistribution, in itself, is not inflationary or deflationary. You are subsidising someone to spend your money for you.
But borrowing, to subsidise someone's spending, is inflationary because the borrowed money is created out of thin air and there is no corresponding creation of wealth(production) - so no matter who spends the money you borrowed, it must drive up prices eventually in the rest of the economy.

18K
TheStranger
Journeyman's "Big Float" Essay
Journeyman - Obviously, monetary policy is a subject which interests me to no end. (Which, in itself, is interesting because I know so little about it). But, it intrigues me that money supply gets zero coverage in the financial press while a quarter point increase in fed funds is a headline grabber. Meanwhile, I come in here and get such thorough treatments on the subject as your brilliant piece. Whoever you are, thanks for the effort and for shining a light. Bravo!
Journeyman
TownCrier: Secrets of the inner sanctum?
TownCrier,

How're you getting those Greenspan quotes from the Q&A. I video tape, then replay and transcribe with captions enabled. Have you found a better way??

Thanx,
J.
PH in LA
Keeping gold (and Permafrost's "message") in perspective
"I got a lot flak from most of you when I rebutted your gurus." PERMAFROST (1/28/2000; 4:01:05MDT - Msg ID:23714)

My dear Permafrost,

Please do not imagine that you "rebutted" anyone here at this forum. What you did do was come running in here to throw up some sand and cloud up a few issues. However, it got in hardly anybody's eyes... you did not even begin to engage FOA (or anyone else) in a meaningful discussion; much less rebut anyone. In fact, his last series of posts stand out as more clear and comprehensive than ever, in part to clearly delineate his posture as compared to yours. In them, FOA reveals himself as no wild-eyed idealist without a meaningful contact with and grasp of reality. Your contention that the Euro is nothing more than another fiat currency not to be compared to the fair-hued gold, (that should be shunned as evil incarnate) is an absurd one. It has taken several generations for the failure of the dollar to reach today's reality. It will take many, many more generations for the Euro to achieve any similar fate. In the meantime, the economic world will continue to function. Anyone who ignores this does so at his own peril. FOA explains and illuminates a hard-headed and pragmatic vision that co-incidentally uses gold as a wealth-preserving tool. He is not a fuzzy-minded gold zealot. Neither are many of the rest of us here at this forum. We do not worship gold in itself as something holy. The error of that point of view was pointed out by Moses. You would do well to ponder this anew.

Some may recall a poster named Chris who tried to come in here with a singularly weak-minded, intellectually empty-headed non-message. FOA spend a couple days trying to engage her with carefully thought out arguments and eventually sent her home to think things through more carefully. Unfortunately, such an assignment proved way too challenging for her and she eventually lost her hold on reality.

By imagining that you have somehow vanquished our "gurus" and/or "rebutted" their messages, you are in danger of a similarly surreal fate. And don't think for a moment that you have convinced anyone else here to take off in that direction with you.

This post is not "flak". It is a reality check. You, of all people should be able to appreciate that by your own rhetorical stylistic conventions, you have renounced the right to expect an overly rigorous adherence to politeness and civility.
TheStranger
18KARAT
I think I agree with everything you just said except perhaps for your initial premise. If companies like Amazon.com, for example, can use easily got capital to finance selling at a loss, they can temporarily depress overall price numbers. What I get from reading she-gold, however, is that "temporarily" may be the operative word here. If so, Amazon's strategy might, in the long run, represent a misallocation of capital which would certainly not contribute to the long run efficiency of the overall economy. It remains to be seen, of course, whether Amazon will succeed or fail. Perhaps you agree with that as well.

Please don't anybody be offended if they address something to me and don't get a quick response. We are having a pretty day today in Salt Lake, and I am going to use it wisely. Thanks.

I am going to be
Usul
The Big Picture
@Journeyman, ALLThe Big Float is a central part of the Big Picture.

A sense of the Big Picture is one of the redeeming characteristics of many contributors to this forum- to see the wood instead of the trees. In the Big Picture, all these factors (Big Float, Euro, oil, trade deficits, carry trades, stock and bond markets, gold, etc.) are inter-related, and all will be affected if there is a significant breakdown in any one of them.

Journeyman, thank you for your 9:14:58MDT No. 23733 comment.

As regards official versions of what happened in international meetings, they are usually sanitised for the public and that is mostly how they will be documented in the journals. Anyone who has participated in any sort of conference or NGO meeting will know that a great deal more is discussed than what goes in the minutes, both in the meetings and on the sidelines.
Then there are sometimes matters that are held confidential for a great many years. Especially if it concerns the interests of nations.

While "It is wrong always, everywhere and for anyone, to believe anything upon insufficient evidence" - W. K. Clifford, and "extraordinary claims require extraordinary evidence" - Carl Sagan ("Broca's Brain", 1979), it is certainly true that-

"The absence of evidence is not evidence of absence"

Papagiannis' Law, also stated by Carl Sagan in - "The Dragons of Eden" (New York, Random House, 1977 and Ballantine Books, 1989)

Until someone comes up with a better explanation of the behaviour of the dollar, oil, and gold, these words of Sherlock Holmes (Sir Arthur Conan Doyle) surely apply:

"When you have eliminated the impossible, whatever remains, however improbable , must be the truth"
Mr Gresham
Journeyman #23738
"Estimates are that the percentage of dollars held outside
the U.S. may be as high as 80%, that is, as many as four of
every five dollars may be "overseas."

Enjoying your post, with time today only for this note while I read it -- the 80% estimate is of the PAPER currency dollars, mostly the 100s that have gone into people's private stashes. What bank accounts and other assets exist in dollars outside USA, I don't know, but it certainly doesn't comprise 80% of the total dollars in existence, most of which are sloshing around within these borders.

The electronic dollars abroad are probably easily exchangeable to local currency, and would be sold or used to purchase US assets/products if they were seen as losing value. The paper dollars would probably come back more slowly, more likely when the local currency was showing more health than the dollar.

$400 billion or so in paper 100s arriving here might present an interesting spectacle in our stores and banks, but it would probably be gradual if it happened at all.


18KARAT
Re: Journeyman (1/28/2000; 9:45:14MDT - Msg ID:23738)

Journeyman, the biggest thing that persuades foreigners to hold dollars
is that they can exchange them for T bonds and stocks.
These are interest/dividend bearing instruments, in general.

This is why, as the size of the current account deficit goes up,
and the number of externally held dollars rises,
the influx of investment capital gets higher too.
The net flow of cash is always in zero balance -
As it must be in a floating currency.

Who pays ultimately for the foreign claims on US debt/equity instruments?
US taxpayers and shareholders.
The taxpayers pay more taxes to pay the interest bill on T bonds.
The shareholders share their dividends with foreign shareholders;
Although in the short term the extra demand for shares drive up the share price.
But the P/E rises. that is to say, the potential earnings yield goes DOWN.
i.e. short term gain (Capital gains)- long term loss(Lower Earnings yield, higher P/E).
That's always the way with any kind of debt obligation.

18K
18KARAT
Re: TheStranger (1/28/2000; 10:37:40MDT - Msg ID:23745)
I concur with what you are saying about misinvestment, but remember:
Every time Amazon subsidises someone to buy a book,
They are still paying full price to the publisher of the book, distibutors, staff etc - the balance coming from shareholder's funds.
Their net daily cash flow must balance.
So the net inflationary effect of the redistribution of wealth is going to be zero,
unless they also borrow against their shareholder's equity,(which they do).
The redistribution of wealth distorts price relativities (microeconomic effect),
and the resulting supply/demand balances,
but apart from borrowed funds, has no (macroeconomic) inflationary effect.

18K
schippi
Gold Support
http://www.SelectSectors.com/hui.gif Gold Index HUI chart shows strong Gold support
just below, where is support for the Equity market?
TownCrier
Fed adds $2.01 billion
http://biz.yahoo.com/rf/000128/r9.htmlThe Fed uses over-the-weekend repurchase agreements to add these reserves to the banking system in addition to yesterday's $8 billion addition via 4-day repos which remain in effect.
Gandalf the White
OK -- Fessup -- Who did the dirty deed after 11:30 NY time ?
The Hobbits want to know about the dump that sent the POG down US$5. in just a few minutes. -- Could this be classified as market manipulation ? --- Naw!!
<;-)
she-gold
TheStrange
www.usagold.comYou're right. The operative word here is "temporarily". Internet retailers subsidize our purchases and hold down prices through shareholder cash and advertizing revenues.

But aggregate advertizing revenues are limited. Companies can only spend so much to advertise their products. Whether these revenues will eventually drain money now going into TV, print and radio remains to be see. What is clear is that a large proportion of the "revenues" posted by internet retailers in their financial statements actually represent the bartering of ad space and amounts to no meaningful income. Thus, expenses continue to increase faster than revenues (ie BUY.com). It would be interesting to know the total aggregate amount spent in the USA on advertising and compare this to the total advertising revenue posted by internet companies. Anyway, unless broadband streaming of internet content improves rapidly (allowing for vastly more compelling internet ads), it's likely that the price/revenue from internet ads will be decreasing dramatically as firms realize the dearth of actual business generated by advertizing on the web (how many ads do YOU actually click on?).

Which leads us back to the primary source of money supporting the internet retailer's sell-below-cost subsidy to the consumer: venture capital. Once again, only an expanded money supply (and debt) will support continued venture capital poured into already struggling internet retailers. And since the possible (though not proven) efficiencies represented by internet retailing do nothing to help the US balance of trade, the end result can only be an increase in the external debt. At 4% now, this is a concern. At what point is the game up?


she-gold
TheStrangeR
www.usagold.comsorry for the inadvertant deletion of the R.

and obviously, thats 4% of the GDP.
TownCrier
Sir Journeyman's question:
http://www.house.gov/banking/"How're you getting those Greenspan quotes from the Q&A. I video tape, then replay and transcribe with captions enabled. Have you found a better way?"

Carrier pigeon.

But seriously...the modern version of the same. Reviewed an internet link on Wednesday and saved the exerpts of text I found to be of interest to a destop notepad file. Those two were all that I saved. In time, you should find all you need at the link provided, whereas the Fed Board of Governors site does not provide the Question and Answer portion of the testimony.
jayzee
stock market decline and gold decline
I do not understand why gold declined when the stock market is also losing. It seems to me that investors would start switching from stocks to gold and PM stocks. Does anyone have an explanation? Thanks!
TownCrier
Hall of Fame Nominations
When a post is nominated, and then rapidly receives the requisite three additional "seconds" bodda-BING-badda-BOOM it is easy for The Tower to take note and then pursue the appropriate action. But when a number of nominations are outstanding, and "seconds" come in over a period of days (which is fine, don't misunderstand,) it becomes ever more difficult for us here at The Tower to keep track given the numerous activities we pursue and the sheer volume of posts to review.

We would like to impose this responsibility upon the poster who takes the initiative to nominate a post in the first place: please keep track of the various posts that are offered as seconds to your original nomination, and then make a post to the TownCrier's attention here at the Forum listing the posters who have provided seconds along with the message ID # and date of the post (or posts) that are to be included in the HOF. That would be extremely helpful to us here in The Tower.

Or better yet, feel free to e-mail that same information to the TownCrier's attention at...
sitemaster@usagold.com

We'll do the rest from there.
Ulysses
Journeyman
http://www.usagold.comJourneyman,
You say 80% of the money supply is overseas. Don't you mean 80% of actual U.S. currency and not M3 money supply? Also, once The Monster (U.S.Govt) starts retiring bonds,won't alot of that money go back into buying existing T-bonds,thereby sending yields back down? If that happened ,would inflation go down? Gold? Thanks for an answer.
A handclasp across cyberspace.
elevator guy
@jayzee
Hey, jayzee, did you ever think that maybe the POG is squashed during market downturns, to steer those looking for shelter away from gold? It would serve the overall interests of TPTB, wouldn't it?

The emperor has no clothes!
TownCrier
jayzee...in response to your question on the price decline
Part hunch, part rumor, part news

The first important step is to realize that this is entirely a paper phenomenon. The price movement is determined by the forces of supply and demand for the investment product known as the COMEX gold futures contract...a way to place bets on the future movement of the contract's price. When one side or the other (buyers or sellers) gets more aggressive in their efforts to execute their position, the price moves in their direction...a self-fulfilling prophesy, essentially. If you have been following the various daily reports here, you may recall a couple of items. First, we reported a couple days ago in The GOLDEN VIEW that a trader (was it L. Kaplan?) said that gold was approaching some of its moving average lines which could lead technical traders into some decision fits. Perhaps we are seeing some of that today.

The other item is that Open Interest on COMEX gold futures has fallen to the lowest level in five years. Open Interest is the trade term for the number of futures contracts that are currently held between the gamblers. Following yesterday's trade, open interest fell by another 1200 to 139,790 contracts. You can look at this as a representation of fewer entities taking smaller positions through this specific form of investment derivative. In thin trade, any price movement tends to be exaggerated.

Looking to Financial World News for any clues, we have this report in response to today's downdraft:

"Market talk suggested a large hedge fund was forced to sell a hefty
gold position, possibly due to serious credit problems. Several fund names
were rumored about, but there has been no clear consensus on which fund
was responsible. Sources said a bank acted on behalf of the fund...
With markets thin and jittery, the move was made quickly, but sources
say good trade buying quickly brought gold off its lows."
***
(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.
----------------

We hope this helps you steer an informed course through these roiled waters. Should the day arrive when the futures volatilities fail to satisfy the original intent ostensibly to provide a means at price hedging for users and producers, it may be scrapped. It would be the first derivative market to die in such a manner on lack of interest. The physical metal market would then truly have its day in the sun...prices based on supply and demand of a tangible good, not of a contract of infinite supply (which, as we mentioned above, seems to nonetheless be dwindling on lack of interest. Demand for the real metal, however, remains alive and well!)
goldfan
18KARAT (1/28/2000; 11:10:19MDT - Msg ID:23749)


18KARAT (1/28/2000; 11:10:19MDT - Msg ID:23749)
Re: TheStranger (1/28/2000; 10:37:40MDT - Msg ID:23745)


You said:
Every time Amazon subsidises someone to buy a book.....
The redistribution of wealth distorts price relativities (microeconomic effect),
and the resulting supply/demand balances,
but apart from borrowed funds, has no (macroeconomic) inflationary effect.

>>>Something I've been pondering, when people borrow, crdit cards, or mortgages, or corporations borrow, to merge, or buyback own stock, and the resulting cash flow is used by companies whose stock is bought , is'nt this an increase to the money supply, and hence inflationary? all else being equal? Is there any material difference in the leverage effect on stock prices of corporations borrowing to conduct their operations, or of shareholders doing it for them, by pushing up stock prices based on borrowed money?

Thanks for your thoughts

FWIW

Goldfan
ORO
PERMAFROST - government and bank
The main flaw in banking is that it includes the institution of a fraud with legal standing. Had they called the balances anything but "money", they would have had none of the problems that threw them into repeated collapses and then led them to both seek government concessions and help.

Fact is, that large holders of cash balances use bonds as part of their money supply - their cash. Including liquid stocks and other instruments. Thus banking would be fine if they just called their "money" by another name that does not imply that the deposits sit in the banks. Very important too is that the banks not be given any government support in perpetrating this action. It is best left in the hands of the market to make these judgements as to how much of banker's debts each market participant would like to hold.

The point of government money rather than bank money propped up by government is that governments preffer cash based financial systems where they can just print up money. Most important is to see that the banks and government have parted ways. The damage they do together is much greater than anything they do when apart. The reversal of the trend of government and bank symbiosis is the undoing of the creeping socialism of the past century in the US, and the past two in Europe.

The continental Europeans found a transitional system where the government could control a gold reserve and issue a currency that trades freely against gold and other currencies and where international settlements are done in gold. The system was in practice during the 1930-39 period. In trade among nations, the period was marked with a heavy dose of reality checks as each currency had occasion to be doused with kerosine and set ablaze when the gold reserves were reduced due to deficit spending by the government and due to spendthrift citizenry.

The current system for the ECB and Euro seem similar to the old system that preceded Bretton Woods. The separation of the ECB from political government is a first step towards a good end. The emphasis on cash Euro is a blow against the government sponsored bank money system. Letting gold trade in a free market without government priveleges for any one entity opens the door for a future transition away from the Euro as well.

Next issue is that of breaks between banking factions - the continental banks and the Anglo banks. Without government support, the large banks can't do away with competition, and the more efficient debt pooling and exchange style debt trading. A separation of government and banking allows for a separation of the continental hard money bankers from the Anglo flex money banks - as neither may have the same level of government support as they had before. Their separation would reveal the clear superiority of the hard money strategy. The governments, too would have less support from banking.

During this transitional phase, as gold gains in visibility, the financial infrastructure of gold banking, payment and settlement systems and gold bonds would form. Also a free exchange market would allow individuals to use both gold and electronic gold in daily trade. The fact that an E-gold type account can do transactions without credit allocation etc. Lowers transaction costs by 1/2 or more relative to credit cards even relative to today's debit cards.

So, PERMAFROST, the forest and the trees are indeed obscured, and it is not clear for who's favor this separation is intended.
What is clear, is that it allows the continuation of the trend that has seen government expenditures fall relative to the economy for the last 30 years in the US. It is clear that it is in the interest of free and transparent markets. Having gold trade for back-up - from the ECB perspective, allows the system to operate even if the Euro does not do well. Which I hope it won't, but the structure of the markets and its dynamics make it likely that it would succeed.

Elwood
Test
Test
goldfan
Mr Gresham (1/28/2000; 10:48:59MDT - Msg ID:23747)
Sir Gresham

You said:

<
I believe ORO has said, one way or another, that he estimates maybe $23Trillion outside the U.S, compared to $6.5Trillion (M3) inside. This seems totally at odds with your statement, but maybe I don't understand either?

Thanks for your thoughts

Goldfan
TownCrier
IMPORTANT typographical CORRECTION in previous post to jayzee
Where we wrote, "It would be the first derivative market to die in such a manner on lack of interest."

It should read, "It would NOT be the first derivative market to die..."

Futures can come and go based on demand, and lack of interest in other futures HAS stopped trading in other futures markets in the past.
TownCrier
Sir PERMAFROST...please allow me to guide you through the interpretational fog into which you've wandered...
You said, "I just read your commentary on how ECB gold revaluation is keeping inflation at bay in Europe."

No such nonsense ever issued forth from The Tower. We are well aware that the ECB anticipates that regional price-inflationary forces and effects will pass through early this year without lasting damage into the latter half. Time will reveal if their expectation is on the mark. Now, if you would please take another look at the wording of our post, we submitted that a steady gold price coupled with the decline in the euro's external exchange rate would result in an increase in the euro-denominated value of the ECB gold assets if they do, in fact, mark to market today. Then specifically, we offered the consideration that "if it is true, as the European Central Bank contends, that price inflation is being held at bay within the euro region, (then) the euro-holders are not being adversely affected by the falling exchange rates; while at the same time the European gold holders are seeing their gold enjoy a net increase in purchasing power."

In yesterday's post we did not lead any willful reader toward the conclusion, as you contend, that gold was in any manner keeping inflation at bay; nor did we say inflation WAS at bay. We alluded to to CONTENTION of the ECB that inflation was not problemmatic, even in light of the euro's forex decline. We drew the conclusion that all was right in euroland where the appearance was one of steadlily managed fiat currency prices, while at the same time the net purchasing power of gold was seen to be rising.
Elwood
This Yellow Isle

This Yellow Isle
by Elwood

We stand upon the shore, this sandy beach,
And watch as dark clouds approach.
The surf upon the near rocky shoals
Shoot skyward spray, waves broach'd.

Yea, hold our ground through the wind and rain
Upon this Yellow Isle
For though the storm comes e'er near
It's we, must endure this last trial.

Behold the high parchments of those in trust
Of them we'll see bye 'n bye
For they, too, will face the fierce winds we must
Yet as dry leaves before the wild wind will fly.

This Yellow Isle, this Yellow Isle
Of thee it is gravely spoken
Your glint 'tis from far horizons seen
Just 'ere the great ships sunk by tokens.

The great ship, she'll heave and then pitch to an' fro'
The Captains will cry "Calm, have no fear!"
Yet, just 'ere the keel, it will crack bow to stern
To all 'twill be known, end is near.

They'll stand transfixed with their frightened stares
As o'er the ever thunderous din
Comes drift the lilting voice of our Another
And the serene pure reason of his Friend.

On this Yellow Isle we're steadfast and firm
Through fair wind, gale wind and gust
For on this Yellow Isle we stand as free men
As our forefathers did before us.
Journeyman
Thanks, TC
TownCrier (1/28/2000; 12:17:07MDT - Msg ID:23755)

You may think a thanx message unwarranted --- but your site ref. will save me approx. 8 hours per AG speech. Is that a productivity increase or what!!

Thanx, J.
ORO
Goldfan - Big Floats
The Estimate I gave is a low ball figure, as it must be greater than that.
But that should be a workable number for estimate of dollar bank lending outside the US. That should provide a rough and high comparison to internal M3.
Total US dollar debt outside the US is likely larger than the $23 trillion figure.

Total dollar debt market size within the US is about $25 trillion (without $7 trillion in financial debt) over an $8.7 trillion economy. The global economic trading arena has a little under $8 trillion of cross border trade without considering trade confined within country borders. The debt generated by such activity should be in rough proportion to the economic activity, which gives about $23 trillion - a good match with my other figures.

The currency derivatives picture, however, indicates that the amounts are far greater. Possibly at the $40 trillion level.
TheStranger
More for Jayzee
Today was a good day for long government bonds(deflation beneficiaries) and a bad day for gold(an inflation beneficiary).

I think one can safely surmise from this that many investors now expect the Fed to raise the stakes in its battle to stop inflation (supposedly before it starts). And, because such a course could risk slowing the economy, stocks also took it on the chin.

Unless one understands the inflation dynamic the Fed is now seeing (which was predicted a year ago here at the forum, BTW) a day like today might convince one that the window of opportunity for gold has already closed. Don't you believe it.

Remember, 1998's most popular investment book was a little ditty called "Deflation". In 1999 the mantra was of "stable prices". At this game of economic forecasting, the majority often gets it wrong. I am afraid it is their manifest destiny to do so.
Cavan Man
TheStranger
If it is acknowledged that the "risk" of inflation persists as evidenced by the "fear" that the FED might (will) raise the rate next week, why then did NEM and GOLD go down? I will assume that the XAU finished lower. Is it because of the COMEX price which is a function of the paper game?
Thanks.
Aristotle
Parallels -- Unfinished Business
Thanks for the various words of encouragement that there is some interest in receiving my forthcoming treatise on "The Perfect Monetary System for an Imperfect World." I hope to have it ready for posting this weekend, schedule willing.

Its amazing, the thoughts one has while showering. I was giving thought to a few of the yet unwritten items in my unfolding commentary. While trying to decide with any degree of certainty when it could be expected to reach completion, it dawned on me that my commentary had become the perfect metaphor for our current monetary system in one respect--that of expectations and realizations regarding investments versus payment-in-full.

Because I have discussed the seed of the topic with others here, and have generally made a small fuss over promises of working toward the development of a larger, more developed commentary over the course of several days/weeks, there are a few here (you are too kind!) that are eagerly awaiting the "payday" when their Expectations become Reality. This is just like an employee who works over time, awaiting the payday when his expectations of wages become a reality, and he gets paid, and hopefully is fully satisfied thereby. BUT...does he choose to be paid-in-full (by exchanging the currency immediately for real goods and Gold,) or does he defer his payment (and satisfaction) to a future day by converting his accounting units (currency/dollars) into some other form of financial units (stocks, bonds, mutual funds, interest bearing bank deposits, etc.)? Whatever your line of business, your business is unfinished until you opt to be paid in full and "take delivery" of what your currency will buy.

At any point along the way, you fine people could have demanded a "payday," requesting me to yield unto you the salary that had been earned to that point in time (meaning, the commentary that had been written to that point in time.) But rather than choosing to get "paid in full" by demanding to be shown the written commentary, you have opted to invest your expectations, and hope that it grows into something bigger and better--by giving me additional time. You have put your immediate realization of a "payment in full" on hold for your expectations of realizing a better "payday" at a future time. And in truth, my commentary is indeed growing more complete, more fluid, more factual, and all around much improved. But what if I never post it? What if, in your investment frenzy, you are content to receive these updates of progress, and if satisfied by the prospects of its growth, never take delivery on your commentary?

Just as with the wages of your effort that are in limbo in IRAs, 401k's, bank accounts, etc., in which you study your quarterly statement, possibly moving funds from one form to another, pehaps I too could convince you not to take delivery of this commentary--keeping you satisfied with quarterly statements that ensure good growth is being made. You could gather around the water cooler and talk with your co-workers about last quarter's performance in which an update indicated that my commentary had more than doubled, grown so large that a file-split was being contemplated.

OK, now just to set the record straight, I don't intend any of this to be taken as some egotistical self tribute to the merits of my growing commentary. That's not the point (although it is my sincere hope that you do read and benefit from it if you ever decide to "take delivery.") My point was this: as I stood under a stream of hot water shampooing my hair, I honestly wondered what it would take for someone to take delivery of the money (Gold) that they earned. Almost nobody does. Rather than calling for the Gold soon after payday (and after paying your necessary bills,) most people transfer their "virtual pay" of dollars into other forms of "virtual pay in limbo" (stocks, bonds, etc.) with this kind of thought: "Maybe I will buy some Gold when I am done making money." You fool! The Gold IS the money, and you haven't "made" any until you can reach into your pocket and pull some out. Otherwise, in various investments you have only succeeded in putting at risk your current "claim" on the money (Gold) you've earned. That isn't to say that the growth of these investments has no merit. It does--but you HAVE TO TAKE DELIVERY. Otherwise the growth is just unrealized words and numbers on an institution's spreadsheet. And again I ask, why would anyone take delivery? Isn't it better to get a quarterly statement telling you that growth has been good, and the prospects for future growth look better? What do people plan to do, wait until they are on their deathbed before they call in their chips to see their honest life's work finally paid for in-full before their dying eyes? How grim.

These investment games are appropriate where you only have access to and use of a failing currency. But you have a choice again with the return of Congressional "generosity" in 1974 in allowing us unwashed U.S. citizens to once again own Gold. Despite its tumultuous pricing history over the last 30 years, Gold is an APPRECIATING currency, and therefore is itself the perfect savings asset--no risk need be taken. Buy and hold, spend when circumstances require. The future will attest to the wisdom in this approach.

As I think on this parallel between fiat earnings and investments compared with my commentary and these updates, I'm swayed toward a new line of thinking. As long as you are content with good earnings reports on your quarterly statements and therefore see no need in taking delivery on Gold, perhaps I should simply continue to provide reports of good progress, and deliver no commentary. With the prevailing market mentality, this should be good enough to satisfy, and indeed would seem to be the preferred outcome--the simple notion that "something" is becoming "more."

Finish your business.

Gold. You don't have it unless you HAVE it. ---Aristotle
Aristotle
Nice work, Elwood
"For on this Yellow Isle we stand as free men
As our forefathers did before us."

Makes for a nice thought as I now venture out into the windy and cold unknown evening.
Hermit Club
nomination
I motion to nominate Steve H's paper, posted by JCTex
Msg( 23273 ) to the HOF
Golden Truth
Dear Permafrost ;-)
Are you having fun yet? It appears to me that you think of GOLD as something only to be admired, as in no rightful role to back a new currency(Euro).
Also any other World currency reserve, the Euro? would bring us to the gates of Hell, unless we see the error of our ways and repent of our secret little Gold and Euro sins, and once again fully embrace the only true World reserve currency, that being the American "fiat" one, backed by your personel promise Permafrost that you will work as hard as i did in building you your import car you bought from me, and in the meantime not inflating your $. I think not!

Everyone, doesn't it look kind of suspicious that just yesterday the Euro falls below parity, and BAM,BAM,BAM,B-O-O-M goes the markets! Eh Permafrost? that should be a buy signal for you, hurry sell all your GOLD if you even have any? and rush right out and buy some more of that U.S "fiat" currency, i,am sure its a a good deal today. Hey, maybe you can even bribe that guy down at the gates of HELL! I've heard a whisper or is that a Hisper number, that Heaven and Hell are going to merge in the biggest deal in all of eternity, and that the "DEVIL" whats to close the deal in American dollars.

That right he said most of his best customers and now patrons have requested payment in U.S $$$ also, they don't like GOLD it tells the TRUTH to much ,and no matter how hot they bring HELL's temperture too. As soon as it cools of GOLD solidifies and starts telling the truth all over again.
P.S I think they are jealous over GOLD's Beauty and honour also? but you can never be sure about any rumours from HELL now can you???????????????

Permafrost any other good ones you'd like to lay on us? G.T
goldfan
ORO (01/28/00; 14:56:18MDT - Msg ID:23769)
Sir ORO Thanks for your quick reply. I'm starting to get it, but the terminology defeats me at times, like swimming in wet sand...

You said

Total US dollar debt outside the US is likely larger than the $23 trillion figure.

Total dollar debt market size within the US is about $25 trillion (without $7 trillion in financial debt) over an $8.7 trillion economy.

>>> What is the difference between "total dollar debt market size within the US", and M3? Is Finacial debt, M3? What else is there?

I would also greatly appreciate help with understanding some terms I found in an article by David W. Tice at Prudentbear.com. He said:

"But if our trading partners resist running a large current account deficit withthe US, our monetary officials are left to finance the country's growing mountain of debt through a sharp devaluation of the currency"

and further on he says"

"all will be ultimately faced with the dilemma of havng to respond to the inevitable devaluation of the dollar, as the US seeks to reflate its economy."

My question is, How exactly does a monetary offical, or other government agent, devalue the dollar? Do they just announce it? ( I know that seems like a dumb question). And also, how does devaluation "finance a mountain of debt"? I thought that debt was already financed, that is what it is, a means of finance? When the bond is signed it is financed. Or does it mean "pay the interest on" and if so, why not say so? What am I missing here?

Thanks again for your help, with sufficient education, we may yet save our democracy.

Goldfan
16-penny
golden dollers
They are giving 2000 dated sackajawea dollers as change at wal mart in southern N.M two weeks before they are supposed to be released to the fed banks
Sippin
Why gold went down today
I was listening to a radio show about gold investments today and the reason gold took a hit was because Australia was having problems with their currency and needed to liquidate to settle some debts. Also the announcer stated that the movement was very sudden and gold took an immediate decline of 5 dollars or so in a matter of minutes or seconds. I was working at the time I was listening and didn't get all the info. If anyone can investigate this, I would appreciate it. I don't know where to look to find any info.

Thanks in advance.
Leigh
16-penny
Last night we got five "golden" dollars at Sam's. All the clerks were wearing promotional buttons and were asking customers if they wanted the coin as change. I put them in my pocket, and by the time I got home they had scratches on them. Also, there were some dark dots on the metal. The coins were pretty just out of the roll, but they won't stay pretty long.
Farfel
Kaplan and the OLD GOLD Paradigm...
Just got back home and I was reading old steve kaplan tonight and he was stating the absolute imperative that the XAU must drop further to meet the collapsing gold price.

Well, I've read Kaplan a long time and in my mind he is strong in some areas, weak in others.

But I think his primary weakness is probably the same one that most technicians seem to suffer, and that is inability to spot trend shift.

I can't think of a single one who forecast the Washington Agreement's effects on gold and I read a large number of these guys predictions.

In any case, my aim is not to target Kaplan for disparagement but rather to proffer a theory, namely:

When there is a true mass psychological shift in the markets, creating a genuine shift from paper to gold, then I think the old rules and yardsticks will probably not apply.

I had this discussion the other day with a gold analyst and he told me that the XAU MUST capitulate into the 40's level in order to begin a gold bull.

Well, I talk to a lot of gold investors out there and I get a sense that, so many of them have lost so much money (in many cases 80%-90% of total gold investment) that there is not much news capable of scaring them out of their positions today.

One fella told me, "Why should I sell now? If I do I only lose the remaining 10% of my investment. Big deal, I could care less at this point. Like a good goldbug, I don't have any debt or margin and so if I lose the last nickel in my gold stocks, I'll still survive. I'm practically wiped out on my gold investments and had to make a big lifestyle adjustment downward. So from my perspective, there's more upside than downside potential now. I really have no farther to fall now"

Now that's a fascinating comment. It indicates resigation on the one hand but also a great deal of fearlessness too such that no matter what the market throws this guy's way, he does not give a damn anymore. He's seen so much bad news and lost so much, that every new piece of bad news no longer ruffles him. He is willing to go down to zero on his gold investments if necessary rather than surrender his convictions.

In other words, it indicates a dramatic psychological shift on the part of a goldbug and multiply that shift by a factor of thousands and it is possible that we have a new fearless animal in the market and his name is "goldbug."

Furthermore, it might mean that even as the gold price keeps plummetting to the basement, the XAU shareholders will respond with ever greater indifference and little to no fear. Thus, in such a new gold paradigm, the XAU might not have any historical correlation to the gold price and might decouple from it completely.

Conversely, the internet stock holders and the other beneficiaries of the great Nineties Bull market have earned themselves a great deal of paper and real assets. In many cases, caught up in the great greed mania, they have leveraged against those assets. In most cases, they have upgraded their lifestyles significantly in order to reflect the increase in their stock portfolios.

In other words, the stock bulls have a lot more to lose. Brand new spiffy lifestyles and lots of new treasured possessions. They are poking their heads against the sky today and the potential fall is tremendous.

Although they may present facades of carefree indifference, they are really the fearful new animal walking the planet today. A lot more to lose = a lot more to fear.

So there you have it: the evidence of a mass psychological shift in the markets, on the part of bulls and bears. Once the markets begin to reflect this new mass psychological trend shift, then we will finally see a dramatic market break, downward for the Dow-sters and Naz-ders and a strong surge upward for the bears.

Why?

Because in my study of markets, it seems that in the long run, money and power ultimately seem to gravitate to those people who seem strongest, most fearless, and most certain.
So those people sitting on the sidelines with cash are more likely to embrace the world of strong fearless goldbugs holding strong convictions than the world of scared, dazed Dow and Nasdaq stock bulls wetting their pants.

Thanks

F*

TheStranger
Cavan Man's Question
Thanks for asking somebody (me) who probably acts like he knows more than he does. I think Sippin has got your answer. Gold and the XAU fell today because somebody took a dump on the market. Somebody also said there was some sort of technical support line crossed today and that may have contributed.

AT first, after this morning's epiphany on inflation was given, gold actually rallied 80 cents or so. But, remember, higher REAL rates are anti-inflationary (bad for gold). Near-term, today's news gives the Fed the green light to create those higher rates. Intermediate-term, however, the markets should quickly come to realize it is too late to forestall an inflation which has already arrived. So, unless the stock market crashes right away, the Fed will have one arduous task trying to contain this inflazione that nobody saw coming.

I am totally jazzed that I was clever enough to buy gold at the threshold of a secular bull(ion) market, when the world was threatened by deflation and bonds were all the rage. I am also jazzed that gold has outperformed most stocks and all bonds since that time (Don't forget, Newmont was up 40% last year!). I am not about to be discouraged because this is taking longer than I hoped... disappointed, yes, but not discouraged. Sometimes, these things just don't go up in a straight line.

**********

Farfel - I liked your post.
TheStranger
A Sleeping Giant (The Media) Awakens
It has been a long time since we goldbugs have had the news boys on our side. This excerpt from a story in today's WSJ.COM is the frst of many, many more:

Signs of Inflation
Send Industrials,
Nasdaq Skidding

By ANDREW FRASER
INTERACTIVE JOURNAL

Stocks plunged Friday as further
evidence that the U.S. economy is
steaming ahead at a breakneck
pace fueled concerns that the
Federal Reserve will have to raise
interest rates aggressively to
prevent inflation from accelerating.
TheStranger
Fleckenstein Echoes Sippin
"Bad day for euro, aussie dollar... The euro continued its losing ways, plumbing to a new low and
trading at just over 97 cents on the dollar. But the truly big mover of the day was the Australian dollar.
Rumors are that some big hedge fund got into trouble and had to liquidate a long Aussie dollar-short yen
position. The Australian dollar today got smashed for about 5 percent in the span of about 15 minutes
and the yen was up about 2 percent. So that trade went wildly wrong, considering people who do those
things always use lots of leverage.

The dollar was quite strong against virtually everything today in the foreign exchange arena. Likewise
gold got smacked. It got knocked down about $5 in that same big break with the Australian dollar,
because that meant the gold in Aussie dollar terms went up dramatically and Aussie producers came in
and sold it, quite likely. So gold closed down $4 after being dropped $5 in a heartbeat."

Stranger's Note: This ain't no big thang!
R Powell
Weak market, strong dollar Why?
I had thought that what's called a market correction would put downward pressure on the dollar (good for gold prices) but over the last few days the dollar index has been climbing steadily while both the NASDAQ and the Dow are showing weakness. What is supporting the dollar? Is it not true that in a broad sense a "happy" market equals a strong dollar? Also, Mr ORO, are we seeing the first of your signposts in declining high risk (high tech) stocks and a shift to safer shares like Peco Electric,etc. Any thoughts always welcome, thanks
RossL
"golden dollar"

Somebody put a Saca-weegey dollar in the Super Bowl pool at work today. I was amazed at the lightness and flimsy aura of it. "Golden dollar" indeed. Hahahaaah.


RossL
Sippin

The volume at the COMEX futures market was very light during the $5 vertical drop today. There was a quick rebound that was sold down again. Another sign that the futures market does not dictate the price any longer.

TheStranger
The New Economy Hall of Fame

Amazon.com To Lay Off 150 Workers

The Associated Press
Friday, Jan. 28, 2000; 12:02 p.m. EST

SEATTLE �� Shares of Amazon.com fell more than 6 percent today after
the company said it is laying off about 150 employees due to an internal
reorganization.

Stranger's Note: In addition to Amazon, here are a few others on the growing list of "unassailable" stocks which are lower today than they were a year or so ago:

Lucent, Dell, America Online, Ebay, Priceline.com, and Compaq...

I wonder who will be "TIME"'s man of the year next year.
Galearis
From Bill Murphy
And to Farfel:
One, of course, must have great confidence in those that are suffering the justice of wet pants from their excesses in the NASDAC are not then too distracted with the smell of urine to notice the gold bug wearing his power tie.

Le Metropole members,

MINI MIDAS - What Happened Today

The U.S. economic numbers continue to strengthen,
while the inflation outlook becomes more worrisome.
The Gross Domestic Product for the U.S was close
to 6% for the fourth quarter while the Employment
Cost Index was 1.1% - both numbers were higher
than expected.

In the meantime, U.S bonds continue to rally
because of reduced available supply as our
government buys some 30 year bonds back. Because
of the inflation numbers, the yield curve is
becoming more and more inverted; ie, the 2, 5 and
10 year notes all have higher yields than the
30 year bond.

This is causing market players that are "long"
short term credit instruments and "short" the
Treasuries to be squeezed. Rumors were rampant
of financial institutions suffering massive losses.

I received a call that the mortgage desks of two
big banks were in trouble. Deutsche Bank and
Mellon Bank were in the rumor mill as two likely
candidates. In addition, there may be many smaller
problems out there for financial institutions that
are also "long" short term money and "short" long
term money. Market participants that have hedged
commitments by shorting Treasuries are really
being squeezed. That encompasses many types of
players.

The irony is that the U.S. buying of bonds -
which normally would be VERY supportive for the
stock market as long term yields come down- is
causing financial distress for many financial
institutions caught in the squeeze.

That is why stock market rallies failed all day
today and the Dow closed down nearly 300 points.

The economic news was bullish for gold. It fluttered
either side of unchanged for awhile, but as soon
as the rumors started to fly and the stock market
swooned, Deutsche Bank and Chase Bank came in and
bombed gold and the price collapsed, ending the
day $4.50 lower.

The good news is that the modus operundi of the
"Hannibal Cannibals" is so blatant that the
manipulation cries are being heard now by more
and more of the mainstream gold market participants.

Over and over, it is Deutsche Bank, Chase and
Goldman Sachs doing the selling at strategic
moments. Why today? Because with banking rumors
flying and the stock market in a big dive, the
bullion banks could not afford a rising gold
market after the latest increasing inflation news.

The banks have to deal with yield curve problems
now. They do not want gold rising above the critical
gold loan area of $290 and have to deal with their
gold loans going underwater too. SO THEY GET
TOGETHER and SELL.

They also fear that a rapidly rising gold market
would indicate the financial distress now creeping
into the markets. In other words, as always, hide
the truth - and ALWAYS at gold's expense.

It is not too hard for them to win the battle in
the short term either. Not too many longs around.
The Comex open interest has now dwindled to
139,790 contracts, the lowest in many years.

Like I said last nite, who wants to bet in a
casino in which that casino practically announces
that the game is rigged against you. Would you take
your hard earned money and sit down to play "21"
in a casino that had this blazing neon sign out
front: "ALL CARD GAMES IN THIS CASINO ARE RIGGED.
IF YOU START TO WIN, THE DEALERS HAVE THE RIGHT
TO PULL CARDS OUT OF THEIR SLEEVES."

That is why speculators do not want to play the
gold game anymore. That is why they are selling
off the North American gold shares and the XAU,
at 59, is on a slow road to oblivion.

Short term. That is the bad news. The good news is
that it won't be long now before either this
fraudulent scheme is exposed, as it is becoming
blatantly obvious, or another surprise like
September's Washington Agreement will confound
the bears again.

In either case, the price explosion in gold is
likely to be dramatic and sustaining this time.
Holders of bullion and gold shares will clean up.

This is NOT a day to be disheartened. Daylight
is not that far off and the events in the market
place today set the stage for gold market fireworks
in the not too distant future.

Lost in the fray today was the fact that platinum
closed very close to $500 while palladium continues
its own relentless move higher.

One final note. Had some email chat with Reginald
Howe this afternoon. Part of his email included
the following:

"I watched the Greenspan confirmation hearing
(yawn). Senator Bryan (Dem., Nevada) in his opening
statement mentioned that he had appreciated the
chance to meet beforehand with the Fed chairman
to discuss certain unspecified matters. Since Nevada
is the biggest gold mining state, perhaps gold
was one of those matters. Maybe his office
could be helpful."

I almost fell off my chair as I read that. The two
days before Greenspan's confirmation hearing, I
spoke with two of Senator Bryan's staff members
and sent them a great deal of material about GATA,
Senator Lieberman's questions on our behalf and
Greenspan's response to Lieberman. I also sent
them a proposed question that Senator Bryan might
ask Greenspan; as Reginald said, Bryan is from a
gold big mining state. They told me they would
bring the gold matter to his attention.

Did Greenspan squash GATA's proposed gold question
that Bryan might have asked?
No way of knowing. I will call Senator Bryan's
office next week. Nevada Caf� members might follow
up also and try to see if Senator Bryan would be
receptive to meeting with us.

Have a nice weekend.
Solomon Weaver
steam wafting off my tea....a little off the gold topic for the late night crew.
Wow Something really happened out there on the Forum today�I sort of have the feeling that the whole string of thoughts should all blend into one big contribution to the hall of fame�.

Permit me to wrap a few more thoughts around my cup of Earl Grey tea as I sit here pondering today's threads�.

JOURNEYMAN AND THE BIG FLOAT � Sir, an excellent read, and you get me believing that AG knows every inch of the trouble things are getting into�I did notice however that you refer to 80% of the "dollars" being overseas and a bit later in the day, Oro giving the numbers refers to these dollars as "debt". Perhaps, it is important for us to consider that this massive pool of dollars is not at all liquid�rather, it is locked into frameworks of millions of contracts and swaps. Any large scale or rapidly unfolding attempt to "liquify" these external dollars (and not expect to "reinvest" them in another "interest bearing vehicle"), and try to "exit" the dollar denominated markets, would start to topple hedge books and bank ledgers all over the world�long before there was hyperinflation in the USA, there would be massive chaos in the entire worlds financial sphere. The Travelers interesting post at the beginning of the day gave me dreams of paying off my mortgage with my small investment of coins�I hope we all could but I must say that his concept as shown below is impossible because the world could not suffer that dramatic amount of dollar destruction and not see a lot of other things get out place along the way.

Now: US$ 300 = E$ 300 = 1 ounce AU = 15 barrels of crude = 1 man's new suit
Eventually, after the US$ devalues internationally and hyperinflates domestically in order to find its intrinsic equilibrium (Read: true value), the equation will look much like this:
Later: US$ 3,000 = E$ 300 = 1 ounce AU = 15 barrels of crude = 1 man's new suit (The Traveler)

My dear knights and ladies�we are all (for good or evil) entirely bound to a world which is a dollar based world�gold may be our wealth, but dollar flows allow our daily bread. The cure (Euro) must not become the illness.

She-gold AND THE EFFECT OF THE INTERNET � I am completely in agreement with the many voices here and in bearish newsletters that the investment public has thrown far too much money at the internet game before seriously considering what it is worth. There is a big bubble.com which can only obey one law as it swells in the coming months "the bigger they are, the harder they fall". On the other hand, we should all keep in sight that the "technology" of the internet is still very young, and it will continue to mature in many unexpected ways. And it will always mature in a fashion which allows people to have more fun, save some time finding what they want, or save money buying what they want. Eventually, the internet will prove to be "deflationary" because it will eliminate the ability of the "middleman" to raise prices against the market. The "birth" of the internet economy can only really take place once bubble.com collapses and the severely injured amongst the corpses on the battle field are revived, brought home, and forced to develop businesses that can really make money.

PERMAFROST THE LOVER OF GOLD � Sir, I once had a boss who said "people always love me or hate me, nothing in between". I commend you on your fervent and ever-renewed faith in your lady GOLD. But sir, can you not see how blind men are?? Things always have three levels of existence: ESSENCE, MATERIAL, VIRTUAL. Take justice for example: The essence of justice is the moral sense of fair play residing in the human heart. The material of justice is the set of laws written to meet that sense. The virtual of justice is how those laws are actually obeyed (or not)�the final stage of all our foolishness is always the virtual stage. The essence of money is gold. The material of money is fiat coupons. The virtual of money are derivatives (contracts) agreeing on the swap and trade of fiat coupons. My interpretation of FOAs comments are that in a world which is incapable of understanding the essence of "most things", we cannot hand "control" over to gold, but rather we must remain at the level of material fiat currencies (which is neutral). Gold as the essence, when freely trading in the background, can support a material currency for world trade. It is out at the virtual level that we get our fiat currencies into trouble by creating massive thunderclouds of derivative trades and government debt coupons. The massive abuses of fractional reserve banking are not the fault of the fiat currency, but rather the fault of our foolishness in the use of these currencies.

THE AMERICAN GAME � It has recently occurred to me that most of the very wealthy in this world are no longer really citizens of a given land�from that I mean that they can position themselves to profit first from the rise of the dollar and then the fall of the dollar. It is probably true that American's have been taught to believe in free lunches and money trees�a something for nothing kind of existence which almost nobody else in the world has been taught. But I think that part of the problem is that a lot of the rest of the world is starting to believe this too and they think that America is the land for that dream�either they emigrate or they send their funds�.when the American game collapses and those folks lose "their" dollars along with "we Americans"�it will be their own fault for believing in the same game we believed in.
But there is another part of the American game which we should always remember�we are also a nation of risk takers, of enthusiastic entrepreneurs, of willing dreamers. In what other nation could a Hungarian emigrant engineer become the CEO of the most rapidly growing and profitable company in human history�which made it's money by doubling the performance of its product every 18 months and keeping prices as low as the competition could drive them? Underneath what appears to be a "debt driven consumer binge driving a massive trade deficit" leading to rampant "expectation of eternal positive returns on investment" vibrates a "spirit of invention and renewal" which is the foundation. If/when the dollar starts to crumble, it will make many of us poorer, but in the end, it will allow American businesses to be great exporters to the world again.

THE PRECARIOUS FUTURE � One needs only to look back at the last 100 years to understand that we are involved in immense change on many levels. In the coming 100 years, we will probably face the near exhaustion of oil energy (at least of cheap oil). We are stepping into an era when "almost all of the value" in things will be based on a human activity and value structures�.where human thoughts are the investment with the greatest leverage (for both creation and destruction). We face a struggle to find diversity inside of unity. We will learn that our planet is not a "zero sum game". The kindness and love that we feel for our children will have to become the same emotion that runs our businesses. Trust will not just be a virtue, it will be a survival skill. I think that as we sit here on this forum, and look at the drama unfolding, we sometimes see the coming chaos�and we hope (with good cause) that gold might be part of what helps us get through to a softer landing.

I have made a small but important personal observation in life: "Every great event where we feel blessed by the richness of our fate (providence), is preceded by a threshold which has fear, despair, doubt." It is almost as if we waver, the world becomes unbalanced and chaotic, and suddenly a great spiritual event occurs.

Good night fellow Goldmeisters (und Goldmeisterinen)�.

Poor old Solomon
Leigh
Mini Midas Report
"Rumors were rampant of financial institutions suffering massive losses...." Early this morning Abby Joseph Cohen was interviewed (in ski attire, at Davos) on CNBC, and she said financial institutions were a WONDERFUL thing to invest in right now!
elevator guy
The evil indicator- gold
(Cabal members talking amongst themselves)

"Well, we've got to raise rates now, or this thing is gonna blow"

"Right, lets start with 1/2%, then play it by ear"

"Gold keeps threatening to go up, and thats not good for our game"

"Not to worry, I'll make a call, and we'll step on it today. And you know its not hard, 'cause its so thinly traded"

"OK. You know, its funny, cause we now have our golden dollar, and thats what people will think of gold, that its just worth a dollar, he he"

"Yeah, and now there aren't really any gold bugs left with any heart, since we rained on their parade. Most of them now believe betting on gold is about as futile as placing all your chips on the same red 12 at a roulette wheel, over and over, spin after spin, after spin. We've got everyone so dizzy they cant think. Heh Heh Heh!"

"So we still have the upper hand, as long as we can dump their money into the paper gold market, and as long as we can step on gold, there will be no indicator of trouble for them to realize the fiat game is rigged, and they will certainly leave their money in the markets, where we can pillage it easily"

"Its amazing that they dont know how easy it is for us to spin the truth! Since gold is so easy to manipulate, it is not really an indicator at all. The new kids on the block dont even know what gold is anymore, and its one flag that we can easily wave any way we want, up or down."

"Its good to wear the crown!! Heh Heh Heh!!!"

Please accept my apology for the above paranoid, farfetched, impossible scenario.
Sippin
Thanks, Stranger
Thanks for confirming what I heard today. As for its significance, I will leave that for those like yourself & others to judge and give opinions on. My expertise is not great in this field, but I have learned quite a bit by reading here at this forum. I guess my contributions to this forum won't be as analytical as most, but I will contribute what knowledge I can find.
Black Blade
Partial list of next weeks data, ...............buckle up!
Next week's data docket is chock full of economic releases with the kingpin of them all -- the employment report -- hitting the market next Friday.

Monday: December personal income and personal consumption expenditures; January Chicago Purchasing Managers' index. Tuesday: January National Association of Purchasing Management index, December construction spending. Wednesday: December new home sales, December leading economic indicators. Thursday: December factory orders, weekly initial claims. Friday: January non-farm payrolls.

dragonfly
Solomon, Farfel, Stranger
Solomon your posts are truly a pleasure to read. They take us into that philosophical realm where we find vision and truth walking hand in hand. Thank you kind sir.

Farfel - insightful and powerful post #23780. Thanks.

Stranger - a veritable cornucopia of info and ideas today. Something I wanted to follow up on after reading your post this morning is how you see the meltdown affecting homeowners and the price of housing. Won't alot of folks be walking away from giant mortgages and low/no equity positions? If there are sufficient defaults won't this lower housing prices or do you see foreign dollar holdings coming in and supporting same? Why would large dollar holders want residential real estate? To rent it out to unemployed/devastated Americans? Can you picture any scenario wherein holding one's physical gold position all by itself is more beneficial than acquiring a mortgage beforehand and paying it off with devalued dollars? Thanks for any further insight into this very practical side of things.
RossL
Solomon Weaver - Msg ID:23789

Excellent post, Sir Solomon. Perhaps you could extrapolate on the following, as a lot of us have posted differing prognostications on this subject.

quote

"The Travelers interesting post at the beginning of the day gave me dreams of paying off my mortgage with my small investment of coins�I hope we all could but I must say that his concept as shown below is impossible because the world could not suffer that dramatic amount of dollar destruction and not see a lot of other things get out place along the way."

end quote


Also: THE AMERICAN GAME
Have you read _The Sovereign Individual_ by James Dale Davidson and William Rees-Mogg? They wrote an excellent book in ~1997 on this subject...
Bonedaddy
Elwood
Thank you. What an interesting perspective, This Yellow Isle! The price of GOLD never rises or falls, only the power of the paper currencies.
The tide comes in, the tide goes out, the island remains the same.
Jason Happy
(No Subject)
I know this website was not the original site of Steve H's latest post, but I would like to second the nomination for the HOF...

I think we need a third to get it there? Help, anyone?

Hermit Club (01/28/00; 17:52:39MDT - Msg ID:23774)
nomination
I motion to nominate Steve H's paper, posted by JCTex
Msg( 23273 ) to the HOF
Skip
Hall of Fame Nomination (Farfel's Msg ID:23780)
After today's action in the gold market, I was undoubtedly one of thousands searching the internet for explanations and insight...and a glimmer of hope.

Certainly Farfel's message stands out as one of the most thought-provoking to appear on this forum, and I wish to nominate it for the hall of fame.

Farfel's theory on why goldbugs are NOT inclined to sell off any remaining gold stocks after losing so much is TRUE! ...at least, I am certainly one who fits the theory. That posting pushed my buttons more than most, because he seems to hit the nail right on the head. I've been beaten down so far that I'd rather see some stocks go to NOTHING than sell them off before they rise to the stratosphere...and see others make the profits that I lost. For example, I bought CALVF at $5.00/share, then at .75/share, then at .25/share, and it is now FOUR CENTS per share. My first investment has lost 99% of principal!!! I'd be a fool to sell now. That's the worst example, but most are down to a fraction of their original investment price...and I'll lay odds that most posters and lurkers on this forum can tell similar tales.

Am I still optimistic about gold and gold stocks? Well, my pessimism right now is greater than it has ever been, because I can't help but wonder what lies they will spread next. Every time we see hope on the horizon, those hopes are once again smashed and bashed to broken bits...and that makes it very hard to keep on believing. Right now, logic says that the gold bull is very near; but hope repeatedly turned into bitter discouragement has taken a toll on my attitude. The manipulators have bled me so much that there is little left to bleed. My financial affairs and retirement accounts have been hurt so totally that there is no way in hell that I would sell off my remaining gold stocks, so the (@#$%^&) manipulators might just as well realize that they have shaken out almost as many goldbugs as possible. In other words, I REFUSE TO SELL!!!!!!!!

Perhaps ALL remaining gold bugs will have to take that stance before the AU and POG finally start to rise for real.

--Skip

Black Blade
Does rising oil factor into inflation data?
There has been much speculation about whether petroleum will rise or fall. Consider the additional costs to the consumer if the Kyoto Protocol is enacted. The Kyoto Protocol is the proposal to restrict emissions of the minor atmospheric gas carbon dioxide in order to mitigate the perceived human influence on global climate, also known as the myth of human-induced "global warming". The current proposal would federally tax crude oil at the rate of about $43.50 per barrel. The Energy Information Administration (E.I.A.) has estimated that the Kyoto Protocol would result in a carbon tax of $348.00 per ton of carbon. There is about 0.12 ton of carbon per barrel of oil or eight barrels per ton of carbon (Oil and Gas Journal, Nov. 2, 1998, p. 30). Recent published research results do not support the supposition of an anthropogenic cause of global climate change, and detailed examination of current observations do not correlate with the assumptions or projections of human-induced greenhouse effects. An additional $43.50 per barrel of oil on top of $27.00 per barrel (for example) could nearly triple energy costs.

Of course we don't need to worry about resulting inflation since the fore-going is stripped from the core CPI numbers ;-)
nickel62
Does anybody know what is the ingredient in thenew" Golden Coins"?
That give the coins this color? What alloy did they use?
Cavan Man
To Aristotle
Sir Knight:

By all means, please continue to enlighten this forum with your thoughts on gold whilst in the showering mode. However, we regret to inform you that we are inforcing terms of your verbal contract with the forum and are calling for immediate delivery of your next treatise, posthaste.

Of course, if you need a couple of more days, please feeel free to enjoy them.
Black Blade
War on drugs = War on gold?
It was only a matter of time, the following from forum on another site.

Repost from KITCO forum:

BY DAVID E. KAPLAN

Marian Walas was feeling the heat. He had helped send more than 100 kilos of cocaine from Chicago to Eastern Europe, federal agents say, but he owed his Colombian suppliers $2 million and they were threatening his life. He swore that the money would be wired immediately. His partner even showed them where: to the account of a Panamanian gold company named Speed Joyeros.

Moving money to Speed Joyeros was also on the mind of Inocensio Lopez. According to court testimony, the Dominican drug dealer dropped off a bag stuffed with nearly $300,000 at a Manhattan hotel room; the money was to go to Moishe Hebroni, the owner of Speed Joyeros.

The connection between the two drug cases and Speed Joyeros is more than a coincidence, law enforcement sources say. Speed is reputed to be Latin America's largest gold trader, with $25 million in sales a month. U.S. drug enforcement agents have seized nearly $1 million from a New York bank account belonging to the company. Now they're examining the firm's movement of millions of dollars of gold and cash around the world. Speed has not been charged with any crime; company officials proclaim their innocence and are fighting the government for release of their funds. But to U.S. experts, the cases show that gold now plays a central role in the billion-dollar business of washing dirty money.

Good as gold. The gold trade has become "the money laundering mechanism of choice," according to internal law enforcement reports, and is being used to wash "staggering amounts" of dirty cash. The way it works is complex�and varied: Basically, drug profits are used to purchase gold, whether as jewelry, ingots, or even scrap, then shipped across borders and resold. The resulting profits are "clean," the drug trafficker who bought the gold in the first place free to do with his money as he pleases. So pervasive is its criminal use that gold is joining the U.S. dollar as the standard currency of the drug trade. Among the evidence:

Nearly every major U.S. money laundering case in recent years has involved gold. Authorities have traced the movement of tons of gold and billions of dollars to deals by Latin American drug cartels.

U.S. gold imports from Latin American drug havens have skyrocketed. Imports of gold from Colombia�a minor producer�ballooned from virtually nothing in 1993 to nearly $200 million in 1996.

In the past 10 years, nearly $2.5 billion in foreign gold flowed into Miami�despite Florida's lack of a jewelry-making industry. Authorities say much of the gold is tied to money laundering and tax scams.

Narcotics traffickers are taking over the Latin American gold trade, industry officials say. Colombian drug dealers are paying exorbitant prices for gold and buying up small dealers across the region.

For drug traffickers, the gold market is like a magnet. So much of the international gold trade operates "off the books" that it is an easy target for organized crime, officials say. While many gold companies operate legitimately, interviews with traders, refiners, and law enforcement officials depict an industry riddled with money laundering, tax fraud, smuggling, and dubious bookkeeping.

But the impact of an illicit gold trade goes beyond the corruption of one industry. Having refined methods to detect money laundering in financial institutions, U.S. investigators are stymied by the ancient trade in gold. Officials also worry that corruption in Latin America's gold trade will spread to the United States, where refiners are importing record amounts of gold from Colombia and Peru. "There's nothing else out there like gold," says U.S. customs agent John Casarra. Posted to Rome in the early 1990s to investigate the Mafia, Casarra found to his surprise that gold figured again and again as the key to laundering cases. "Money launderers are foremost businessmen, and businessmen want certainty," he says. "Gold gives that to them. They can exchange it anywhere in the world."

Take the case of Gustavo Upegui Delgado. Casarra and his Italian colleagues were stunned in 1994, when they found Delgado, a top money launderer for Colombia's Cali cartel, was buying over a ton of gold a month with his colleagues, using drug money to purchase the stuff, then shipping it to Panama. The launderers moved so much of the metal, officials say, that it depressed the price of gold between the two countries.

The big surprise is that it took traffickers like Delgado so long to tumble to the allure of gold. The industry is largely made up of individual dealers and small companies that prefer to deal in cash. High tariffs on gold have attracted smugglers for years. "There's a dual economic system in the jewelry industry," concedes Richard Rubin, the owner of Republic Metals in Miami, a gold refiner. "There's on the books and there's off the books."

How big is the underground gold trade? No one really knows, but customs officials got an unsettling hint a few years ago when they began checking trade data on U.S. gold shipments. "We began to see spikes�crazy spikes," says Lou Bock, a customs specialist in international trade crimes. "We thought they must have been errors at first." Initially, analysts discovered large movements of gold between the United States and various Caribbean islands�places known not for their gold industry but for laundering dirty money. U.S. gold imports from the Netherlands Antilles, for example, jumped from $68,000 in 1993 to $29 million just four years later.

In the zone. Equally impressive spikes soon emerged from Colombia and Peru, the centers of cocaine production. Between 1994 and 1997, U.S. imports of Peruvian gold grew more than ninefold, from $19 million to $177 million. Imports of gold from Colombia ballooned from a mere $120,000 in 1993 to nearly $200 million in 1996.

Much of the jump in Peruvian production may be due to rapid growth in that nation's legitimate gold industry, says John Lutley, a veteran analyst at the industry-sponsored Gold Institute in Washington, D.C. But Lutley finds the data for Colombia hard to explain. "That's a totally incredible number," he says. The flood of Colombian gold has made at least some American refiners wary. "We do no business out of Colombia, for the pure and simple reason that we can't establish the identity of the owner of the gold," says Michel Berleson, marketing manager for top refiner Handy Harman.

Latin American gold enters the United States largely through Miami. From 1989 to 1998, annual gold imports through Miami International Airport jumped from $18 million to $465 million�a 26-fold increase. While much of this trade is legitimate, gold analysts remain wary, given the absence of a jewelry-making industry in Florida. Indeed, U.S. money laundering experts believe these odd statistics reflect a myriad of schemes for laundering drug money.

One typical scheme works like this: Top refiners in Switzerland sell their gold to jewelry makers in Italy, the world's largest supplier of fine gold jewelry. The Italian jewelry is sold to U.S. buyers�most of this trade is thought to be legitimate�and to their second top market, Panama, which imported $300 million worth of Italian gold last year�25 to 30 tons�according to Gold Fields Mineral Services, a London-based research firm.

In Panama, nearly all the gold arrives at the Col-n Free Zone, a bustling market perched on the edge of the Panama Canal. Home to Speed Joyeros and 1,600 other companies, the zona libre is the world's second-largest free port, after Hong Kong. Bound by an imposing gray wall topped by barbed wire, the 1.5-square-mile zone is home to a dizzying potpourri of global traders: Arabs, Chinese, Indians, Jews. More than $6 billion of merchandise passes through the district each year�as much as a quarter of it, investigators say, financed by drug money.

In the money. Once in Col-n, much of the Italian gold is sold to Colombian front men for the cocaine industry. It is Col-n, for example, where the Cali cartel's Delgado sent his gold each month. The gold is then smuggled back to Colombia, where some dealers sell it for pesos and use the money for living expenses and to fund more drug production. But others melt down the jewelry, recast it into ingots, and sell the gold to refiners in the United States or Switzerland, producing a stream of income that looks legitimate.

Investigators have found that in some cases, the launderers even buy back the same gold they've just sold for refining in the United States, paying for it with yet more drug money. The scheme apparently is also a good deal for tax cheats. A recent crackdown in Peru found that 40 percent of that nation's gold companies were bogus, set up largely to take advantage of an export-tax rebate. Smugglers shipped gold to American refiners, pocketed the tax rebate, smuggled the gold back to Peru, then shipped it out again, grabbing yet another rebate. "I may have handled gold coming in that was gold I sent down there to begin with," says Richard Rubin, whose Republic Metals made large shipments to and from Peru.

Gold traders say the influence of narcotraffickers is so pervasive that they are taking over Latin America's gold trade, co-opting legitimate firms and buying up traders in country after country. "They're squeezing out the legitimate dealers," says one prominent trader who insisted on anonymity.

Federal agents believe companies like Speed Joyeros play a key role in the underground gold trade, a charge the firm's owners emphatically reject. "If my clients are laundering money, why haven't they been indicted?" argues Speed attorney Louis Diamond. Business for Speed, meanwhile, is booming. In Col-n, the company is building what a competitor calls "a temple of gold"�possibly the largest jewelry store in Latin America.

Drug dealers playing the gold card are doing it in increasingly sophisticated ways. In 1989, federal agents stopped a billion-dollar money laundry that exported so much gold from Uruguay that that country became America's largest gold supplier. The fact that Uruguay had no gold industry mattered little to the launderers�what mattered was creating a credible cover for their flow of narcodollars. Today, some criminals are importing gold-plated bronze into the United States, others are shipping out just the opposite: gold disguised as other metals. Having taken payment in gold, the traffickers simply want to move their assets back home. Customs inspectors, now on the lookout for gold smugglers, have made repeated seizures in recent months. In one case, a woman flying to Colombia from New York was stopped with two tractor-trailer hitches, seemingly made of steel. Under the paint, inspectors say they found solid gold.

The gold trade poses other challenges for law enforcement. The industry's bookkeeping practices can be nightmarish, and gold traders often are shielded by ethnic and family bonds. "Arms cases are comparatively easy," says Casarra, the money laundering watchdog. "They are a commodity you follow from country A to country B. But gold is more like a currency. Moreover, its form can change, and that can make it extremely difficult to follow."

Law enforcement's gold bugs also face obstacles within their own camp. Casarra and a handful of colleagues have fought a sometimes frustrating battle within the U.S. government to focus more attention on the gold trade. Many investigators still view gold cases as exotic, even while their bosses stress the importance of going after criminal money. Washington, meanwhile, has taken its campaign against money laundering overseas, prompting governments worldwide to put new laws on the books. But cutting the underworld's financial pipeline will take more than seizing bank accounts. If the focus remains merely on hard cash and not precious metal, the world's drug barons may yet live to see a new Golden Age. With Philip P. Willan and Eleni Dimmler in Rome, Carol Salguero in Lima, and Mark Madden
SteveH
It would sure be a shame to use this as an excuse...
www.kitco.comfor the curtailment of the legal trade in gold...

repost:

Date: Sat Jan 29 2000 08:17
cherokee () ID#198222:
Copyright � 1999 cherokee All rights reserved

looks like they're gonna kick it while it's down.....


The golden age of crime

Why international drug traffickers are invading the global gold trade


BY DAVID E. KAPLAN

Marian Walas was feeling the heat. He had helped send more than 100 kilos of cocaine from Chicago to Eastern Europe, federal agents say, but he owed his Colombian suppliers $2 million and they were threatening his life. He swore that the money would be wired immediately. His partner even showed them where: to the account of a Panamanian gold company named Speed Joyeros.

Moving money to Speed Joyeros was also on the mind of Inocensio Lopez. According to court testimony, the Dominican drug dealer dropped off a bag stuffed with nearly $300,000 at a Manhattan hotel room; the money was to go to Moishe Hebroni, the owner of Speed Joyeros.

The connection between the two drug cases and Speed Joyeros is more than a coincidence, law enforcement sources say. Speed is reputed to be Latin America's largest gold trader, with $25 million in sales a month. U.S. drug enforcement agents have seized nearly $1 million from a New York bank account belonging to the company. Now they're examining the firm's movement of millions of dollars of gold and cash around the world. Speed has not been charged with any crime; company officials proclaim their innocence and are fighting the government for release of their funds. But to U.S. experts, the cases show that gold now plays a central role in the billion-dollar business of washing dirty money.

Good as gold. The gold trade has become "the money laundering mechanism of choice," according to internal law enforcement reports, and is being used to wash "staggering amounts" of dirty cash. The way it works is complex�and varied: Basically, drug profits are used to purchase gold, whether as jewelry, ingots, or even scrap, then shipped across borders and resold. The resulting profits are "clean," the drug trafficker who bought the gold in the first place free to do with his money as he pleases. So pervasive is its criminal use that gold is joining the U.S. dollar as the standard currency of the drug trade. Among the evidence:

Nearly every major U.S. money laundering case in recent years has involved gold. Authorities have traced the movement of tons of gold and billions of dollars to deals by Latin American drug cartels.

U.S. gold imports from Latin American drug havens have skyrocketed. Imports of gold from Colombia�a minor producer�ballooned from virtually nothing in 1993 to nearly $200 million in 1996.

In the past 10 years, nearly $2.5 billion in foreign gold flowed into Miami�despite Florida's lack of a jewelry-making industry. Authorities say much of the gold is tied to money laundering and tax scams.

Narcotics traffickers are taking over the Latin American gold trade, industry officials say. Colombian drug dealers are paying exorbitant prices for gold and buying up small dealers across the region.

For drug traffickers, the gold market is like a magnet. So much of the international gold trade operates "off the books" that it is an easy target for organized crime, officials say. While many gold companies operate legitimately, interviews with traders, refiners, and law enforcement officials depict an industry riddled with money laundering, tax fraud, smuggling, and dubious bookkeeping.

But the impact of an illicit gold trade goes beyond the corruption of one industry. Having refined methods to detect money laundering in financial institutions, U.S. investigators are stymied by the ancient trade in gold. Officials also worry that corruption in Latin America's gold trade will spread to the United States, where refiners are importing record amounts of gold from Colombia and Peru. "There's nothing else out there like gold," says U.S. customs agent John Casarra. Posted to Rome in the early 1990s to investigate the Mafia, Casarra found to his surprise that gold figured again and again as the key to laundering cases. "Money launderers are foremost businessmen, and businessmen want certainty," he says. "Gold gives that to them. They can exchange it anywhere in the world."

Take the case of Gustavo Upegui Delgado. Casarra and his Italian colleagues were stunned in 1994, when they found Delgado, a top money launderer for Colombia's Cali cartel, was buying over a ton of gold a month with his colleagues, using drug money to purchase the stuff, then shipping it to Panama. The launderers moved so much of the metal, officials say, that it depressed the price of gold between the two countries.

The big surprise is that it took traffickers like Delgado so long to tumble to the allure of gold. The industry is largely made up of individual dealers and small companies that prefer to deal in cash. High tariffs on gold have attracted smugglers for years. "There's a dual economic system in the jewelry industry," concedes Richard Rubin, the owner of Republic Metals in Miami, a gold refiner. "There's on the books and there's off the books."

How big is the underground gold trade? No one really knows, but customs officials got an unsettling hint a few years ago when they began checking trade data on U.S. gold shipments. "We began to see spikes�crazy spikes," says Lou Bock, a customs specialist in international trade crimes. "We thought they must have been errors at first." Initially, analysts discovered large movements of gold between the United States and various Caribbean islands�places known not for their gold industry but for laundering dirty money. U.S. gold imports from the Netherlands Antilles, for example, jumped from $68,000 in 1993 to $29 million just four years later.

In the zone. Equally impressive spikes soon emerged from Colombia and Peru, the centers of cocaine production. Between 1994 and 1997, U.S. imports of Peruvian gold grew more than ninefold, from $19 million to $177 million. Imports of gold from Colombia ballooned from a mere $120,000 in 1993 to nearly $200 million in 1996.

Much of the jump in Peruvian production may be due to rapid growth in that nation's legitimate gold industry, says John Lutley, a veteran analyst at the industry-sponsored Gold Institute in Washington, D.C. But Lutley finds the data for Colombia hard to explain. "That's a totally incredible number," he says. The flood of Colombian gold has made at least some American refiners wary. "We do no business out of Colombia, for the pure and simple reason that we can't establish the identity of the owner of the gold," says Michel Berleson, marketing manager for top refiner Handy Harman.

Latin American gold enters the United States largely through Miami. From 1989 to 1998, annual gold imports through Miami International Airport jumped from $18 million to $465 million�a 26-fold increase. While much of this trade is legitimate, gold analysts remain wary, given the absence of a jewelry-making industry in Florida. Indeed, U.S. money laundering experts believe these odd statistics reflect a myriad of schemes for laundering drug money.

One typical scheme works like this: Top refiners in Switzerland sell their gold to jewelry makers in Italy, the world's largest supplier of fine gold jewelry. The Italian jewelry is sold to U.S. buyers�most of this trade is thought to be legitimate�and to their second top market, Panama, which imported $300 million worth of Italian gold last year�25 to 30 tons�according to Gold Fields Mineral Services, a London-based research firm.

In Panama, nearly all the gold arrives at the Col-n Free Zone, a bustling market perched on the edge of the Panama Canal. Home to Speed Joyeros and 1,600 other companies, the zona libre is the world's second-largest free port, after Hong Kong. Bound by an imposing gray wall topped by barbed wire, the 1.5-square-mile zone is home to a dizzying potpourri of global traders: Arabs, Chinese, Indians, Jews. More than $6 billion of merchandise passes through the district each year�as much as a quarter of it, investigators say, financed by drug money.

In the money. Once in Col-n, much of the Italian gold is sold to Colombian front men for the cocaine industry. It is Col-n, for example, where the Cali cartel's Delgado sent his gold each month. The gold is then smuggled back to Colombia, where some dealers sell it for pesos and use the money for living expenses and to fund more drug production. But others melt down the jewelry, recast it into ingots, and sell the gold to refiners in the United States or Switzerland, producing a stream of income that looks legitimate.

Investigators have found that in some cases, the launderers even buy back the same gold they've just sold for refining in the United States, paying for it with yet more drug money. The scheme apparently is also a good deal for tax cheats. A recent crackdown in Peru found that 40 percent of that nation's gold companies were bogus, set up largely to take advantage of an export-tax rebate. Smugglers shipped gold to American refiners, pocketed the tax rebate, smuggled the gold back to Peru, then shipped it out again, grabbing yet another rebate. "I may have handled gold coming in that was gold I sent down there to begin with," says Richard Rubin, whose Republic Metals made large shipments to and from Peru.

Gold traders say the influence of narcotraffickers is so pervasive that they are taking over Latin America's gold trade, co-opting legitimate firms and buying up traders in country after country. "They're squeezing out the legitimate dealers," says one prominent trader who insisted on anonymity.

Federal agents believe companies like Speed Joyeros play a key role in the underground gold trade, a charge the firm's owners emphatically reject. "If my clients are laundering money, why haven't they been indicted?" argues Speed attorney Louis Diamond. Business for Speed, meanwhile, is booming. In Col-n, the company is building what a competitor calls "a temple of gold"�possibly the largest jewelry store in Latin America.

Drug dealers playing the gold card are doing it in increasingly sophisticated ways. In 1989, federal agents stopped a billion-dollar money laundry that exported so much gold from Uruguay that that country became America's largest gold supplier. The fact that Uruguay had no gold industry mattered little to the launderers�what mattered was creating a credible cover for their flow of narcodollars. Today, some criminals are importing gold-plated bronze into the United States, others are shipping out just the opposite: gold disguised as other metals. Having taken payment in gold, the traffickers simply want to move their assets back home. Customs inspectors, now on the lookout for gold smugglers, have made repeated seizures in recent months. In one case, a woman flying to Colombia from New York was stopped with two tractor-trailer hitches, seemingly made of steel. Under the paint, inspectors say they found solid gold.

The gold trade poses other challenges for law enforcement. The industry's bookkeeping practices can be nightmarish, and gold traders often are shielded by ethnic and family bonds. "Arms cases are comparatively easy," says Casarra, the money laundering watchdog. "They are a commodity you follow from country A to country B. But gold is more like a currency. Moreover, its form can change, and that can make it extremely difficult to follow."

Law enforcement's gold bugs also face obstacles within their own camp. Casarra and a handful of colleagues have fought a sometimes frustrating battle within the U.S. government to focus more attention on the gold trade. Many investigators still view gold cases as exotic, even while their bosses stress the importance of going after criminal money. Washington, meanwhile, has taken its campaign against money laundering overseas, prompting governments worldwide to put new laws on the books. But cutting the underworld's financial pipeline will take more than seizing bank accounts. If the focus remains merely on hard cash and not precious metal, the world's drug barons may yet live to see a new Golden Age. With Philip P. Willan and Eleni Dimmler in Rome, Carol Salguero in Lima, and Mark Madden

The Invisible Hand
Gold down, euro down
Is this not the A/FOA scenario?
Granted, in their opinion gold determines the value of the euro and this week we have seen the euro slide before gold slid.
But still, yellow's value in euro is not affected. So this points again to the A/FOA's scenario.
SteveH
ooops!
Sorry black blade!
FOA
Nice Thoughts all!
ALL:
Thanks to everyone for all the excellent imput and discussion here. I have read only a small bit of what was offered, but what I did see was great. Also thanks for supporting a "civil" discussion forum. This method does work the best as contrasting the WTO meeting in Seattle against our current Dravos forum demonstrates.
SteveH, nice work of presenting the "New gold market" in a clear context. It's a good example of presenting something in a professional manner while leaving the emotions at home.
PHinLA, thanks for your post of support. Truly, we must all present our views in a format that allows the audience to think constructively about world events. People always see things more clearly when allowed to compare thoughts, not people.

Besides, in the end, we all spend our short time on earth as faceless fools. Ourselves, we are nothing, but our good perceptions and thoughts travel an endless road as the history of man. Indeed, every crowded road begins life as a small trail insights that are walked by the few. We walk this gold trail of the future, here today on this forum.

I'll try to post one time later (if able). Will close with these two (out of context, but interesting)
thoughts from Mr. Paul Volcker, speaking Thursday night during a speech sponsored by the Bank of Thailand.

----Ultimately, a world currency would be implemented --

-----"National currencies are only illusory,"-----------

thanks FOA


18KARAT
Re: goldfan (1/28/2000; 14:03:42MDT - Msg ID:23761)
Re: goldfan (1/28/2000; 14:03:42MDT - Msg ID:23761)

>>>Something I've been pondering, when people borrow, crdit cards, or mortgages, or corporations >borrow, to merge, or buyback own stock, and the resulting cash flow is used by companies whose stock >is bought , is'nt this an increase to the money supply, and hence inflationary? all else being equal?

If they borrow from a non-bank financial intermediary then no -
It's not inflationary.
Because someone has to commit money to the intermediary,
in the form of bonds or debentures,
for the intermediary to lend it out again.
It's as if you lent the money to the ultimate borrower yourself.
You are letting someone have temporary use
of your money for a fee (interest).
The non-bank financial intermediary only acts as a broker
between the ultimate lenders (depositor, bondholder)
and the ultimate borrowers.
This does not change the money supply.

Banks are different.

Because of the fractional reserve system
they only keep a percentage of your "cash" deposits as reserves.
And lend the rest out as new loans.

Since the depositor's account is still there and payable on demand,
they are in effect, creating a new credit account out of nothing.
(In fact, they are creating the new account
out of the expectation that the average depositor leaves
a large part of his/her cash on deposit indefinitely).

As long as there is no run on the bank,
the bank gets away with using your cash deposits twice in this way.
Having it fully accessable by you in theory,
and by some other borrower in practice.

The credited money in the borrower's account is spent
(otherwise why borrow and pay interest?)
and ultimately ends up in someone else's account!
where the credit-creation round-robin begins again.
Hence: miraculous multiplication.

Money base is high-powered money
precisely because banks can multiply it up out of sight
through repeated rounds of new credit creation.
Only the reserve requirement restrains the multiplier effect,
and stops it from blowing up to infinity.

>Is there any material difference in the leverage effect on stock prices of corporations borrowing to >conduct their operations, or of shareholders doing it for them, by pushing up stock prices based on >borrowed money?

There is not much difference.
In both cases the money is borrowed against shareholder's funds.
Remember, that a company is a collective agent of its shareholders.
Everything it does, it does in the shareholders' name.
In the good old days of unlimited liability companies,
Your company's debts became your debts, in the event of a default.

Since the invention of limited liability,
your liability is limited to the fully-paid issue price of your shares.
So it's a bit less risky for the shareholder,
if your company borrows the money.
But then the market is presumably aware of limited liability
and prices the extra risk of default into the interest rate.
So whether you gain anything in the long run is doubtful.
It's a bit like insurance.
You get less risk of a disasterous failure.
But the price is: you pay an ongoing premium.

Nevertheless there are many times
when large established companies
can borrow money cheaper than you.
Generally you should let them.
In a rational market
the entity with the cheapest access to funds
would do the borrowing.

But a complicating factor is the different desire for risk.
The company responds to all its shareholders -
And assumes an appropriate level of leveraged risk.
You may be more risk tolerant than the average shareholder,
so you leverage your shares up still higher.

18K

SteveH
Hmmm?
http://biz.yahoo.com/rf/000129/j.htmlrepost:
Saturday January 29, 3:03 am Eastern Time
Note: this article has a followup with more information.
Alert: DAVOS, Switzerland, Jan 29 (Reuters) - The short-term outlook for the world economy will depend in large part on how the United States deals with its excessive economic growth and rising inflation rates, a top IMF official said on Saturday. Stanley Fischer, the fund's first deputy managing director, also told reporters on the sidelines of the World Economic Forum in Davos, Switzerland that Europe's battered single currency had significant room to appreciate. (currency, options)

Thanks FOA.
TheStranger
18KARAT
Your point is well taken. I presume, BTW, when you say, "The redistribution of wealth... has no (macroeconomic) inflationary effect," you mean until Amazon fails, at which time, all else being equal, general pricing for all of their merchandise might be expected to rebound.

I like this line of thought. I also wonder how much the consumer always saves once shipping is taken into account, BTW. But, while I have serious doubts about Amazon's strategy, I do not have any doubt about the success of e-tailing in general.
TheStranger
Dragonfly's Question
Dragonfly - (What an unusual handle you have). I don't see a coming meltdown of the type you apparently describe. That doesn't mean I don't think it can happen. It just means I don't see it.

Such a meltdown did NOT occur after the '87 crash because Greenspan made a bunch of reassuring phone calls to business leaders and then got out that bottomless checkbook of the Fed's and began creating vast amounts of money. This is a tactic which was realistically unavailable to Volcker during the very tough recession of 1981 because of the very high inflation rates which Volcker was trying to vanquish.

Given Greenspan's demonstrated tendency to react aggressively in the event of crises, and the as-yet incipient nature of the current reinflation, I would expect THIS Fed to avoid "meltdown". Of course, in doing so, they might set a '70s-style pattern of behavior which could result in even higher rates of inflation. Where that would lead would depend on future policy.

About big houses and big mortgages: In an inflation environment, housing prices rise right along with just about everything else. But the ASSUMABLE fixed- rate home mortgage can make housing an unusually good hedge. First of all, this is because a home mortgage is the largest loan most people can qualify for. Right now, you can probably get one for 8 or 8 1/2%. After tax, this would cost you maybe 6%. So, as long as home prices rise more than 6%, your return on investment will be positively leveraged. AGAIN, THIS ASSUMES THE FED CHOOSES THE INFLATION ROUTE AND NOT THE MELTDOWN ROUTE.

But here is the kicker. If your mortgage is assumable, and I think most are (you should ask someone who knows more than I do, however), then the mortgage itself also leverages your return. People will pay substantially more for an older home with an 8% mortgage than they will for a similar new home with a 15% mortgage, for example.

If you think demographics will point toward smaller houses in the future, you might buy a modest home surrounded by lots of property that can be subdivided.

As I do not foresee runaway inflation, I should note that I am not following the advice above. I also have no idea whether gold or real estate would perform better in such an environment (although gold has far superior liquidity characteristics, in my opinion). My own expectation is for SOME inflation in a world which was, until recently, expecting the opposite. That alone should accrue substantial benefit to those who hold gold at these ridiculous prices. We'll see. Thanks.
jinx44
unwed mothers
Here is the "official" spin on the new dollar coin........

The construction and electromagnetic properties of the new Golden Dollar are so similar in design to the Susan B. Anthony (SBA) Dollar Coin that the new coin is compatible with mechanical and electromagnetic coin mechanisms currently in use.

Both the new Golden Dollar and the SBA are clad coins, sharing a three-layer composite construction, with a pure copper core sandwiched between and metallurgically bonded to the outer layers of alloy material.

In the case of the SBA, the alloy layers on each side of the core are cupro-nickle, a silver-colored material composed of 75% copper and 25% nickel. This is the same alloy that makes up the U.S. nickel coin.

With the new Golden Dollar, the alloy layers on each side of the core are manganese brass, a golden-colored material composed of 77% copper, 12% zinc, 7% manganese, and 4% nickel.

Taking account of the copper core, the overall composition of the new Golden Dollar is 88.5% copper, 6.0% zinc, 3.5 % manganese, and 2.0% nickel. The overall composition of the SBA coin is 87.5% copper and 12.5% nickel.

The coin's composite construction provides security features that allow machines to distinguish it from slugs, tokens, and foreign coins.

...........I find it quite prescient that our newest token slug portrays an ignorant unwed teenage mother, is made out of copper and brass and has no intrinsic value at all. The article on drug runners buying gold sets the tune for the future demonization (and demonitization) of all who hold gold. Gold is a bearer form of wealth. The criminals in DC hate what they can't control, tax and seize.
18KARAT
Re: TheStranger (1/29/2000; 8:30:36MDT - Msg ID:23809)

>Your point is well taken. I presume, BTW, when you say, "The redistribution of wealth... has no >(macroeconomic) inflationary effect," you mean until Amazon fails, at which time, all else being equal, >general pricing for all of their merchandise might be expected to rebound.

No, not really, it will still be a microeconomic effect.
Yes, the price of books will rebound up to its unsubsidised price.
But the spending on advertising, distribution
and book publishing will go down
when Amazon no longer subsidises the book market.
So those prices will fall to compensate.
Also the things that Amazon execs buy
with the millions they get from their stocks options, shares, etc. will then be cut back.
So those prices will also fall to compensate.

Given that the net cash flow will still have to balance,
even at zero if Amazon ceases to exist,
there will still be no macroeconomic inflation from changing the distribution of demand/supply

Mind you, if a crashing Amazon or its shareholders default on a few loans,
then that will be genuinely deflationary in a macroeconomic sense.
Because that would involve a genuine destruction of money.


>I like this line of thought. I also wonder how much the consumer always saves once shipping is taken into >account, BTW. But, while I have serious doubts about Amazon's strategy, I do not have any doubt about >the success of e-tailing in general.

Agreed - 18K
goldfan
Black Blade (1/29/2000; 6:42:17MDT - Msg ID:23802
Sir Black Blade thanks to you and Cherokee for this piece :
War on drugs = War on gold?


I have been interested for a while in the possible connection of drugs and gold.(Posted on this a while back)
My bit of research has led me to believe that there is possible 1000 tonnes of cocaine sold per year in the US alone (Coke is about 60% of US;drug consumption). At $150/gm street, this amounts to $135billion per year. This is the equivalent of 15 000 tonnes per year of gold. What an enormous demand for gold (6 times present world production), if the drug lords get worried about the value of the dollar!!

It seems to me, that the citizens of the US have a strong desire for coke, which by this mechanism gets translated into a strong demand for gold. So it matters not whether they care for gold. It's equally good, maybe better, for the price of gold, if they maintain their desire for coke. Not so??

FWIW
Goldfan
goldfan
18KARAT (1/29/2000; 8:06:58MDT - Msg ID:23807
http://www.prudentbear/markcom/012100.htm)
Thanks much Sir 18K for your response to this:

Re: goldfan (1/28/2000; 14:03:42MDT - Msg ID:23761)

>>>Something I've been pondering, when people borrow, crdit cards, or mortgages, or corporations >borrow, to merge, or buyback own stock, and the resulting cash flow is used by companies whose stock >is bought , is'nt this an increase to the money supply, and hence inflationary? all else being equal?

You said:

If they borrow from a non-bank financial intermediary then no -
It's not inflationary.
Because someone has to commit money to the intermediary,
in the form of bonds or debentures,
for the intermediary to lend it out again.

>> Noland at Prudentbear.com (link) recently made the case that the non-bank intermediaries like Fannie Mae and the credit card issuers and so on are actually creating money when they loan. I'm trying to work that out, but it seems to do with the way the non-banks get money from say a money market fund (which purchases treasuries and gets cash from consumers, among others), consumers mortgage their houses with Fannie Mae , then the cash they get winds up back in the money market fund, augmented by cash they've received from loans using their stock as collateral.

I'm a bit confused still about this. Noland suggested people should debate wth him. Would you like to offer some more thoughts?

Thanks
Goldfan
TheStranger
From Yesterday's Wall Street Journal
Here, from yesterday's Wall Street Journal, is as good an example of how
excess money creates higher prices as you will ever see. Of particular note is the writer's use of mutually inconsistant statements such as - "(the Fed will raise rates in February) despite low inflation" and - "(trucking) industry
leaders like J.B. Hunt Transport Services Inc. are
expected to push for
price increases of at least 5% this year." Is this a sign of the times?


"Robert Litan, director of economic research at the
Brookings Institution in
Washington, says there are reasons to worry right now. He
notes that the
1960s expansion, previously the longest on record, serves
as a warning
about what can happen when labor markets get too tight.
>From 1960 to
1965, he points out, inflation averaged just 1.3%. But
when unemployment
fell to 3.8% in 1966, inflation began to pick up.

By 1969, unemployment reached 3.5%, inflation rose to
5.5%, and, not so
coincidentally, the boom ended. "If the 1960s showed one
thing, it's that if
you run the economy too hot for too long, you have
trouble."

Role of the Fed

That "trouble" normally comes from the Federal Reserve,
which typically
intervenes by raising interest rates, in an effort to
slow growth, long before
the labor pool can be depleted. Indeed, the current tight
labor market is a
major reason why the Fed has raised interest rates in
recent months and
why it is likely to do so again in February, despite low
inflation.

Trucking already is suffering, as workers once attracted
to the relatively
good pay find they can get similar wages elsewhere
without having to work
long hours away from home...


...In previous economic booms, the increased costs of hiring
and keeping
employees led to worries about higher prices that could
cause an
inflationary spiral.

Some economists see the seeds of such a cycle in the
trucking business. To
attract workers, trucking companies have had to raise pay
and add
amenities. Equipment at truck stops allows truckers to
dial up cable TV
and check their e-mail.

But higher pay is the biggest draw. SignPost Inc., a
Hudson, Wis.,
consulting firm, says that about 50 companies out of
roughly 250 that it
surveyed had raised wages between August and November;
the average
increase was 4.4%. With fuel prices climbing along with
wages, industry
leaders like J.B. Hunt Transport Services Inc. are
expected to push for
price increases of at least 5% this year."

**********

18KARAT - Again, good points. Thanks for the explanation.

-The Stranger
Gandalf the White
The Volcker's speech that FOA referred to in #23806
FINANCE


Volcker expects one currency worldwide
Small firms need to consolidate


Parista Yuthamanop


Trends toward regional currency integration will strengthen as countries adapt to the greater volatility of capital flows in financial markets, according to Paul Volcker, former chairman of the US Federal Reserve.

Ultimately, a world currency would be implemented, he said on Thursday night during a speech sponsored by the Bank of Thailand.

"It will not be a world that I will live to see," Mr Volcker said, noting that it took four decades for the European Union to establish its single currency.

"But I hope that the cultural heritage and political diversity of nations will be treasured," he said. Consolidation among small firms unable to compete in the global market was a necessity.

Mr Volcker noted that the size of Thailand's largest bank was only comparable to a community or small regional institution in the US.

Major international investment firms had the ability to move "hundreds of billions of dollars" quickly on changes in market perception.

New technology and the herd instinct of investors also worsened the economic collapse in Asia.

"East Asian economies, for all their enormously favourable growth prospects, were financially too small, too exposed and too young to withstand the stormy seas of global finance," Mr Volcker said.

Improved accounting standards, supervision and transparency were crucial for emerging countries in the future. A strong, independent central bank would also help bolster market confidence, a critical factor in determining the movement of funds.

Countries such as the US have not escaped their own banking crises, Mr Volcker said. But the scale of damage was limited due to more diversified economies.

He believed that in the new financial architecture, small countries would have greater reliance on larger ones, although he acknowledged there was no "simple policy fix" for emerging economies.

Thailand must have a strong monetary policy and flexible private sector to cope with the rapid movement of large amounts of capital in today's world financial market.

He said the crisis which hit Thailand when it devalued the baht was the result of institutional shortcomings. Monetary policy was also of the old-fashioned type with a fixed exchange rate.

"What will be important for emerging countries is to make the central bank independent and free of political partisanship," Mr Volcker said.

He also said that governments would have to stop bailing out the private sector. One reason for the crisis which hit Asia was the "moral hazard", whereby lenders knew that whatever happened the IMF would in the end have to bail out the debtor countries, he said. Another way of tackling the problem was regional co-operation. Given current trends it was possible that in the future there could be only one currency. This would help reduce market fluctuations. "National currencies are only illusory," he said.
===
<;-)
Vox
Gold for Drugs
Sounds like this arrangement could be a significant contributor to the flow of gold out of this country. Does this show up in the export figures?
TheStranger
Inflation Update
From today's New York Times:

January 28, 2000

-Economic Surge Feeds Inflation Fear-

Filed at 6:07 p.m. EST
WASHINGTON (AP) -- The U.S. economy, propelled by hardy
consumer spending, finished 1999 on a vibrant note, but the growth came at a price: a worrisome uptick in wages and benefits that economists fear could trigger inflation. Wall Street plunged.

From USA Today:

-Markets Tumble on Inflation News-
-Nasdaq Posts Biggest Weekly Loss Since Mid-1998-

NEW YORK (Bloomberg) - U.S. stocks tumbled, sending the Nasdaq Composite Index to its biggest weekly loss since August 1998, after reports showing faster inflation fueled concern the Federal Reserve will raise interest rates more than expected in coming months.

From today's San Diego Union Tribune:

-Inflation Worries Send Dow Down 289 Points; Nasdaq Suffers Second-Worst Point Decline Ever-
By Noelle Knox
January 28, 2000
NEW YORK -- Stocks staged a sharp decline Friday as fresh inflation news sparked a wave of "sell" cries on Wall Street, with banks, manufacturing and technology companies bearing the brunt of the bad news.
Jason Happy
(No Subject)
http://finance.yahoo.com/q?s=HGMCY&d=5dAnybody know what happened to Harmony Gold today? (HGMCY) They lost nearly 10% on larger than normal volume.

http://finance.yahoo.com/q?s=HGMCY&d=5d
Leigh
jinx44
Dear jinx44: This is from the World Book Encyclopedia:

Sacagawea joined the [Lewis and Clark] expedition in what is now North Dakota, after Lewis and Clark had hired her husband as an interpreter during the winter of 1804-1805. Her husband was a French-Canadian trader named Toussaint Charbonneau. Lewis and Clark thought Sacagawea might be helpful when the expedition reached Shoshone territory in the Rocky Mountains.

In the Rockies in August 1805, the explorers met a band of Shoshone Indians whose chief was Sacagawea's brother. Sacagawea aided in communication between the Shoshone and the explorers. She also helped secure horses from the tribe for the explorers.

There was a fabulous PBS documentary a few years ago about the Lewis and Clark expedition, and there was a lot of fascinating stuff about Sacagawea in it. I can't remember whether her husband died during the expedition or not.
nickel62
From the Financial Times an article on the weakness of the Euro.
The puzzle of euro weakness

This week the euro fell through parity with the dollar for the second time. As the politicians decide how worried they should be about this, investors have to think too about whether the euro is set for a bounceback - or whether it will continue to slide.

The euro has now fallen by 17 per cent against the US dollar since the launch of the single currency. Friday saw the currency hitting all-time lows against the dollar.

And this is not just due to strength in the US currency - the euro has slumped against sterling and the Japanese yen too.

This weakness has many economists puzzled.

The euro-zone economy is entering a period of much stronger growth.

In France, unemployment has hit a seven-year low, and even the laggards Germany and Italy are showing definite signs of improvement.

The economic area has a current account surplus, and interest rates are expected to rise.

All this might be thought to strengthen the currency. So why has the euro hit an all-time low?

Take a look at the capital flows in and out of the euro-zone, and some of the mystery is explained.

Although the euro-zone has a current account surplus - which would tend to increase the demand for the currency - this is dwarfed by the size of capital outflows.

In the first 10 months of 1999, there was a net outflow of direct investment of E98bn ($99bn), and a net outflow of E51bn of portfolio investment, compared with a current account surplus of E38bn.

Structural reform

Europe is simply not attracting enough investors. To lure them in, the euro-zone needs a period of sustained, strong non-inflationary growth.

To achieve this, structural reform of the euro- zone's labour markets is needed.

Investors also need to feel confident that the political climate for business in Europe is favourable.

Worries about the political direction of governments in France and Germany, and about possible intervention in cross-border deals, may be scaring investors off.

If Vodafone AirTouch's bid for Mannesmann succeeds, that could be a turning point.

A slowdown of growth in the US would also make the euro-zone look relatively more attractive.

But Friday's strong fourth quarter gross domestic product figures made this look unlikely for the time being.

With the Fed likely to raise interest rates to squash the clear signs of inflationary pressure also present in Friday's GDP and employment cost index, demand for dollars will not abate soon.

The net capital flows out of the euro-zone have had a further consequence - combined with hopes of a recovery in the euro exchange rate, they have left many investors long in euros.

The fall through parity has meant that many of these positions are being liquidated.

If this process continues, it will make a euro bounceback more difficult.

One other factor could be keeping the euro down.

Although inflation is hardly a worry now, fears about prices in the next year or two may be having an effect on the currency.

Interest rates

Sliding bonds may just be a reaction to expectations of higher interest rates.

But they could be read another way - as an indication that the markets are not ruling out a rise in inflation.

The increase in the oil price, together with some strong wage claims in Germany, mean that the risk to prices cannot be altogether ignored.

There must also be some concern that because of Europe's structural rigidities, inflation may pick up at an early stage in the economic cycle.

If the European Central Bank's policy of pursuing price stability were fully credible, then rises in interest rates would be expected to eliminate this risk.

But unlike the US Fed, the ECB has not had time to establish its anti-inflation credentials.

There may still be a perception that the ECB might be happy to keep interest rates at a level that will support growth.

This would tend to lead to both weak bonds and a weak currency - as we are seeing now.

So what could reverse the euro's decline?

The markets are waiting to see whether members of the ECB will try to talk the euro up, or even intervene.

This looks unlikely. The ECB has learned from the mistakes it made in its early days, when it made numerous confusing comments about the exchange rate, and is now wisely staying quiet.

Another possibility is that the weakness of the euro against the yen could bring the yen/dollar exchange rate under pressure, prompting intervention by the Japanese authorities.

This might put a temporary floor under the euro exchange rate, but is unlikely to reverse the market.

If European growth continues to pick up, and if inflationary fears recede, then Europe will become a more attractive investment destination - particularly if the US's star begins to wane.

Then we will see a sustained euro bounce back.

Investors have to decide how likely this scenario may be.





The puzzle of euro weakness

This week the euro fell through parity with the dollar for the second time. As the politicians decide how worried they should be about this, investors have to think too about whether the euro is set for a bounceback - or whether it will continue to slide.

The euro has now fallen by 17 per cent against the US dollar since the launch of the single currency. Friday saw the currency hitting all-time lows against the dollar.

And this is not just due to strength in the US currency - the euro has slumped against sterling and the Japanese yen too.

This weakness has many economists puzzled.

The euro-zone economy is entering a period of much stronger growth.

In France, unemployment has hit a seven-year low, and even the laggards Germany and Italy are showing definite signs of improvement.

The economic area has a current account surplus, and interest rates are expected to rise.

All this might be thought to strengthen the currency. So why has the euro hit an all-time low?

Take a look at the capital flows in and out of the euro-zone, and some of the mystery is explained.

Although the euro-zone has a current account surplus - which would tend to increase the demand for the currency - this is dwarfed by the size of capital outflows.

In the first 10 months of 1999, there was a net outflow of direct investment of E98bn ($99bn), and a net outflow of E51bn of portfolio investment, compared with a current account surplus of E38bn.

Structural reform

Europe is simply not attracting enough investors. To lure them in, the euro-zone needs a period of sustained, strong non-inflationary growth.

To achieve this, structural reform of the euro- zone's labour markets is needed.

Investors also need to feel confident that the political climate for business in Europe is favourable.

Worries about the political direction of governments in France and Germany, and about possible intervention in cross-border deals, may be scaring investors off.

If Vodafone AirTouch's bid for Mannesmann succeeds, that could be a turning point.

A slowdown of growth in the US would also make the euro-zone look relatively more attractive.

But Friday's strong fourth quarter gross domestic product figures made this look unlikely for the time being.

With the Fed likely to raise interest rates to squash the clear signs of inflationary pressure also present in Friday's GDP and employment cost index, demand for dollars will not abate soon.

The net capital flows out of the euro-zone have had a further consequence - combined with hopes of a recovery in the euro exchange rate, they have left many investors long in euros.

The fall through parity has meant that many of these positions are being liquidated.

If this process continues, it will make a euro bounceback more difficult.

One other factor could be keeping the euro down.

Although inflation is hardly a worry now, fears about prices in the next year or two may be having an effect on the currency.

Interest rates

Sliding bonds may just be a reaction to expectations of higher interest rates.

But they could be read another way - as an indication that the markets are not ruling out a rise in inflation.

The increase in the oil price, together with some strong wage claims in Germany, mean that the risk to prices cannot be altogether ignored.

There must also be some concern that because of Europe's structural rigidities, inflation may pick up at an early stage in the economic cycle.

If the European Central Bank's policy of pursuing price stability were fully credible, then rises in interest rates would be expected to eliminate this risk.

But unlike the US Fed, the ECB has not had time to establish its anti-inflation credentials.

There may still be a perception that the ECB might be happy to keep interest rates at a level that will support growth.

This would tend to lead to both weak bonds and a weak currency - as we are seeing now.

So what could reverse the euro's decline?

The markets are waiting to see whether members of the ECB will try to talk the euro up, or even intervene.

This looks unlikely. The ECB has learned from the mistakes it made in its early days, when it made numerous confusing comments about the exchange rate, and is now wisely staying quiet.

Another possibility is that the weakness of the euro against the yen could bring the yen/dollar exchange rate under pressure, prompting intervention by the Japanese authorities.

This might put a temporary floor under the euro exchange rate, but is unlikely to reverse the market.

If European growth continues to pick up, and if inflationary fears recede, then Europe will become a more attractive investment destination - particularly if the US's star begins to wane.

Then we will see a sustained euro bounce back.

Investors have to decide how likely this scenario may be.





The puzzle of euro weakness

This week the euro fell through parity with the dollar for the second time. As the politicians decide how worried they should be about this, investors have to think too about whether the euro is set for a bounceback - or whether it will continue to slide.

The euro has now fallen by 17 per cent against the US dollar since the launch of the single currency. Friday saw the currency hitting all-time lows against the dollar.

And this is not just due to strength in the US currency - the euro has slumped against sterling and the Japanese yen too.

This weakness has many economists puzzled.

The euro-zone economy is entering a period of much stronger growth.

In France, unemployment has hit a seven-year low, and even the laggards Germany and Italy are showing definite signs of improvement.

The economic area has a current account surplus, and interest rates are expected to rise.

All this might be thought to strengthen the currency. So why has the euro hit an all-time low?

Take a look at the capital flows in and out of the euro-zone, and some of the mystery is explained.

Although the euro-zone has a current account surplus - which would tend to increase the demand for the currency - this is dwarfed by the size of capital outflows.

In the first 10 months of 1999, there was a net outflow of direct investment of E98bn ($99bn), and a net outflow of E51bn of portfolio investment, compared with a current account surplus of E38bn.

Structural reform

Europe is simply not attracting enough investors. To lure them in, the euro-zone needs a period of sustained, strong non-inflationary growth.

To achieve this, structural reform of the euro- zone's labour markets is needed.

Investors also need to feel confident that the political climate for business in Europe is favourable.

Worries about the political direction of governments in France and Germany, and about possible intervention in cross-border deals, may be scaring investors off.

If Vodafone AirTouch's bid for Mannesmann succeeds, that could be a turning point.

A slowdown of growth in the US would also make the euro-zone look relatively more attractive.

But Friday's strong fourth quarter gross domestic product figures made this look unlikely for the time being.

With the Fed likely to raise interest rates to squash the clear signs of inflationary pressure also present in Friday's GDP and employment cost index, demand for dollars will not abate soon.

The net capital flows out of the euro-zone have had a further consequence - combined with hopes of a recovery in the euro exchange rate, they have left many investors long in euros.

The fall through parity has meant that many of these positions are being liquidated.

If this process continues, it will make a euro bounceback more difficult.

One other factor could be keeping the euro down.

Although inflation is hardly a worry now, fears about prices in the next year or two may be having an effect on the currency.

Interest rates

Sliding bonds may just be a reaction to expectations of higher interest rates.

But they could be read another way - as an indication that the markets are not ruling out a rise in inflation.

The increase in the oil price, together with some strong wage claims in Germany, mean that the risk to prices cannot be altogether ignored.

There must also be some concern that because of Europe's structural rigidities, inflation may pick up at an early stage in the economic cycle.

If the European Central Bank's policy of pursuing price stability were fully credible, then rises in interest rates would be expected to eliminate this risk.

But unlike the US Fed, the ECB has not had time to establish its anti-inflation credentials.

There may still be a perception that the ECB might be happy to keep interest rates at a level that will support growth.

This would tend to lead to both weak bonds and a weak currency - as we are seeing now.

So what could reverse the euro's decline?

The markets are waiting to see whether members of the ECB will try to talk the euro up, or even intervene.

This looks unlikely. The ECB has learned from the mistakes it made in its early days, when it made numerous confusing comments about the exchange rate, and is now wisely staying quiet.

Another possibility is that the weakness of the euro against the yen could bring the yen/dollar exchange rate under pressure, prompting intervention by the Japanese authorities.

This might put a temporary floor under the euro exchange rate, but is unlikely to reverse the market.

If European growth continues to pick up, and if inflationary fears recede, then Europe will become a more attractive investment destination - particularly if the US's star begins to wane.

Then we will see a sustained euro bounce back.

Investors have to decide how likely this scenario may be.





nickel62
Goldfan thanks for your question I had the same concern.
I would appreciate it if someone is able to bring some clarity to the concept of non-bank money creation. Mr. Norlans article was excellent at pointing out how the liquidity that has been apparently driving the stock market to the moon was largely a resilt of the non-banks also creating money in addition to the banks but I am having trouble understanding exactly how this is accomplished. Would anyone care to give it a try? Thanks in advance.
lamprey_65
Black Blade
...the "perceived human influence on global climate, also known as the myth of human-induced 'global
warming'"?

Do some reading on the Greenland ice cores, or think about what happens when a closed system (in this case, the atmosphere) is unbalanced by outside influences. There will be (and I contend, there are now) consequences for those actions. This is not agenda inspired science...it's just science - the same science that created the computer you are now using. Don't confuse the science with how actions are taken because of its findings. Science created the possibility of the atomic bomb...politicians decided to build it.

Global warming from greenhouse gasses (carbon dioxide and carbon monoxide) is real, REGARDLESS of whether some decide to deny the science.

Lamprey
TheStranger
April Fool's Day
Here is a contest entry I posted last April Fool's Day. Since I didn't win, and given all that has changed since, I thought it would be fun to repost it now.

The Stranger (4/1/99; 15:29:17MDT - Msg ID:4081)
*****April Fools Day, 2000*****
The following items were printed by YAHOO Business News NEXT April Fools Day and became unstuck in time. They are
reprinted here with permission:

NEW YORK -- Minutes of the latest FOMC meeting were released today. Conversation revolved mostly around the possible
need for a third Fed tightening prior to the group's next meeting. Chairman Greenspan was quoted as saying that the deflation
threat of 1998 was now safely relegated to the past and could not "reasonably be expected to recur in our lifetimes." The
Chairman was also quoted as saying, "but, in our very efforts to avoid succumbing to the nearly worldwide recession in 1998-99,
lay the seeds of the inflation data that we are now seeing in 2000."

In other news ...

Spot gold rose another $3.50/oz. today, closing at $421. "It's amazing," said one floor trader. "Last April we had Asian contagion,
war in the Balkans, Y2k and the introduction of the Euro to worry about, and yet gold just kept going down. Now, all of those
concerns have been resolved, and gold won't stop going up. I can't explain it."

Michael Kosares, of CPM USAGOLD in Denver, did offer one cryptic explanation. "Inflation," he said. "It turned out to be the
Fifth Horseman."
SteveH
repost
www.kitco.comrepost:

Date: Sat Jan 29 2000 15:59
Observer (Gold Bear Slaughter Soon?) ID#249130:
Copyright � 1999 Observer/Kitco Inc. All rights reserved
While people on this site moan and groan, and ultra bearish opinion now is the "norm" here again, the most successful gold fund manager in the world -- John Hathaway of the Tocqeville Gold Fund -- predicts a new rally more powerful than last fall.


Rich on Paper

By John Hathaway

Gold is poised to make its second significant move to the upside in less
than a year. Gold shares and the gold price are in a deep funk, the same
as the despondency that preceded the September 1999 rally of 30% from
a twenty-two year low in the space of three weeks. The catalyst for the
rally was an agreement among the leading central banks, known as the
Washington Agreement, to limit sales and lending activities, which were
depressing gold. While pessimism still reigns, the fundamentals of the
gold market have turned decidedly bullish thanks to this development.
The agreement, signed by the 15 European Central Union members, fixed
the level of outright sales for the next five years. More important, the
banks will not increase gold loans beyond the current level. Gold loans
have been more damaging to the gold price than outright sales
themselves. Finally, the US, Japan, the IMF and the BIS have stated that
they will abide by the spirit of the agreement. Therefore, 85% of
worldwide official sector gold holdings are now either off the market or
will be disposed of in a predictable manner.

This watershed event caught the overly short market by surprise. More
important, it provided a fundamental basis for stating categorically that the
low point in gold for the next decade is in place. The downside price risk
is no longer open-ended. It is only a matter of time before additional
upside materializes. How long will it take? The next strong upside move
will be driven by another fundamental development, which will also come
as a surprise to this excessively short market. That development will be
widespread gold producer hedge book buybacks combined with high
profile statements that promise to de-emphasize the importance of
hedging. Buybacks are already underway. However, anti-hedging
statements, which will probably come later this year, will alter negative
market psychology by removing still another argument in favor of the
bearish case for gold, the expectation of ceaseless and expanding
producer hedging.

According to Goldfields Mineral Services� ( GFMS ) most recent survey,
new supply from producer hedging is likely to decline by nearly 300
tonnes in the current year to 150 from 445 in 1999. However, GFMS is
understating the magnitude of the change. Gold company reserve growth
dropped significantly in 1999. The raw material for hedging is not
expanding. Reserve growth in 1999 will be minimal. A net buyback of
the industry hedge position would not be surprising. It would suggest a
much larger decline in supply than forecast by Goldfields. Combined
with the Washington Agreement, reduced hedging portends a significant
shrinkage in the supply of gold over the next twelve months. GFMS
forecasts a 10% reduction in supply. It could easily exceed 15%, if
producer hedging is zero or negative.

To recall the three reasons for gold's protracted decline, official sector or
central bank selling and lending plus producer hedging have been the
most visible. The combination led to the "piling on" variety of short
selling by hedge funds and other speculators. To them, gold was just a
cheap source of funding, first because the borrowing costs were lower
than any other currency, and second, because gold was expected to
decline in value. Secular disinvestment is the third reason, which will be
discussed in more depth shortly.

Because gold industry management bought into the bearish case for gold,
they engaged in extensive forward sales and other hedging transactions.
This activity accelerated gold supply by as much as two years� future
mine output. The sharp spike in the gold price following the
announcement of the Washington Agreement blew up the hedge books of
two high profile producers, Ashanti Goldfields and Cambior and
threatened the solvency of the two companies. Their difficulties
dramatized the risks of excessive hedging and soured both investor and
management appetites for the practice.

The rationale for investing in gold stocks is the expectation of a higher
gold price. It is not because a particular CFO or hedge manager happens
to be a clever trader in the gold market. Nobody wants to pay for that.
The valuation of hedge book enhancements to earnings cannot begin to
approach those delivered by the upside in the gold price. In the words of
Leigh Goehring ( portfolio manager at Prudential ) , the industry has
succeeded in re-rating itself downward by destroying the option value of
the shares. At times, it has appeared that industry management does not
understand gold market fundamentals. In certain cases, there was an
apparent dread of higher gold prices because of potential financial
damage from their hedge books. All of this appears to be changing due
to a widespread reassessment of hedging.

Gold equities are exceptionally cheap at the moment. According to the
respected research team at Scotia Bank, they currently trade at a discount
of 18% to net present value, an unprecedented low valuation, even before
the September 1999 rally. Because of the lengthy gold bear market,
exacerbated by hedging and short selling, shares of gold mining
companies, not surprisingly, have ranked among the worst performers
over the last twenty years. The global market capitalization of the
industry is less than $50 billion. The market cap of one high tech
company, Qualcomm, has gained and then lost this amount in the last six
weeks. Industry earnings are all but non-existent apart from hedge book
profits. Financial staying power for many companies would be in doubt
if the gold price remains depressed. Concerned senior executives are
considering how they can engineer a reversal of fortune from a near
evisceration of shareholder value.

In principle, the answer is simple: announce a change of policy on
hedging. The difficulty lies in the execution. Mining companies cannot
afford to bid against each other to restructure their hedge books. Nor can
they tip their hand in advance, as front-runners would bid up prices. Still,
once the market perceives a different industry stance on hedging, the gold
price will rise even more sharply than it did in September. Equity
valuations are also likely to rise once previously alienated shareholders
interested in the upside play on gold return to the fold. Just as the
Washington Agreement caught short sellers by surprise in September
1999, a sharp curtailment in producer hedging will trigger a rally to new
highs.

The third, most important, and least discussed reason for the gold bear
market has been the twenty-plus year bull market in financial assets. It
has banished gold to investment Siberia. Interest has vanished for all but
a few diehards with long memories. However, long dormant investment
demand seems ready to awaken in 2000. If so, it would provide the basis
for a sustained, much higher price level that would destroy all hope for
shorts to cover at a profit. Investment demand is the most potent of all
forces that could drive gold higher, but has been absent for twenty years.
For this reason, analysts have modeled supply and demand factors based
on newly mined gold, scrap, and net sales or purchases by the official
sector versus consumption for jewelry and industry and bar hoarding ( a
form of investment, primarily in Asia ) . Little attention has been paid to
investment demand, which has been treated simply as a residual of the
balance between the foregoing supply and demand factors. In their just
published numbers, GFMS projects investment demand for the year 2000
at a negative 418 tonnes vs. a positive 203 tonnes in 1999. Investment
demand appears to be negative in the GFMS model in order to balance
the numbers. Not to pick on GFMS, but these numbers simply don't
make sense. I believe that investment demand will be positive in 2000,
and will begin to crowd out jewelry consumption.

Gold Supply/Demand Balance ( tonnes )
1999
2000
Estimated
Mine Production
2,569
2,650
Official Sector Sales
441
250
Old Gold Scrap
623
650
Producer Hedging
445
150
Total Supply
4,078
3,700
Jewelry
3,069
3,350
Other Fabrication
603
618
Bar Hoarding
203
150
Total Demand
3,875
4,118
Balance = Net Investment
203
-418


Source: Goldfields Mineral Services

Investment demand will awaken because of macro-economic factors that
are not within the province of GFMS-type statistical surveys. The world
is not awash in gold, it is awash in dollars. The run rate of the US trade
deficit exceeds $300 billion per year. 40% of US debt is now held by
foreigners. Interest rates are in a rising pattern across the yield curve.
The monetary base grew at the highest rate in 50 years during the fourth
quarter of 1999. While inflation numbers as measured by the Labor
Departments PPI and CPI still appear tame, the precursors of higher
inflation numbers are impossible to ignore for anyone not caught up in
market mania. According to a recent ISI Group commentary, "inflation
still looks tame, at the same time every core measure... has been
starting to creep up over the past few months including US core PPI,
CPI, and import prices as well as German and French core CPIs.
The Atlanta Fed finished prices index has increased sharply and the
Euro PPI increased much more than expected in November. In this
context, it should be remembered US average hourly earnings gains
also appear to have bottomed out in recent months." Expect the
sanguine low inflation, goldilocks economy, "Greenspan is a genius"
mentality to be severely challenged in the current year.

Gold demand has three components. These are fabrication for jewelry and
industry, potential demand from short covering, and investment demand.
Fabrication demand has grown steadily, especially for jewelry. Without
it, gold would have collapsed under the weight of the short selling binge.
It has counterbalanced the extremely negative investment sentiment of
recent years. At 3,700 tonnes in 1999, it exceeded new mine production
by over 1,000 tonnes. Without central bank sales, producer selling, and
speculative short selling to fill this deficit, the equilibrium gold price
would have to be several hundred dollars higher than where it stands.
However, fabrication demand by itself does not hold the key to higher
gold prices. Instead, it will be pushed aside by panic short covering and
renewed investment demand.

There are two reasons to expect the next rally in gold to be more
explosive than the 30% run up in September 1999. First the short
position still remains very large ( for more information, see The Golden
Pyramid ) . It stands at 5,000 to 10,000 tonnes, or two to four years� mine
production. Lending appears to have expanded during the fourth quarter,
despite the Washington Agreement, as Kuwait, the Vatican, and other
stragglers were recruited to put out the October short squeeze fire. Since
mine production is more than absorbed by fabrication, short positions can
only be covered by new borrowings, or by central bank sales subject to
the 400 ton per year limit under the Washington Agreement.

Bullion dealers appear to shoulder the bulk of the risk that central banks
might grow reluctant to provide liquidity. In our conversations with
mining executives, it appears that bullion dealers were so eager to sell
hedging instruments that they provided very lax margin provisions. This
situation has not changed since the Washington Agreement rally. In a
startling disclosure, Ashanti recently announced that its hedge book had
changed for the worse since their difficulties began. Although the
quantity has declined slightly to 9 mm ounces, the breakeven point has
declined to $262 from around $285. The notional loss today is $270mm,
whereas four months ago, it would have been zero. The company's
balance sheet has shown no improvement. Ashanti's bullion bankers
appear to be at equal or greater risk than when this fiasco first came to
light. Ashanti is just one of a number of specific situations that could
motivate bullion dealers to manipulate the gold price at the high end of its
trading range or at specific chart points closely watched by traders. It is
safe to say that Ashanti, one of the most active hedgers, will be a
non-entity this arena for some time to come.

Beyond Ashanti, the bullion dealer/mining industry aggregate hedge
position remains as vulnerable as ever to a gold rally. Complacency has
settled in following the twelve-week retracement in the gold price from its
October 1999 peak. Few participants in the outstanding short position
contemplate another sharp rally in gold. Many of the shorts do not
appear to understand the degree to which they, or the institutions they
represent, are at peril. The fallacious argument that gold in the form of
mining reserves to be delivered, in some cases, at distant future dates, is an
effective long to offset the dealer short, is still a foundation of this
complacency. What this view fails to take into account is the financial
stress that would result from a substantial rise in the gold price, which
does not retrace, for deliveries scheduled several years in the future.

Keep in mind that bullion banks operate on a high degree of leverage.
There is an ongoing mismatch between paper and physical gold. A given
flow of physical gold can be multiplied by a factor of 5x or greater in the
paper market. Any reduction of physical provided by the industry at a
future date implies increased leverage and an expanded aggregate short
position among the bullion dealers. Compared to the diamond industry,
which enjoys gross margins of 50% or more, the gold industry has done
a poor job of marketing. By turning over much of the distribution
function to bullion dealers, the industry has amplified its own supply by
whatever leverage factor bullion dealers wish to apply. Over the longer
term, the gold industry would be well advised to explore ways in which it
could avoid giving over control of physical flows to these intermediaries.

The second reason to expect a sharp, sudden rise is that markets do not
adjust slowly to changes in psychology. Complacency built upon the
assumption of tame inflation, the new paradigms of e-commerce, and
masterful Fed leadership is overripe. We live in an age of unprecedented
financial euphoria. The dollar is considered to be unassailable.
Valuations that have never been seen are considered reasonable. Recently,
Paul MacRae Montgomery, a noted student of the financial markets,
observed that the ratio of triple-A bond yields to the S&P yield is 7.5
times. The only other examples in history where this relationship even
approximated this number was the Weimar Republic in Germany,
probably not a useful parallel, and Japan in 1989, most likely a valid
parallel. Montgomery also prepared a chart, carried by Barron's,
showing the ratio of mergers to GNP, reproduced below. It speaks for
itself:



Strange as it may seem, gold has a corner on euphoria. Overvalued
stocks, short positions in gold, and foreign holders US dollar instruments
occupy the same space. They are hostage to the stale incantations of the
bull market. The financial markets at large are conceptually short gold.

The climate of opinion in the investment market is that inflation will never,
ever reappear. This credo, repeated ad nauseam by investment gurus in all
the media, is the foundation of financial euphoria. What if we couldn't
resort to this mantra? The year 2000 will provide the answer.

Perhaps the most unsuspecting of the potential victims are foreign holders
of US debt. A major reason for low inflation is the willingness of our
trading partners to accept our paper for their goods. The rosy inflation
picture would quickly sour if their high opinion of dollar-denominated
debt faltered. The US has been importing the rest of the world's
over-capacity. For years, the US economy's strength was matched by
weakness among our trading partners. Economic recoveries are now
underway in the rest of the world. Over-capacity is being absorbed, and
the flood of dollars necessary to finance our record trade gap may
become less welcome. A change in sentiment would lead to sharply
higher US interest rates.

The gold market has reached a point where conventional supply and
demand models offer little guidance. Macro economic forces, which have
been gestating for what seems like forever, will become impossible to
ignore. The positive fundamentals, which formed the underpinnings of
the twenty-year bull market in financial assets, have withered. Only the
fa�ade remains. Once market participants wake up to the change, gold
will benefit to an extent that is inconceivable to those who are short.

Paper wealth has become a state of mind, even a fantasy, regardless of
whether it is represented by shares of overvalued high tech companies or
foreign holdings of overvalued US dollars. Vying for the title of the
greatest fools are the central bankers who have systematically divested
their gold through outright sales and lending in order to increase their
holdings of higher yielding dollars and other paper currencies. Nouveau
central bankers parrot the values and beliefs of the paper asset bull
market. They disdain gold and couldn't be more negative. Their
supposed prescience is one of the unfathomable myths of our time. Look
for them to change their minds and turn into panic buyers of gold when
paper currencies lose value.

Vast quantities of present-day paper wealth, held in the form of inflated
stock market equities, will never be converted into lasting wealth. For
most, this imaginary wealth will die along with the prevailing market
mania. Only a few high tech millionaires will transform their dot.com and
similar paper into lasting wealth. As in all major market turns, surprise
will be a major factor. No advance warning signals for a privileged or
clever few will be flashed. Manias exist because a popular point of view
becomes over-exploited. A willingness to act in advance, when the
negative catalysts are still unclear, and risk leaving money on the table, is
the only certain escape. Our suggestion: sell a little while it is still
possible to sell. Risk derision and buy gold or gold shares, the pariah of
all asset classes. When investment confidence falters, gold will be the
leveraged play. A small commitment will preserve and protect some of
the paper wealth that would otherwise disappear.

Most holders of equity shares are unable to move their wealth efficiently
between alternative asset classes. Gold is the important exception. It is
liquid, and currently happens to be depressed which to our mind is one of
the benchmarks of value. Gold, almost alone at this point in time, stands
out as a more than reasonably priced insurance policy against an
undiversified portfolio of high tech and dot.com equities. A small
investment will translate into enhanced buying power following a serious
upset in the financial markets. To feel rich on paper these days is
commonplace. To convert these paper riches into lasting wealth will be
the exception.

John Hathaway

January 2000
� Tocqueville Asset Management L.P.
nickel62
Great Article by John Hathaway!
John Hathaway of the Tocqeville Gold Fund -- predicts a new rally more powerful than last fall.


Rich on Paper

By John Hathaway

Gold is poised to make its second significant move to the upside in less
than a year. Gold shares and the gold price are in a deep funk, the same
as the despondency that preceded the September 1999 rally of 30% from
a twenty-two year low in the space of three weeks. The catalyst for the
rally was an agreement among the leading central banks, known as the
Washington Agreement, to limit sales and lending activities, which were
depressing gold. While pessimism still reigns, the fundamentals of the
gold market have turned decidedly bullish thanks to this development.
The agreement, signed by the 15 European Central Union members, fixed
the level of outright sales for the next five years. More important, the
banks will not increase gold loans beyond the current level. Gold loans
have been more damaging to the gold price than outright sales
themselves. Finally, the US, Japan, the IMF and the BIS have stated that
they will abide by the spirit of the agreement. Therefore, 85% of
worldwide official sector gold holdings are now either off the market or
will be disposed of in a predictable manner.

This watershed event caught the overly short market by surprise. More
important, it provided a fundamental basis for stating categorically that the
low point in gold for the next decade is in place. The downside price risk
is no longer open-ended. It is only a matter of time before additional
upside materializes. How long will it take? The next strong upside move
will be driven by another fundamental development, which will also come
as a surprise to this excessively short market. That development will be
widespread gold producer hedge book buybacks combined with high
profile statements that promise to de-emphasize the importance of
hedging. Buybacks are already underway. However, anti-hedging
statements, which will probably come later this year, will alter negative
market psychology by removing still another argument in favor of the
bearish case for gold, the expectation of ceaseless and expanding
producer hedging.

According to Goldfields Mineral Services� ( GFMS ) most recent survey,
new supply from producer hedging is likely to decline by nearly 300
tonnes in the current year to 150 from 445 in 1999. However, GFMS is
understating the magnitude of the change. Gold company reserve growth
dropped significantly in 1999. The raw material for hedging is not
expanding. Reserve growth in 1999 will be minimal. A net buyback of
the industry hedge position would not be surprising. It would suggest a
much larger decline in supply than forecast by Goldfields. Combined
with the Washington Agreement, reduced hedging portends a significant
shrinkage in the supply of gold over the next twelve months. GFMS
forecasts a 10% reduction in supply. It could easily exceed 15%, if
producer hedging is zero or negative.

To recall the three reasons for gold's protracted decline, official sector or
central bank selling and lending plus producer hedging have been the
most visible. The combination led to the "piling on" variety of short
selling by hedge funds and other speculators. To them, gold was just a
cheap source of funding, first because the borrowing costs were lower
than any other currency, and second, because gold was expected to
decline in value. Secular disinvestment is the third reason, which will be
discussed in more depth shortly.

Because gold industry management bought into the bearish case for gold,
they engaged in extensive forward sales and other hedging transactions.
This activity accelerated gold supply by as much as two years� future
mine output. The sharp spike in the gold price following the
announcement of the Washington Agreement blew up the hedge books of
two high profile producers, Ashanti Goldfields and Cambior and
threatened the solvency of the two companies. Their difficulties
dramatized the risks of excessive hedging and soured both investor and
management appetites for the practice.

The rationale for investing in gold stocks is the expectation of a higher
gold price. It is not because a particular CFO or hedge manager happens
to be a clever trader in the gold market. Nobody wants to pay for that.
The valuation of hedge book enhancements to earnings cannot begin to
approach those delivered by the upside in the gold price. In the words of
Leigh Goehring ( portfolio manager at Prudential ) , the industry has
succeeded in re-rating itself downward by destroying the option value of
the shares. At times, it has appeared that industry management does not
understand gold market fundamentals. In certain cases, there was an
apparent dread of higher gold prices because of potential financial
damage from their hedge books. All of this appears to be changing due
to a widespread reassessment of hedging.

Gold equities are exceptionally cheap at the moment. According to the
respected research team at Scotia Bank, they currently trade at a discount
of 18% to net present value, an unprecedented low valuation, even before
the September 1999 rally. Because of the lengthy gold bear market,
exacerbated by hedging and short selling, shares of gold mining
companies, not surprisingly, have ranked among the worst performers
over the last twenty years. The global market capitalization of the
industry is less than $50 billion. The market cap of one high tech
company, Qualcomm, has gained and then lost this amount in the last six
weeks. Industry earnings are all but non-existent apart from hedge book
profits. Financial staying power for many companies would be in doubt
if the gold price remains depressed. Concerned senior executives are
considering how they can engineer a reversal of fortune from a near
evisceration of shareholder value.

In principle, the answer is simple: announce a change of policy on
hedging. The difficulty lies in the execution. Mining companies cannot
afford to bid against each other to restructure their hedge books. Nor can
they tip their hand in advance, as front-runners would bid up prices. Still,
once the market perceives a different industry stance on hedging, the gold
price will rise even more sharply than it did in September. Equity
valuations are also likely to rise once previously alienated shareholders
interested in the upside play on gold return to the fold. Just as the
Washington Agreement caught short sellers by surprise in September
1999, a sharp curtailment in producer hedging will trigger a rally to new
highs.

The third, most important, and least discussed reason for the gold bear
market has been the twenty-plus year bull market in financial assets. It
has banished gold to investment Siberia. Interest has vanished for all but
a few diehards with long memories. However, long dormant investment
demand seems ready to awaken in 2000. If so, it would provide the basis
for a sustained, much higher price level that would destroy all hope for
shorts to cover at a profit. Investment demand is the most potent of all
forces that could drive gold higher, but has been absent for twenty years.
For this reason, analysts have modeled supply and demand factors based
on newly mined gold, scrap, and net sales or purchases by the official
sector versus consumption for jewelry and industry and bar hoarding ( a
form of investment, primarily in Asia ) . Little attention has been paid to
investment demand, which has been treated simply as a residual of the
balance between the foregoing supply and demand factors. In their just
published numbers, GFMS projects investment demand for the year 2000
at a negative 418 tonnes vs. a positive 203 tonnes in 1999. Investment
demand appears to be negative in the GFMS model in order to balance
the numbers. Not to pick on GFMS, but these numbers simply don't
make sense. I believe that investment demand will be positive in 2000,
and will begin to crowd out jewelry consumption.

Gold Supply/Demand Balance ( tonnes )
1999
2000
Estimated
Mine Production
2,569
2,650
Official Sector Sales
441
250
Old Gold Scrap
623
650
Producer Hedging
445
150
Total Supply
4,078
3,700
Jewelry
3,069
3,350
Other Fabrication
603
618
Bar Hoarding
203
150
Total Demand
3,875
4,118
Balance = Net Investment
203
-418


Source: Goldfields Mineral Services

Investment demand will awaken because of macro-economic factors that
are not within the province of GFMS-type statistical surveys. The world
is not awash in gold, it is awash in dollars. The run rate of the US trade
deficit exceeds $300 billion per year. 40% of US debt is now held by
foreigners. Interest rates are in a rising pattern across the yield curve.
The monetary base grew at the highest rate in 50 years during the fourth
quarter of 1999. While inflation numbers as measured by the Labor
Departments PPI and CPI still appear tame, the precursors of higher
inflation numbers are impossible to ignore for anyone not caught up in
market mania. According to a recent ISI Group commentary, "inflation
still looks tame, at the same time every core measure... has been
starting to creep up over the past few months including US core PPI,
CPI, and import prices as well as German and French core CPIs.
The Atlanta Fed finished prices index has increased sharply and the
Euro PPI increased much more than expected in November. In this
context, it should be remembered US average hourly earnings gains
also appear to have bottomed out in recent months." Expect the
sanguine low inflation, goldilocks economy, "Greenspan is a genius"
mentality to be severely challenged in the current year.

Gold demand has three components. These are fabrication for jewelry and
industry, potential demand from short covering, and investment demand.
Fabrication demand has grown steadily, especially for jewelry. Without
it, gold would have collapsed under the weight of the short selling binge.
It has counterbalanced the extremely negative investment sentiment of
recent years. At 3,700 tonnes in 1999, it exceeded new mine production
by over 1,000 tonnes. Without central bank sales, producer selling, and
speculative short selling to fill this deficit, the equilibrium gold price
would have to be several hundred dollars higher than where it stands.
However, fabrication demand by itself does not hold the key to higher
gold prices. Instead, it will be pushed aside by panic short covering and
renewed investment demand.

There are two reasons to expect the next rally in gold to be more
explosive than the 30% run up in September 1999. First the short
position still remains very large ( for more information, see The Golden
Pyramid ) . It stands at 5,000 to 10,000 tonnes, or two to four years� mine
production. Lending appears to have expanded during the fourth quarter,
despite the Washington Agreement, as Kuwait, the Vatican, and other
stragglers were recruited to put out the October short squeeze fire. Since
mine production is more than absorbed by fabrication, short positions can
only be covered by new borrowings, or by central bank sales subject to
the 400 ton per year limit under the Washington Agreement.

Bullion dealers appear to shoulder the bulk of the risk that central banks
might grow reluctant to provide liquidity. In our conversations with
mining executives, it appears that bullion dealers were so eager to sell
hedging instruments that they provided very lax margin provisions. This
situation has not changed since the Washington Agreement rally. In a
startling disclosure, Ashanti recently announced that its hedge book had
changed for the worse since their difficulties began. Although the
quantity has declined slightly to 9 mm ounces, the breakeven point has
declined to $262 from around $285. The notional loss today is $270mm,
whereas four months ago, it would have been zero. The company's
balance sheet has shown no improvement. Ashanti's bullion bankers
appear to be at equal or greater risk than when this fiasco first came to
light. Ashanti is just one of a number of specific situations that could
motivate bullion dealers to manipulate the gold price at the high end of its
trading range or at specific chart points closely watched by traders. It is
safe to say that Ashanti, one of the most active hedgers, will be a
non-entity this arena for some time to come.

Beyond Ashanti, the bullion dealer/mining industry aggregate hedge
position remains as vulnerable as ever to a gold rally. Complacency has
settled in following the twelve-week retracement in the gold price from its
October 1999 peak. Few participants in the outstanding short position
contemplate another sharp rally in gold. Many of the shorts do not
appear to understand the degree to which they, or the institutions they
represent, are at peril. The fallacious argument that gold in the form of
mining reserves to be delivered, in some cases, at distant future dates, is an
effective long to offset the dealer short, is still a foundation of this
complacency. What this view fails to take into account is the financial
stress that would result from a substantial rise in the gold price, which
does not retrace, for deliveries scheduled several years in the future.

Keep in mind that bullion banks operate on a high degree of leverage.
There is an ongoing mismatch between paper and physical gold. A given
flow of physical gold can be multiplied by a factor of 5x or greater in the
paper market. Any reduction of physical provided by the industry at a
future date implies increased leverage and an expanded aggregate short
position among the bullion dealers. Compared to the diamond industry,
which enjoys gross margins of 50% or more, the gold industry has done
a poor job of marketing. By turning over much of the distribution
function to bullion dealers, the industry has amplified its own supply by
whatever leverage factor bullion dealers wish to apply. Over the longer
term, the gold industry would be well advised to explore ways in which it
could avoid giving over control of physical flows to these intermediaries.

The second reason to expect a sharp, sudden rise is that markets do not
adjust slowly to changes in psychology. Complacency built upon the
assumption of tame inflation, the new paradigms of e-commerce, and
masterful Fed leadership is overripe. We live in an age of unprecedented
financial euphoria. The dollar is considered to be unassailable.
Valuations that have never been seen are considered reasonable. Recently,
Paul MacRae Montgomery, a noted student of the financial markets,
observed that the ratio of triple-A bond yields to the S&P yield is 7.5
times. The only other examples in history where this relationship even
approximated this number was the Weimar Republic in Germany,
probably not a useful parallel, and Japan in 1989, most likely a valid
parallel. Montgomery also prepared a chart, carried by Barron's,
showing the ratio of mergers to GNP, reproduced below. It speaks for
itself:



Strange as it may seem, gold has a corner on euphoria. Overvalued
stocks, short positions in gold, and foreign holders US dollar instruments
occupy the same space. They are hostage to the stale incantations of the
bull market. The financial markets at large are conceptually short gold.

The climate of opinion in the investment market is that inflation will never,
ever reappear. This credo, repeated ad nauseam by investment gurus in all
the media, is the foundation of financial euphoria. What if we couldn't
resort to this mantra? The year 2000 will provide the answer.

Perhaps the most unsuspecting of the potential victims are foreign holders
of US debt. A major reason for low inflation is the willingness of our
trading partners to accept our paper for their goods. The rosy inflation
picture would quickly sour if their high opinion of dollar-denominated
debt faltered. The US has been importing the rest of the world's
over-capacity. For years, the US economy's strength was matched by
weakness among our trading partners. Economic recoveries are now
underway in the rest of the world. Over-capacity is being absorbed, and
the flood of dollars necessary to finance our record trade gap may
become less welcome. A change in sentiment would lead to sharply
higher US interest rates.

The gold market has reached a point where conventional supply and
demand models offer little guidance. Macro economic forces, which have
been gestating for what seems like forever, will become impossible to
ignore. The positive fundamentals, which formed the underpinnings of
the twenty-year bull market in financial assets, have withered. Only the
fa�ade remains. Once market participants wake up to the change, gold
will benefit to an extent that is inconceivable to those who are short.

Paper wealth has become a state of mind, even a fantasy, regardless of
whether it is represented by shares of overvalued high tech companies or
foreign holdings of overvalued US dollars. Vying for the title of the
greatest fools are the central bankers who have systematically divested
their gold through outright sales and lending in order to increase their
holdings of higher yielding dollars and other paper currencies. Nouveau
central bankers parrot the values and beliefs of the paper asset bull
market. They disdain gold and couldn't be more negative. Their
supposed prescience is one of the unfathomable myths of our time. Look
for them to change their minds and turn into panic buyers of gold when
paper currencies lose value.

Vast quantities of present-day paper wealth, held in the form of inflated
stock market equities, will never be converted into lasting wealth. For
most, this imaginary wealth will die along with the prevailing market
mania. Only a few high tech millionaires will transform their dot.com and
similar paper into lasting wealth. As in all major market turns, surprise
will be a major factor. No advance warning signals for a privileged or
clever few will be flashed. Manias exist because a popular point of view
becomes over-exploited. A willingness to act in advance, when the
negative catalysts are still unclear, and risk leaving money on the table, is
the only certain escape. Our suggestion: sell a little while it is still
possible to sell. Risk derision and buy gold or gold shares, the pariah of
all asset classes. When investment confidence falters, gold will be the
leveraged play. A small commitment will preserve and protect some of
the paper wealth that would otherwise disappear.

Most holders of equity shares are unable to move their wealth efficiently
between alternative asset classes. Gold is the important exception. It is
liquid, and currently happens to be depressed which to our mind is one of
the benchmarks of value. Gold, almost alone at this point in time, stands
out as a more than reasonably priced insurance policy against an
undiversified portfolio of high tech and dot.com equities. A small
investment will translate into enhanced buying power following a serious
upset in the financial markets. To feel rich on paper these days is
commonplace. To convert these paper riches into lasting wealth will be
the exception.

John Hathaway

January 2000
� Tocqueville Asset Management L.P.
SteveH
Let's help a friend
I got this letter from a person who needs our thougths. Any takers:

XXX,

I will take a wack at your questions. I will also post your question to www.usagold.com forum. Tune in there for response. Especially look for answers from ORO or FOA on our post. I will leave your name out of it.

Steve

PS see below your comments for my comments.

At 02:04 PM 1/29/00 -0500, you wrote:
>-- [ From: xxx xxxxxxx * EMC.Ver #2.5.02 ] --
>
>
>1-29-2000
>
>Hi Steve,
>
>I found and read your Open Letter to Congress on the Euro, the Gold Market,
>and the Dollar. I have been doing research on the strength and weakness
>movement of the US Dollar and its relationship to Gold and Oil. Well, you
>can plainly see how your paper put the relationship of all three components
>into perspective for me. There was one part I didn't understand, however.
>Would you please help me with that.

thanks.

>
>I don't know what it means that the 15% reserve gold which is to back the
>Euro will be "marked" quarterly to current open market gold prices? Also,
>Steve, how will the Euro be aided by this event on a quarterly basis in
>light of the fact that no physical gold is planned to be a part of the
>backing of the Euro in the first place in spite of the fact that there will
>be 15% gold (physical?) backing that currency?

My take on this is that the ECB has 787 tons (amount in my memory) set aside that it will not sell or lease that is earmarked as a reserve. They will not sell it or trade it for Euros. It just sits there as backing. Each quarter they revalue it to the London Spot price on the last business day of the quarter (I believe).
There is a rumor now out that says they will double the reserve to 30% to protect their currency.


>
>Can you also shed some light on why last Friday 1/28 the price of gold
>plummeted $4.00+ Dollars on the New York Spot Gold Price Market?

I heard it was a bullion bank selling gold either to cover a loss in stocks or derivatives or to cap gold.

>
>Also can you shed any light on why the US Dollar is currently rising so
>powerfully in strength against all currencies? Both Thursday and Friday
>1/27th & 28th saw the US Dollar Index break up and out of chart resistance
>into and beyond the 104.00 region. Its strength absolutely amazed me in
>light of the many negatives supposedly weighting against the Dollar, ie.
>balance of trade deficit, national debt (now in excess of 5 Trillion $'s),
>the export of some 103 metric tons of gold from our country in Dec. 1999 as
>you stated in your letter, the stock market speculation investment bubble,
>etc, etc.?

I will leave this to ORO.

>
>You know, Steve, I try to make sense out of the movement of the dollar, the
>movement of gold, the movement of interest rates, the movement of the cost
>of crude oil, the US bond market and even the Japanese Yen in relationship
>to each other and our economy but remain confounded over trying to get a
>grip on understanding these relationships. They must be very complicated
>because nothing I have ever read, with the exception of your paper's clarity
>, has helped me to see what is happening.

Keep reading on the www.usagold.com forum. This is the whole topic of discussion here.

>
>Your paper did help quite a bit with a number of things especially the
>process of selling gold forward since the 1970's and the fact that these
>paper sales of gold contracts to the tune of 1,500 tons deficit annually has
>pretty much gotten out of hand at this point and the first big hedge fund
>victim was LTCM back in 1998 (even though they were on the wrong side of
>currency derivatives at the time).
>
>Did the European countries decide to raise the interest charged on leased
>gold from 1% to 5% because of clearly foreseeable coming defaults and wanted
>a little more insulation/protection?

Let see what ORO says.

>
>And one of my big questions aside from what is making the US Dollar so
>STRONG and for what foreseeable time frame, is, what effect will a
>dramatically falling stock market have on the relationship of the Dollar to
>the Euro to Gold to Crude Oil? I seem to get the sense that so much hinges
>on the direction of the US Economy and how it is perceived by the rest of
>the world.

Agreed to last part. First part: Falling stock market will focus attention on gold and I suspect will weaken the dollar. It has been said that trade deficit dollars find themselves into the market. So what ever causes the trade deficit to lessen will send less fuel to stock market. Also heard that Freddi Mac and Fannie Mae credit is finding its way into the markets in a big way too.

>
>The way it looks to me now, Steve, is that if the economy falters badly,
>gold price will rise, crude prices will rise and the $ will fall. Every
>time I think I understand what is going on relationship wise I am fooled
>over and over again and, like the US Dollar yesterday and the day before,
>the Stock Market shows all the signs of tanking and the dollar shows
>unprecedented STRENGTH. Go figure, Steve.

I believe that the trend for long term bond yield is to follow oil higher. Oil should (by the model I and others have followed) show oil as the key. The Euro stands to win of oil bids for gold. As debt of the Euro takes over debt of the dollar we may see similar events: oil higher in dollars and gold higher in dollars.

>
>Please don't let the fact that I am rambling and venting at the same time
>discourage you from writing back to me. I live in Southern xxxxx and would
>not hesitate calling you by phone to discuss these things with you to get
>them in better perspective. Just an option if you wish.

Let the discussion take place on the www.usagold.com forum. You will not believe how incredible these folks are. Good thinkers.

>
>At any rate, please do reply to some of my strongest questions /confusions
>/misconceptions / wonderings about this whole relationship concern. I would
>so truly appreciate it.
>
>Sincerely,
xxxxx
>
>PS . . . I know this is going on forever but here is another observation.
>In light of the fact that the huge hedge fund LTCM was easily bailed out,
>various European countries still have multiple gold sales to have occur
>(spread out over quite some time), the IMF wild card and its possible gold
>sales and the unstoppable ability of the Federal Reserve (or others) to
>orchestrate "bailouts" when ever needed by apparently any financial
>institution whose failure would threaten the business as usual program:
>where does that leave the future of Gold? The Dollar? It looks to me like
>Gold will continue to be held down (for a long time to come) from rising in
>price and the US Dollar will continue to enjoy its Powerful Dominance: All
>this in spite of "wild card failures and FOI's" Wadaya think, Steve?
>
>
>

Only unstoppable in the sense of an open check book. This leads to inflation which is what we are seeing now. Inflation is considered the lesser of two evils, the other being deflation. The more they try to stop it, the more inflation we will have and the quicker the move to the Euro and subsequently gold. We are in the middle of this process now, imo.

Steve
Farfel
Assault of the KITCO Gold Shorts.
On the other forum, there is a deluge of negative comments about the gold price appearing from the group known as technicians/chartists/stochastics worshippers. Every second post seems to be an ominous warning of the certainty of "gaps to be filled" such that gold MUST drop soon to the 250-260 area. The warnings are frequent and unrelenting, so much so that one cannot help but sense fear behind the urgency of these forecasts.

Well, if there is one thing I have learned about the gold market by now, its the absolute certainty of uncertainty.

If there is one thing I've learned with respect to gold technicians, not a single one of them predicted the October gold spike toward 330. Ergo, it seems their craft probably has some short term validity during sustained trends but absolutely no ability to call notable trend shifts with any real precision.

The reasons are various:

1) The gold market is manipulated by an oligopolistic cartel
(the Central Banks) and their actions can be arbitrary and unpredicatable. No chartist can know if Switzerland will step forward tomorrow and announce a cancellation of all future gold sales. No technician can accurately forecast whether Alan Greenspan dies in his sleep tonight and the certain severe market reaction to such an event. Nobody can determine categorically whether or not, during the next hedge fund blow-up, the government will intervene to support it or decide that this time it is OK to let the big fund collapse.

2) A sudden shift in mass psychology is not measurable today by any known scientific barometer. Like a social science, technical analysis attempts to define and categorize in a manner that often holds up well in AFTER-the-fact evaluation, yet more often than not, fails completely in its predictive ability.

3) Since chartists post esoteric technical mumbo jumbo on almost a daily basis, always allowing that if a certain level is breached, then previous forecasts become null and void, then it is almost impossible to pin down the accuracy of any technical forecast. There are simply to many "escape clauses" in any of their predictions to determine their validity.

It seems that only fundamental developments can lead to notable trend shift. Although the status quo in America seems likely to prevail while Greenspan, Summers, and Clinton guide Ship USA, Chaos Theory would suggest that we are long overdue for a left field event that will knock the boat off-course.

The technical gold shorts cannot be blind to developing systemic pressures in the markets and that may explain their over-insistent, relentless, repetitious demands that goldbugs accept their categorical assertions concerning gold's direction.

BUT dramatic market reaction to the Washington Agreement proved that the "the technical gold shorts wear no clothes."

And as I noted in an earlier post, the goldbugs are only now becoming more aware of this new Truth, and in this new awareness, they are casting away their long held fears and
ignoring the louder, increasingly nervous bleating of the gold short sheep.

Thanks

F*
Cavan Man
To Leigh
There is much written about Sacagawea in "Undaunted Courage" by Stephen Ambrose. I do believe her husband survived the ordeal. That lady was extremely helpful to the expedition. Her contributions are not exaggerated.

Also good by Ambrose is "Citizen Soldier".
lamprey_65
Farfel
I too noticed the number of negative postings today on Kitco...seems like an agenda by a group trying to scare the wits out of people.

What a world we live in.

Lamprey
Cavan Man
To Farfel
I enjoyed your earlier post but the follow on to it was even better. That one's a HOFer.
Cavan Man
lamprey 66
"Global Warming Is 300 Year-Old News"See the op-ed section of the WSJ, 1-18-00 for a different take. It's a keeper. Recommended to all!
Cavan Man
To ORO and FOA
Regarding Saudi strategic planning; wouldn't their plans be upset if Iraq again became a very aggressive threat in the region. The US Cavalry would come to the rescue making the region again dependent on US largesse. How to move into EURO given that scenario?
Cavan Man
lamprey_65
Sorry.
lamprey_65
Cavan Man
The link you provided isn't working...but I think I'd agree with the title. The problem is two-fold:

1. Many see this as a political issue or a business issue...I see it as a science issue.
2. Man has been changing the composition of the atmosphere for OVER 300 years...it's accelerating and there will be (and have been) consequences.

I've never understood how people who claim that taking responsibility for actions should be a cornerstone for society can so easily dismiss the actions man is having on this planet. My only explanation is the hatred for the "other party"mentality...since I'm an Independent, I don't think that way.

I am a Conservative in conservation matters as well as fiscal and social matters, i.e. - I believe we should work to CONSERVE what has been given.

Lamprey
TownCrier
Hear ye! Hear ye!
http://www.usagold.com/pointpaper3.PDFSir SteveH has graciously provided his full document in .pdf format to USAGOLD for your full enjoyment. The .pdf document, "An Open Letter to Congress on the Euro, the Gold Market, and the Dollar" By Steve Hickel, may be downloaded to your computer by clicking on the link above. You may then enjoy its rich format by viewing it on-screen with the Adobe Acrobat Reader, or else printing it out...suitable to grace the top of your coffee tables at home!

On behalf of all that gather at this Round Table, "Thank you, Sir SteveH!"
Elwood
Larry Summers, Esq.

We all know a man named Summers
Who marches to the fiat drummers
But don't hearken that man
Else you'll land in a jam
They'll pick your pocket and you'll be glummer.
Cavan Man
lamprey_65
I do not have the link, only the reference. If you read the piece which is written by two gentlemen who call themselves "Chemists" in the employ of the "Oregon Institute of Science and Medicine", you will get a different take on the issue at hand. I understand your feelings (I think) on the matter and do not disagree. It is a complicated issue and there is good "science" on both sides of it. Now, back to gold....

FOA
For anyone that would like to know
http://www.weforum.org/DRAVOS

ABOUT THE FORUM

The World Economic Forum is the foremost global partnership of business, political, intellectual and other leaders of society committed to improving the state of the world.

Members, constituents and collaborators have a unique opportunity, through their association with the World
Economic Forum, to engage in processes of developing and sharing ideas, opinions and knowledge on the key issues of the global agenda.

The World Economic Forum is an independent, impartial, not-for-profit Foundation which acts in the spirit of
entrepreneurship in the global public interest to further economic growth and social progress.

NEW HEADQUARTERS

In November 1998 the World Economic Forum moved into its new headquarters overlooking Lake Geneva.

The new building reflects the culture of the Forum in the following ways:

Our environmental responsibility by being completely integrated into the landscape. The rooftops are covered with grass and recycled glass, and energy consumption is kept at a minimum
The offices are completely open space, creating a true team culture without any hierarchical differences
The new working environment reflects today's network society, not only by being equipped with the latest communications technologies, but also by providing 27 different meeting points and lounges for personal interaction
The building also serves as a "clubhouse" for members and constituents of the World Economic Forum, allowing board and other meetings for up to 120 persons.


The World Economic Forum's headquarters have been established in close cooperation with the Government of
the Canton of Geneva and the Commune of Cologny and will integrate a communal shelter equipped for several hundred people.

Message from the President

There are three reasons our Foundation is so special:

First, we constitute a unique partnership of representatives from business and government. Our basic philosophy is that the great challenges facing humankind as we move into the next century can only be met through joint efforts on the part of government and business. But these efforts have to be stimulated by the best minds and have to be made transparent to the public. In short, what makes the Foundation unique is that we are a truly global community, a global partnership of business, government, academia and the media.

Second, we are not only a unique community; we have a very special role to play.

At the beginning of each year during our Annual Meeting in Davos, we brainstorm to help define the global agenda. At this meeting and, indeed, during our numerous other gatherings throughout the year, we discuss the key political, economic and social issues.

And this leads me to the third reason our Foundation is very special: we all have a responsibility to fulfill its
mission: "Committed to improving the state of the world". We are aware that entrepreneurship is the basis for all
economic and, ultimately, social progress, but entrepreneurship has to take place in the framework of social responsibility. Therefore I call on each of you to keep in mind our motto: "Entrepreneurship in the global public interest."

We are building the network society. This means that elites will more and more disappear. The new network society will be open and access should be guaranteed to everybody. For this reason, the World Economic Forum has increased its exposure by creating a web-site that allows all the members of the global civic society to be integrated into our activities.

Klaus Schwab

Timeline 1970-79


1970
Klaus Schwab, Professor of Business Administration, takes the initiative and the personal risk to convene Europe's chief executives to an informal gathering in the Swiss mountain town of Davos in January 1971, to discuss a coherent strategy for European business to face challenge, in the international marketplace. He secures the patronage of the Commission of the European Communities, as well as the encouragement of Europe's industry associations.

1971
Klaus Schwab founds the European Management Forum, a not-for-profit foundation, as a framework for further
initiatives and activities. The foundation's Annual Meeting in Davos is now considered the global summit which defines the political, economic and business agenda for the year.

1973
Country Forums are created, to bring together the international business community with the political and
economic leaders of specific countries. By 1995, more than 500 such meetings have taken place - in some 30 capitals or at the foundation's headquarters in Geneva, making the foundation the leading interface for global
business/government interaction.

1973
After concentrating at first on management issues, the foundation increasingly integrates into its activities
(after the oil shock) political, economic and social issues. It starts to play a major role in confronting
environmental challenges as expressed, for example, in its role as an official adviser to the Earth Summit in Rio in
1992.

1976
With the creation of the first Arab-European Business Leaders Symposium in Montreux (2000 participants) and
the first Latin American-European Business Leaders Symposium in 1977, foundation activities take on an international dimension.

1976
The foundation transforms itself into a membership organization, becoming the catalyst for the foremost global
business network.

1977
The foundation starts to organize Country Forums in developing countries. In such a way it highlights the
potential of emerging markets and helps to integrate these countries into the world economy.

1979
The publication of the first annual World Competitiveness Report marks the debut of the foundation's research
activities.

1979
The foundation is the first non-governmental organization to initiate a partnership with China's economic commissions and starts activities in China. Since 1980, an annual Business Leaders Symposium is held in Beijing and a high-level Chinese delegation comes every year to Davos. No other organization has brought so many businesses to China; many flourishing joint ventures today originated within the activities of the Forum. The foundation has had a substantial impact on the economic reform policies of China.

Timeline 1980-89


1982
The first Informal Gathering of World Economic Leaders takes place on the occasion of the Annual Meeting in Davos, bringing together cabinet members of major countries with heads of international organizations (such as the World Bank, IMF, GATT). This serves as a model for similar initiatives in the global public interest, including: the Club of Media Leaders (editors-in-chief) the annual informal gathering of heads of the world's foremost non-governmental economic research organizations the Informal Gathering of Regional Leaders the Informal Gathering of Global City Leaders the Roundtable of Industry and International Organization Leaders.
All take place on the occasion of the Annual Meeting in Davos.


1982
A special Informal Gathering of Trade Ministers from 17 countries is organized in Lausanneby the foundation, which spurs the launch of the Uruguay Round.

1983
Governors Meetings, integrating the chief executive officers of the world's most important corporations, are created in specific industry sectors. These "CEO clubs" add an industry orientation to the foundation's well established country-related activities. Today, ten such industry groups exist with more than 400 Governors.

1985
Regular meetings begin in India, which have a substantial impact on the opening-up of the country. Concrete proposals made by business participants are taken into account by the government in shaping its policy.

1987
In order to reflect its increasingly global outlook, the name of the foundation is changed to World Economic
Forum.

1987
Hans-Dietrich Genscher, Germany's Foreign Minister delivers his famous "Let's give Gorbachev a chance" speech at the Annual Meeting in Davos. This is considered by many historians to mark the beginning of the end of the Cold War.

1988
World Link magazine is launched, covering global business and economic issues for 35,000 decision-makers worldwide, increasing the foundation's publishing activity.

1988
The foundation has played a role in major reconciliation processes in the world, with the first of these initiatives
in 1988. Examples are: Greece and Turkey: after being at the brink of war, signing of the "Davos Declaration" between Prime Ministers Papandreou and Ozal, Davos 1988 Korea: both Koreas meet for the first time for discussions at ministerial level at the Annual Meeting, Davos 1989 German Chancellor Helmut Kohl and East German Prime Minister Hans Modrow meet, accelerating significantly the process of German reunification, Davos 1990 East Asia: bilateral contacts lead to the normalization of relations with Vietnam, Davos 1990 South Africa: the first private meeting of all political constituencies of South Africa is held in the Forum's headquarters in Geneva in 1990; the first joint appearance outside South Africa of F.W. de Klerk, Nelson Mandela and Chief Buthelezi brought new impetus to the political transition, Davos 1992 Middle East: Israeli Prime Minister Shimon Peres and PLO Chairman Yasser Arafat reach a viable draft agreement on Gaza and Jericho, moving forward on the road to peace in the Middle East, Davos 1994. Middle East: Israeli Prime Minister Shimon Peres and PLO
Chairman Yasser Arafat reach a viable draft agreement on Gaza and Jericho, moving forward on the road to peace in the Middle East, Davos 1994.

1989
WELCOM is created, the first electronic networking system between the foundation's members and constituents. This pioneering effort, operated on a limited scale, has provided the foundation with experience to develop a strong digital information and communications dimension for its future activities.

Timeline 1990-2000


1990
The foundation launches in Davos an unprecedented All-European Summit of heads of state and government,
followed by substantial activities to integrate Central and Eastern European countries and the former USSR into
the world economy.

1992
The foundation initiates the annual Europe/East Asia Economic Summit with the objective to strengthen
economic and business links between the two regions. The first meeting in Hong Kong gathers 400 participants;
it is followed by a second in Hong Kong in 1993 and a third Summit in Singapore in 1994 attended by over 600
participants. Calls were made there for a meeting on the level of European/East Asian heads of government to
be held in 1995, creating between Asia and Europe an APEC-type organization.

1992
The foundation creates a new network, Global Leaders for Tomorrow, composed of young leaders from business, politics, academia, the arts and the media, all of whom are under 43 when chosen and are already well established through their achievements and their positions of influence. The first 200 Global Leaders for Tomorrow are appointed, to be followed by another 100 each year. The network provides an additional source of forward-looking ideas and initiatives.

1992
The foundation sponsors the creation of a sister foundation, the World Arts Forum, which convenes 200 artistic and cultural leaders from all over the world to a special meeting in Venice, Italy; based on this experience and
contacts, the foundation integrates a stronger cultural and artistic dimension into all its activities. From 1995
onwards, it awards a prize (the Crystal Award) to personalities who, in addition to having made a real difference in the world of arts, have also made an outstanding contribution to cross-cultural understanding.

1993
The first Southern Africa Economic Summit takes place and is followed by a second in June 1994, coinciding with the emergence of the first democratic Government of National Unity in South Africa.

1993
The foundation launches the Industry Summit outside the Annual Meeting in Davos, to serve particularly
entrepreneurial "Global Growth Companies". The first Industry Summit is organized in Cambridge Massachusetts in cooperation with MIT and Harvard University; the 1994 Summit takes place in Palo Alto, hosted by Stanford University, and with the collaboration of Caltech and the University of California, Berkeley. The cooperation of the world's leading universities ensures the latest technology-research and
knowledge-oriented input into the activities of the foundation.

1993
In order to reinforce the club character of its networks, the foundation limits its activities to members and to
their special guests only.

1993
The foundation starts the concept of Forum Fellows nominating some 300 top experts in the political, economic,
social, cultural and technological fields as pertinent advisers and contributors to its activities.

1993
The Informal Gathering of Editorialists and Commentators is created to provide the media with its own networks and with the opportunity to interact intensively with the other constituents of the Forum.

1994
The foundation welcomes its 1000th member and launches two new forms of membership in addition to the 1000
multinationals forming the core of the foundation membership: the Global Growth Companies, a second pillar of
particularly entrepreneurial fast-growing companies; and Regional Membership which allows the integration of
companies with a specific interest in a particular region, such as Asia and Southern Africa. Already more than
half of member companies are headquartered outside Europe.

1994
The first Middle East/North Africa Economic Summit in Casablanca is convened by the World Economic Forum
in partnership with the Council on Foreign Relations, under the presidency of King Hassan II of Morocco. The
Casablanca Declaration produced at the Summit proposes numerous concrete mechanisms to support the peace
process in the Middle East and to launch the concept of a Middle East/North Africa economic community.

1995
The foundation holds its 25th Annual Meeting in Davos.

1995
The foundation takes members on a Special Trip to the Greater Mekong Subregion, creating a new identity and
new forms of cooperation in this rapidly developing growth area.

1995
The Forum has actively promoted the integration of Latin America into the world economy for many years, and
in 1995 the first Mercosur Economic Summit is held in Sao Paulo. The Summit is instrumental in overcoming a
crisis situation (an automotive trade dispute between Argentina and Brazil) which threatens the existence of this
newly emerging economic region. On the occasion of the second Summit in Buenos Aires (1996), Chile formally
joins the regional trade group (Argentina, Brazil, Chile, Paraguay and Umguay) as an associate member.

1996
The theme of the Annual Meeting of Foundation Members is "Sustaining Globalization," and worldwide attention focuses on Davos as the centre of a growing debate, initiated by an editorial, written by the foundation's president and managing director, published in the International Herald Tribune and widely cited in other media.

1996
The first ASEM (Asia Europe Meeting) meeting takes place in Bangkok. This meeting of heads of state and government of European and Asian countries was initiated and prepared by our Europe/East Asia Economic Summit.

1996
The first Central and Eastern European Economic Summit is held in Salzburg, under the patronage of Austrian
President Thomas Klestil. Attended by all the relevant heads of state and government, in addition to a significant group of business leaders, the meeting creates a new identity for this region inside the larger European framework.

1996
The foundation publishes its Global Competitiveness Report . The report is highly valued by governments worldwide as a benchmark for their own performance. The foundation recognizes its responsibility in this area and brings back the report under its sole control. Jeffrey Sachs, Director of the Harvard Institute for international Development, is co-chairman of the Report's Advisory Board.

1996
The Council of the World Economic Forum meets for the first time at the Annual Meeting in Davos. The World Economic Forum integrates its Foundation members in the decision-making process via the Council, which is made up of some 40 eminent representatives of member companies. They meet twice a year.

1997
The Africa Competitiveness Report is published for the first time. This new study undertaken on a region's
competitiveness is based on the model of the successful Global Competitiveness Report. It is the first
comprehensive competitiveness study on the African continent.

1998
Creation of the Business Consultative Council, a group of over 30 heads of business associations from around the world and heads of several United Nations bodies meet for the first time in Davos at the Annual Meeting. This innovative initiative of the World Economic Forum offers the UN the support of business and aims to install a permanent relationship between the business community and the UN system.

1998
The Forum moves into its new headquarters at 91-93 route de la Capite, 1223 Cologny/Geneva, Switzerland.

2000
The Forum holds its 30th Annual Meeting in Davos.


koan
platinum, palladium and silver
Platinum and palladium have made very important breakouts - $471 and $483. As well comex silver inventorie are at only 73 million oz and the mkt seems to be reacting. We may have the beginnings of a good bull mkt in all three - it remains to be seen if they can pull gold up. The mkt so distrusts the metals that even with the white metals about to push through $500 the mining companies of those metals are still pretty much on the bottom. Watch the comex warehouse stocks on silver and also if silver breaks $6.00 it should explode. It looks like the above moves are catching most by surprise as no one at all is watching the unfolding of these event. We will see. Cheers all. Koan.
FOA
Is this more clear?
World Economic Forum in Davos, Switzerland
"Informal talks" as reality overcomes illusion.


I was just thinking:
In the January issue of News and Views" from USAGOLD, Michael Kosares noted that; "In my view, we are witnessing the breakdown of the dollar based floating rate system erected in the 1970s to replace the ill-fated Bretton Woods arrangement." He then gave his many good reasons for that view.

I couldn't agree with this more, especially the above statement. The late 60s into the early 70s is where our current gold trail began and today we are seeing more twists in this winding path. From the beginning, our gold marketplace has been little more than a reflection of the same forces political powers exerted upon all world markets. Indeed, gold has never ended it's function of being a major currency component of international reserves. Because of this, it has received the same exchange rate pressures that governments have exerted upon their own paper moneys. Today, our private gold marketplace is maneuvered to act as a proxy for the governments political needs as it (the marketplace) prints gold as needed to impact it's price. No different from the treasuries printing money and intervening in currency exchange markets.

Can there be an end for this?

In these power games we know that nations states always have an agenda. This purpose is slowly revealed as the repeating force of policy direction eventually exposes their thoughts. In time, these political thoughts are shaped into real events for all to see. The recent Washington Agreement
and the BOE gold sale are a prime examples of this. Still, if one can feel the political purpose ahead of time, just the background events can mark a clear trail. From our (Another/FOA) table we offer the "Thoughts" that in time can give birth to official acts.

The Currency Trail and The Gold Trail, two moneys on the same path?

On this forum (USAGOLD) and many others, readers are sometimes exposed to opposite extremes of "money" thought. I submit that History and Logic say neither of these extremes will "Play" in this "Modern Drama".

On the radical side, ........."the serious gold bug" says all currencies will fail and only gold is the correct investment. All currencies are created by the same evil, misguided governments and should be avoided at all costs. Even degenerating into a lower scale of emotion, they point out that all forms of money politics are gross manipulations of the public. All with Secret Agents and a New World Order that controlling the worlds wealth......

The intrigue never ends! I submit that this is a "common view" that's been promoted for 200 years. Today, serious investors know that as a modern people, we can only hold real wealth for endurance, not daily use in commerce. Patiently, knowing that in time society always creates the
political motives that unlock gold's value hidden by the "illusion" of today's reserve currency system. In gold today we find this hidden wealth and observe the march of "Giant Footsteps" in a direction that's unlocking it's value. Still, in the end, society will use a currency system to denominate this wealth transition. A different system, yes, but a digital one never the less!

On the conservative side,...... "the dollar inflation experts" have witnessed the ebb and flow of minor price inflation events over 25+ years and base their preparations on the next event being the same. As such, this view expresses an expectation that this currency (the dollar) will continue on indefinitely in inflation and deflation cycles. It assumes the dollar system has retained the same
fundamental values it had in the past cycles and the world will continue to use it. Yet, hidden below the surface is the rot of massive dollar expansion and the debt that has produced it. Each cycle of economic expansion was built on a greater multiple expansion of dollars. All without an overall increase in productive abilities of the American machine. Indeed, some measures show that the ability of the US to produce goods locally has declined in real terms as they transferred a large portion of said production to other peoples overseas. A dynamic that actually further removes more economic function from backing the dollar money supply.

I submit that this modern "American Experience" of dollar production has completely overtaken the ability of this system to engineer "one more cycle" of regular dollar inflation!

For ourselves, we walk far away from these two concepts. In reality our position remains in the absolute center.

In our view, the buying of physical gold should mostly be form dollar asset holders because this is the currency system that is going to change. A strategy for both foreign and native dollar investors with foreign holders changing settlement to Euros.

Yes, history does show that no currency has ever lasted and all will fail. A point we completely agree with. However, recent history of our modern time clearly demonstrates that as every past national currency failed, the world economy moved on to the next functioning currency system. We have progressed too far in trade efficiencies for us to function without a digital fiat system. For our world, there will be no going back to "gold alone" Therefore, we fully expect, accept and plan for a reserve currency system to be in operation as the old one fails, and so should you. It's a prudent, conservative concept. In this transition, dollar gold prices will best reflect the hyper inflation that will wreck the outgoing system.

Further in our view, we feel that the dollar timeline has ended along with it's past "minor inflation" cycles (8% to 15%). This time a new price inflation will take hold and "run away" as the world evolves into the next system of settlement. Again, the dollar will remain the the US currency unit. America will continue to buy and sell using dollars, much the same as other countries with major inflation It's the reserve currency settlement system that will change and effect the dollar value.

Onward:

Why so much gold now and not before?

It's always been a good individually policy to hold some gold. Especially after circulating gold lost it's ability to function in a modern evolving economic architecture (1933?). Yes, over all these years, one aspect for holding physical is that a natural disaster, a local banking panic or short term trade dispute could find one using gold coins. However, this has always had a short term impact with long-term effects on wealth. Look around at the other national economies that have been destroyed lately (and in the past)? Go there and we find that they are still using the broken, local fiat systems. Had they held some of their savings in gold or strong major currencies, most of their wealth would have remained intact. So, holding some gold (or gold stocks in a foreign account) worked fine.

But today, the world has evolved. In our modern perceptions we hold gold for two reasons. 10% (of the reason) is still for use in a temporary currency breakdown. 90% (of the reason) should be for gold to represent your real wealth in a form that negates the effects of a "failing WORLD DOLLAR reserve currency system", not a just another "local" cycle of inflation.

It's in this second 90% reason that we find the most misunderstanding of our times. Many gold investors of "Western Thought" own some gold for the above 10% reason. The rest of their wealth is denominated in the currency they expect to survive the best, the dollar. In addition, they retain gold derivatives that owe their existence to a world "dollar marketplace". For many years they have lowered their holdings of physical gold and replaced them with these leveraged dollar gold derivatives. All because they accepted the concept that the dollar and it's world markets will remain intact through the next cycle. This massive discarding of real gold has altered the physical marketplace by supplying gold for commodity use and creating a demand for paper gold products. In effect, Western Players shorted real gold, then brought into gold mines that also shorted real gold! To date, the massive volume on the LBMA is a testimony and confirmation of this new gold market based on contract gold.

Again, on one side we hear a conservative voice that says the dollar will complete another cycle of price inflation as past money supply expansion works it's magic. Just like the 70s we will see prices rising 6%, 8% or even 13%. Knowing how money principles work, the average investor has but to position himself in "derivative inflation hedges", gold stocks, oil stocks, REITs and commodity futures. Then wait the cycle out. Expecting some inflation or a partial dollar breakdown, they consider themselves prepared by holding paper wealth based on a continuation of
the dollar marketplace.

Something has changed!

They totally ignore the fact that past dollar inflation produced price inflation, early on. Yet today, world dollar liquidity has grown at huge rates for many years (perhaps a decade) without this price effect many had expected. Some have been positioned, on and off in resource investments that have yet to produce the gains "relative" to those experienced in the 70s inflation. Financial panics come and go, yet dollar use has only increased. The US trade deficit explodes for years with no ill effects. Local and world dollar interest rates remain somewhat tame in the face of what should have been a panic flight from US investments.

All of this clearly points to a currency system that "WAS" being held together and supported by world Central Banks. There is simply no other answer for this action. As this support unwinds, look for the old rules to be broken.

We walk this trail today!

A rising dollar today is an indication of "deflation stress" under the surface. Players scramble to unwind positions as dollar liquidity dries up. The withdrawal of dollar settlement in world financing, savings and CB reserve structure destroyed dollars like soup on a slow boil. In time (like today, like now!), dollar exchange rates are driven up in much the same way the Yen is. The process
represents weakness in the background financial function, not strength inherent in the integrity of the currency. The reverse leverage in the market destroys more assets as the currency rises.

The US Fed must flood the world with money in order to stop the stress. It is! Indeed, the BOJ has and will follow the same course. It's called the final inflation.

The world dollar gold market we all thought we knew will respond in a way not expected. It will fail! Contract gold prices will be stressed from two forces........... From one side, major users of this paper market will flood the market to the full extent of their equity. Creating gold contracts out of nothing but the dollar bank accounts that stand behind them. Just as the Fed is pumping money to try and protect the banking system, so too will gold contracts be created to try and protect the gold banking system ................From the other side; As this unfolds, major demand for physical gold will erupt from official sources world-wide. Not the kind of coin buyer demand we know of
from the past. No, this is the kind of serious buying none of us have ever seen! As the "dollar boil" becomes more obvious it (physical demand) will completely avoid the contract market and go straight into the much smaller dealer market. In effect, allowing contract gold to experience a void on the "buy side" as physical gold completely disappears on the "offer side". Some "traders contend
that they will sell their gold if it goes into the thousands and buy a car, new house, etc.! This from "behind the desk" players that think they will lean back and observe the largest shift in real wealth ever to occur. And do so at a computer screen, no less. No, no they will not! We hear these words in the context of today's soft reality. Later, it's the extra houses and cars that people will be selling
to buy more gold. Believe It!

None of this has happened yet, or has it? From the Washington Agreement to date, all aspects of the contract market have become "strained". Major players have withdrawn from the physical lending markets and left behind a small facade of unbacked "paper lending". Hence the low lease
rates. Some mines are in default on major gold loans and Comex Open Interest falls away. I expect the comex to receive some major use when the next (real!) spike arrives. Perhaps from paper hedging paper? We shall see.

A Story: There are facts, reality and only one's perception separates them.

------A New York plumber walks into a hardware store for supplies. After paying and receiving his change, he accidentally drops a penny on the floor while walking away. The checker points out his lost penny. The plumber says he can't afford to pick it up. The checker asks why? My friend, he says I makes 60.00 an hour. That works out to .0166 cents a second. If I pick up that penny, I'll lose money. In fact, just talking to you cost me .20 cents. Let me out of here or I'll go broke!-------- (smile)

ALL: The world does not think this way, but to hear some people talk you would think it does.

---------When a stock goes from $10.00 to $100.00 the same day, it's reported it went up 1,000%. If it goes down to $50.00 the next day, it's said it dropped only 50%. Yet the investor that brought it for $10, just lost half his 1,000% gain, or -500% down! --------------

--------If we are told that a stock that's been falling for years and is down 95%,,,,,,,,,,often the same bullish trader has been in and out of that issue "all the way down". Most of us would agree that human nature being what it is,,,,,,,,,,, he lost far more than 95% on this long journey! In addition, the "mind set" created from this trip must affect ones judgement of wealth? Often making it
impossible to walk a different trail. ----------------------

I'm back into the sea of thoughts, now. Be back when I can,,,,,,,,,,thanks FOA





Cavan Man
To FOA
Welcome back to the forum friend. I have a theory on why the issue of inflation (in a conventional sense) is today irrelevent with regards PM advocacy. If I can get some time aside from the family and business I hope to share it here. I believe your thoughts are best. Kind regards...
Leigh
FOA
Good evening, FOA! I've been reading your last post, and I have two questions, please. First (and I've asked this before), if "big money" people already know the things you're telling us, why haven't they converted their substantial dollar holdings into gold? Surely at places like this Davos meeting they trade wealth-preserving tips with one another. But the spot price, and the fact that there is still physical supply available, isn't reflecting that huge buying has taken place.

Secondly, if Goldman Sachs and other banking executives know these things you're telling us, why are they still shorting gold? Why is the Fed putting on such a facade? Americans can deal with hard truths if they feel authorities are being honest with them. However, once people realize they've been lied to and misled, they're going to be furious! The material you sent from the WEF said that "elites will disappear" and constituents will be drawn in. Right now all I can see is that average people (constituents?) are being told a pack of lies.

Thanks for sharing your information with us.
pdeep
Currency Systems
It appears to me that history shows us that all paper-based currency systems suffer from the politics of force, and the force of politics. All Central Banks (and with the Swiss capitulation, I can be inclusive) have failed to provide a stable (measured in centuries, not decades) currency system. The temptation to perform the magic of money creation, and its resultant hidden tax of inflation is the "oil" of politics, especially for those nations that have embarked on large redistribution programs.

We don't need currencies based on nation states. We need a mechanism to settle economic transactions where the value of the transaction, calculated and encoded in bits and bytes, is linked to something real, and of value, based on its demand outside of the transaction function.

The only items at this time, in the past, that have admirably fulfilled this function are gold and other precious metals.

But its hard to move real items around as a basis for concluding transactions. Which is why the marriage of information technology and telecommunications has resulted in the ability to conclude such transactions, in bits and bytes linked to the metals themselves.

A privately run gold and precious metals-based economic settlement system such as e-gold is one of the only ways I can think of to avoid falling into another nation-state currency trap.

It's much cheaper than VISA or MasterCard, it is redeemable in real specie, and it's value depends on the outside market forces, not on political scams.

Digital gold *should* be the new "currency" of the future. The creation of "money" and "value" are much too important to be left in the hands of the kleptomaniac inept.

Guess I'll stop the rant.....
Cavan Man
To Leigh
I'll wager the smart "big money" is making the wealth preserving transition now. Remember, gold is a very secretive subject. Have you told a lot of other people you own gold?

Also, GS execs are no different than any other person you could possibly meet who cannot understand the reasons to own gold. In addition, their bread and butter is the dollar "loaf". They have much at stake and every incentive to maintain the status quo.

The EURO could not achieve what FOA projects on its own. No, a "hammer" is needed; that hammer is oil. Oil is the most important natural resource in the world with the exception of pure air and good topsoil. Here in the US, the price at the pump has been so cheap for so long, we take the availability of gasoline at the market prices we are accustomed to for granted.

What the FOA/Another "table" forecasts is so hard to believe because it (new monetary system) is a radical departure from anything most of us have even read thoroughly in history books. Perhaps you read a transcript offered by Aristotle from 1971 (Nixon) where the need for a "new monetray system" was openly admitted? I am sure you know that when you discuss economics with someone their eyes glaze over. When you launch into monetray theory, history etc., watch how fast they change the subject. I consider myself "well read" although a simpleton and never gave it (monetary study) a second thought.

It is good to see you posting. sorry for the rant.
Cavan Man
The Million Dollar Question
If you have savings locked up in an IRA, 401K or similar, do you buy gold stocks, oil stocks REIT's etc and hedge against inflation playing the sector rotation strategy?

Or, do you bite the bullet, take the tax hit and buy metal?

Can one be, "in the middle" on this one? I believe one must choose either The Stranger or FOA/Another. Which is it? Decision, decisions.......
Chris Powell
Three new posts at GATA
http://www.egroups.com/group/gata/350.html?What happened with the gold price Friday:

http://www.egroups.com/group/gata/350.html?


What's new at GATA:

http://www.egroups.com/group/gata/351.html?


Last August he wrote the definitive essay
on the gold market, "The Golden Pyramid." A
few weeks later he predicted the imminent
spike in the gold price. Now, with an essay
titled "Rich on Paper, John Hathaway of
Tocqueville Asset Management predicts the
next spike in gold and says it will be even
bigger than the last:

http://www.egroups.com/group/gata/352.html?


Leigh
Cavan Man
Hi, Cavan Man! No, you weren't ranting, but do you really believe the Abby Cohens of this world are clueless about the Euro, the U.S. debt, and other issues? That's their job! Don't you think these people share information with each other? I can't imagine that the Euro group is hiding something from the dollar group at the Davos meeting.

As for their buying gold in secret, many of these people have so much money (let's take Michael Dell) that converting even a part of it would shock the market.

I don't get offended easily, so please express your thoughts freely. I am very interested in what other people are thinking.
Leigh
Cavan Man's Million Dollar Question
Well, we took the tax hit (sold mutual funds), and my husband is absolutely in shock about how much we're going to have to pay in taxes! He never used to worry about finances until now. We are metal-rich and cash-poor.
Solomon Weaver
reply to RossL
RossL (01/28/00; 22:39:48MDT - Msg ID:23795)
Solomon Weaver - Msg ID:23789

Excellent post, Sir Solomon. Perhaps you could extrapolate on the following, as a lot of us have posted differing prognostications on this subject.

quote

"The Travelers interesting post at the beginning of the day gave me dreams of paying off my mortgage with my small investment of coins�I hope we all could but I must say that his concept as shown below is impossible because the world could not suffer that dramatic amount of dollar destruction and not see a lot of other things get out place along the way."

end quote
-------

RossL --- They say that you cannot teach an old dog new tricks. The problem I see is that the physical structure of the worlds financial institutions and millions of international contracts is based on a dollar system. There is now a great balance between those who have "contributed" dollars and those who "owe" dollars. If the dollar starts to crumble too fast, there will be massive defaults...which will cause severe lock-up problems. Such a severe chaotic episode is NOT THE TIME to convince THE WORLD to suddenly switch to the Euro...secondly, like refugees fleeing a war zone who can't bring the furniture, they would be unable to move their dollar assets (bonds) over to Euros (so in principle allow their bond issuers to default).

So, for the Euro to take power from the dollar, the transition must take place as a "controlled burn" (rockets use these too, however).

We may on one side say "yes, but even if we do not want it a great dollar crash can happen, consider too that the Ruble, once the great currency of the Communist Bloc also collapsed". Well, although it may be based on a massive debt expansion, we must all remember that the G7 nations and their cavalcade have just undergone a cycle of expansion which has seen a massive new investment in industrial, commercial, and comsumer infrastructure..in a derivative meltdown, these factories and apartment houses will not melt, ONLY THEIR OWNERSHIP WILL BE CONTESTED.

They say to find the truth, follow the money....well a massive amount of "ownership" around the world is denominated in dollars (at least the bank leins are).

Not only the American's will fight to keep some value in the dollar.....

So after a long winded answer sir L, I think that the relative value of gold against a currency basket might rise dramatically, and not really ruin the world trade, the devaluation of the dollar WILL NOT BE ALLOWED to progress too fast...because in the short to mid term, ALMOST EVERYBODY LOSES in this case.
Peter Asher
Leigh
Well done on getting out of the Mutual funds before the market tanked!!!! The fear of paying taxes is what keeps people in and riding all the way down to the bottom.

Marius
A fine novel about Sacagawea and Lewis & Clark
Leigh,

Don't know if you're familiar with this, but there's a fine novel by Will Henry called Gates Of The Mountains, which deals with Sacagawea in a most interesting manner. I won't spoil it by telling how, but it's a really nice piece of historical fiction. It's one of my all-time favorites.
Black Blade
Lamprey_65, and Cavanman......Why let science fact mess up a nice little myth?
Cavanman, the researchers that you refer to in msg. ID 23838 are Arthur B. Robinson and Noah Robinson who are chemists at the Oregon Institute of Science and Medicine. They also previously published their research with another individual named Zachery(?) in one of the general professional journals. Their research was based on atmospheric temperature based on data gathered from NASA satellites and weather balloons over a 20 year period. Over the same 20 year period, the advocates of "Global Warming" produced computer models that predicted an increase of 2 to 3 degrees Fahrenheit over the same time frame. Many of these advocates were also part of the "Global Cooling" crowd in the late 60's and early to mid 70's, of course they blamed Hydrocarbons. However, the predictive computer models, as with most statistical models can be manipulated where data is "filtered" for "best-fit" analysis. My contention of course is that any sustained "Global warming" is natural and not a unique event caused by man. But, why should we quibble and let the facts confuse a fine myth ;-)

Lamprey_65 ID msg. 23823 you wrote:

"Do some reading on the Greenland ice cores, or think about what happens when a closed system (in this case, the atmosphere) is unbalanced by outside influences. There will be (and I contend, there are now) consequences for those actions. This is not agenda inspired science...it's just science - the same science that created the computer you are now using. Don't confuse the science with how actions are taken because of its findings. Science created the possibility of the atomic bomb...politicians decided to build it."

"Global warming from greenhouse gasses (carbon dioxide and carbon monoxide) is real, REGARDLESS of whether some decide to deny the science."

I don't wish to take this forum too far afield from the topic of Au. But I will respond with a short synopsis of my background and the published research from REPUTABLE EARTH SCIENTISTS, and not "Junk Science" pushed by politically-correct "Chicken Littles" who may or may not have a particular agenda.

During a fellowship at a particular university in the Pacific Northwest I had been involved in research in consolidated and unconsolidated sedimentary strata dating from the Eocene, Oligocene and Miocene Epochs in the areas around W. Montana and N. Idaho. This research involved studies of the paleontology, paleoclimate, paleofluvial patterns and geology of the region during the recent geologic past. One thing is certain, warmer climates existed at these latitudes in the recent geologic past, long before the arrival of man (this even accounting for continental drift over the same time frame). A tropical climate (based on fauna/flora and palenology � fossil pollen evidence) existed in this area during the Late Eocene (about 20 million years ago) long before man and the industrial age. More recently man has been experiencing the rebound effects from the "Little Ice Age" (1250-1850). Significant rises in global temperature are a predictable consequence. The current level of global warming is real and natural. Climate is constantly changing, and has varied over any time scale chosen, whether as small as a decade or as long as a geologic era. Natural variability has been demonstrated to exceed any supportable estimate of human-induced variability. To suggest that man can cause such significant changes on "Global Temperature" is of course ridiculous. Also, geologic controls on climate are significant. Long-term changes can be demonstrated to occur congruently with tectonic changes, whereas short-term changes appear to be correlated with natural events such as solar variability, apogee and perigee cycles of the earth's orbit around the sun (such as the melankovich cycle approximately every 23,000 years), and periods of volcanic activity resulting in massive discharges of dust and gases.

I read the proposal for the National Research Council a few years ago. I was somewhat amused that it was endorsed by great psuedo-scientific minds like Robert Redford, Ted and Jane Turner, and Al Gore (self proclaimed inventor of the Internet). Meanwhile I along with 19,000 other professional earth scientists have signed the petition against the Kyoto Proposal questioning the methodology and the validity of the so-called "research". Attempts to engineer Earth's very complex climate before understanding natural controls on climate are risky, if not impossible. I know that this is a very short explanation of my position, but to go into detail would fill volumes, as the research regarding climate change is so vast and overwhelming. I am not sure what you are alluding to regarding the ice core samples in Greenland. Is this a study on the isotopic variances of carbon gases locked up in the ice sheet, or are you referring to the article listed below? BTW, the Greenland ice sheet has actually expanded while some other glacial ice sheets have declined. The following may be of interest to you:

Bluemle, J.P., J.M. Sabel, and W. Karlen, 1999, "Rate and Magnitude of Past Global Climate Changes," Environmental Geosciences, v. 6, n.2, p. 63-75.

Fischer, H., M. Wahlen, J. Smith, D. Mastoianni, and B. Deck, 1999, "Ice Core Records of Atmospheric CO2 Around the Last Three Glacial Terminations," Science, v. 283, p. 1712-1714.

Fan, S., M. Gloor, J. Mahlman, S. Pacala, J. Sarmiento, T. Takahashi, and R. Tans, 1998, "A Large Terrestrial Carbon Sink in North America Implied by Atmospheric and Oceanic Carbon Dioxide Data and Models," Science, v.282, p. 442-446.

Also, two books:

Moore, Peter D., Bill Chaloner, and Philip Stott, 1996, Global Environmental Change; Blackwell Science, Oxford, England, 244p.

Lamb, H.H., 1995, Climate, History and the Modern World: 2nd Ed., Routledge, NY, 433p.
elevator guy
@FOA
Thank you for sharing with us. Your insights are many and sharp, and provoke thoughts I have heretofore not had.

I have a question about the Forum in Davos. Is this Forum related to the Biliderbergers, or the CFR? Does it exist concurrently with those organizations, or is it one and the same, wearing new clothes? Does the Forum have an agenda for the unification of the governments of the world, or an interest in population control? You will have to forgive me for these questions, if they are out of line. Its just that I have an idea of TPTB akin to the Wizard of Oz, where the man behind the curtain pulls the strings that control world history to a large degree.

I must be upfront, and say that I distrust global organizations who feel it is their duty to impose their vision on the peoples of the world. I do not see this as a liberating force for the world, but only the begining of the one world government spoken about in the Book of Revelation, from which comes the false Messiah, and the mark of the beast. Earthly efforts at solving man's problems with man's methods invariably lend themselves toward this onw world govenment solution, however noble and altruistic their intent may be. It is a progression of events that will unfold sooner or later. The timing is the unknown part.

One more off the wall question- When the Forum moved into its new headquaters, did it retain the grass roof concept?
8^)
Black Blade
Goldfan re: MSG 23813
Goldfan: Far be it that I should wish for an increase in cocaine use for the good of gold, although I am Libertarian and therefore pro-liberty.

The article from Cherokee that I and SteveH reposted from KITCO posed an interesting situation and provided a frightening prospect. If the USG decided that gold was a threat to the dollar, or for whatever reason, then to ban gold ownership under the guise of the Drug-War would be in their interest. The "War on Drugs" is lost and has been lost since day-one. Even Ronald Reagan said: "You can't beat the free-market". By banning gold, the government would just create a new class of criminals....us! Besides, cocaine gives me the nasal drips 8-)
ORO
FOA - NWO - CFR Members
The CFR is the Council on Foreign Relations that was founded by JD Rockefeller. It was later built into the State Department in the same way the Soviet Communists were not the government by name but were so in reality. The committee running the party also ran the government.

In the US, the CFR includes much of the leadership of our government and industry.

In the current administration:
President Bill Clinton
Treasury Secretary (former) Robert Rubin
Federal Reserve Chairman Alan Greenspan

In the previous administration:
Secretary of State James Baker
Treasury Secretary Nicholas Brady
Fed Charman Paul Volcker

Previous Administrations
Secretary of State Zbiginiew Brzezinsky and his Economics undersecretary Richard Cooper
Secretary of State Henry Kissinger
President Eisenhower
President Kennedy
Secretary of State John Foster Dulles (also a founder)
President Carter

Banks:
Chase - David Rockefeller (of course)
Citigroup - John Reed


Far from trying to hide what and who they are or their goals, they say everything out in the open. They have the clear understanding that in a democracy of uninformed voters, who have the intellectual fortitude of baboons - because their egalitarian schooling ceased to put challanges to their minds in kindergarten - an insufficient number will be able to understand the concepts, and even fewer would take this to the point of putting a genuine effort in checking reality. Many of the religious leaders that try to open the eyes of their flock still find that they preffer them as sheep, since religious leaders fear that if the sheep could think for themselves they would not be following their leaders.

The US has a "Politburo" and it shares in function and in ideology much of the essence of the communists. The Davos forum is a broader meeting place where these people of the various national and regional "Politburos" meet with the rest of the party faithful. It is where the slogans for the people are determined, and the spoils of plunder are decided and distributed.

For some reading from the horses mouth take up any of the papers from the Trilateral Commission's Annual Meetings.

Brzezinski - "Between Two Ages: America's Role in the Technetronic Era", (1970) Greenwood Press, Westport CT.

Richard Cooper - Any of his articles in the International Studies Journal, Foreign Affairs
------------

A final note to this post:
The people of the CFR are diverse and follow various agendas and interests. However, the opportunities they see are the same for all, and the mantras required to get people to agree to this are the same for all. As with all organizations aimed at coordinating power, the CFR has its share of ideological divergences and cross-purposes. It contains the misguided victims of Oxbridge educations, as well as the mercenaries and profiteers who intend to profit from the actions.
Would a banker ever consider subsidizing his enemies if he did not expect to gain control over them by their habit of dependency? Would the concious free socialists ever pass an opportunity to use their enemy to provide them with funding and organization? It is only a question of who is doing a better job of defrauding the other. Needless to say, among the ranks of Bankers and Socialists we may find the best perpetrators of confidence games.

Leigh
Marius
Thanks for the tip about the Sacagawea book. Just thinking about Sacagawea/Lewis and Clark has made me want to run down to the library to borrow the Ken Burns video again!

ORO, I know what you mean about these groups putting their agenda out in the open. Clinton certainly has no qualms about stating his goals of turning our country into a socialist state ASAP. What do you think about the Fed's mantra of "There is no inflation on the horizon." Or Abby Cohen telling CNBC viewers to invest in financial institutions (I saw her do it the other day). Is their deceit considered "necessary" in order to fleece us all so that we'll accept socialism?
Cavan Man
Leigh
I've asked FOA several times what he thought the USD camp might be planning in response to the FOA/Another Thoughts. Regarding AG, he did say in so many words he was doing what he could with the tools he had. As for the rest of our "leaders", who knows; I hope they are reading this forum. BTW, MK said they are (USN and FBI have hits here I think he said).

Maybe this is the answer:

The people you refer to might not be very leveraged with debt to assets. They will continue to be in positions of wealth and power and have the least to lose. If there is Weimar style inflation for a short time (I don't belive that), those at the top will probably consolidate their gains and move on. Don't expect the American "third estate" to express extreme dissatisfaction. Heck, most don't even vote.

Did you really close out your IRA's?!
18KARAT
Re: goldfan (1/29/2000; 11:37:33MDT - Msg ID:23814)
Fannie Mae & Credit Cards
Give me a couple of days to research your prudentbear reference
and also to read up on Fannie Mae.
This is a peculiarly US institution.
We have nothing like it here in Australia.
I did have a quick look at that prubear reference a few days ago
and it did not make much sense to me.
I'll get back to you.

In my country, credit cards are generally issued by banks.
But I would say that if the money is borrowed on the money markets,
say by selling mainly 30-90 day paper,
and then lent to credit card holders,
Where credit cards are rolling lines of credit
with a payment cycle of typically 1 month,
then the card issuing agency is probably acting primarily as broker and underwriter.
It should be possible to get very close to the same loan duration profile
as the average credit card junkie,
using a combination of paper of different durations,
and debt-swap instruments.
The duration risk would be almost perfectly hedged.
Thus you would be getting almost perfect pass-through of the loan obligation
from the credit card debtor to the ultimate purchasers of the paper.
No risky credit-creation by the credit card issuer would be required.
Cavan Man
The CFR, Bilderbergers and the Davos Power Breakfast
These people come out of many of the same schools as ORO pointed out. They have similar backgrounds in many respects. They also have similar ambitions, generally speaking. What is said about "birds of a feather"? They have so much in common it would be unreasonable not to expect them to, "flock together". That they are leading world figures of lesser and greater stature does not make them any different than tappa keg of beer hwever different their agenda might be. There is nothing sinister in all of this IMHO.

As for me this morning, I am taking my family to church to worship The Lord and then watch the Rams beat the Titans! Have a teriffic day to all.

Thanks FOA.
Leigh
Cavan Man
No, we still have retirement funds in the stock market. Plus, we have some high-performing Janus and Berger funds that are very dear to my husband's heart. Most of our easily-cashed-in stuff is gone, though.
USAGOLD
New Age Responsibility Transference Syndrome
The latest Wall Street Underground (Nick Gaurino) lays out an interesting scenario. Much of the money created by the Fed over the past year, says WSU, has gone into stocks in the form of margin loans. The very same margin loans, I am sure, that Alan Greenspan registered his concern about at last week's Congressional testimony. The Fed creates and laments.....creates and laments -- like the alcoholic who can't put the bottle down. The problem is all the short term money -- repo money -- created in the last quarter of '99 which is supposedly going to be reeled in duirng the first quarter of 2000. Here's the problem: Most of that high charged, super smooth money has gone to purchasing stocks and mutual funds. So how do you reel in money that might no longer exist? -- as in "I just got my mutual fund statement and I can't believe that I'm actually losing money...What the heck happened to those high tech stocks?" "Reeling in" could equate to "crashing."

Then there's the story of the Indianapolis medical student, found prominently in this morning's Rocky Mountain News financial section, who lost everything he had in his Ameritrade account and in the process raised a furor in the on-line trading business. Seems a NASDAQ arbitration panel sympathized with the med student's complete misunderstanding and incomprehension of the uses of leverage and made Ameritrade restore his position -- some $40,000. (Look out on-line trading houses -- INCOMING!! INCOMING!!!)

His lawyer, Mark Maddox, explained that his client's lack of knowledge was at fault: "When you don't fully understand what margin is all about and you tend to think of it like a credit card or your mortgage, you can be in for a rude awakening." Credit Card? Mortgage? Please tell me you're kidding, Mr. Maddox. So we are now to believe that our med student had no knowledge of what he was getting into? He borrowed money not understanding the terms by which it would be repaid? And of course, that's the brokerage's fault. We no longer need worry about personal responsibility in this country. It wasn't the investor's greed at the root of this but the inability of Ameritrade to get their hands on the guy, look him square in the eye and tell him he's gambling with his tuition money. Whatever we do in modern America is not only forgiven; it is covered. Remember that and keep handy the phone number of your favorite tort attorney.

Then there is this bit of brilliance passed along by Counsellor Maddox: "The big mistake that Ameritrade made, and that (my client) made, was having a margin account to start with. If they had limited him to the cash account, we probably would not have had this problem." The fact that every margined loser could make this claim is, of course, lost in the New Age Responsibility Transference Syndrome which bleeds the times.

Take note, the benevolent sharing of the blame, the judicious use of the word "they." Then consider that anyone can have a margin call, because just about anyone can (and probably has) borrowed to the brim to take advantage of the never-ending, Fed-sponsored stock mania. You don't have to be wealthy. You don't have knowledge about stocks and bonds. You don't even have to be lucky. You don't have to have anything but the point and click modus operandi.

And Mr. Maddox, please send me a stack of you cards. I'm attending a major Yuppie Get Together next weekend. By then the pain could be acute, and there's plenty of Transference potential, as you might have already gathered.

In the meantime, Mr. Gaurino could be right. With more sheep out there hung up on the fence than you count, what happens when those margin calls come and there's no money to meet them. I remember back in the 1980s when someone in the real estate, banking or oil business went crahing down in financial ignominy (as interest rates went up), the refrain always was: "He was leveraged to his eyeballs. And that's what happens when your leveraged like that." This time around though, all you have to do is prove that you never understood what you were doing in the first place and somebody else will pick up the tab.

We'll leave this subject with a final quote from our Mr. Maddox who seems to have learned something from all this:

"The guy (my client) was flying by the seat of his pants in a very wild market. I think that hurt them (Editor's Note: Please note once again the judicious use of the word "them" not "him."). It was also shown that Ameritrade would extend margin to any adult with a heartbeat and a $2000 account. The arbitrator was convinced not everyone is suitable to be extended margins."

So now we begin to contemplate the social consequences of a mania gone bad. Why, comparatively speaking, do I think that the consequences of this case will be mild? The case of the Atlanta day trader who shot up his Full Service Day or Night Trading Firm with Professional in House Guidance comes to mind. It was the Professional Guidance part that took the blame for that one -- at least in the murderer's eyes. After all, personal responsibility is a thing of the past, and with it, commmon sense.
goldfan
Chaos Dynamics and the World Economy
Chaos Dynamics and World Economic Order

Chaos theory applies to the interaction of matter and energy, seeking to better understand reality as it appears to us. The mathematics is demonstrated by the basic equation yt = f(yt-1) of what are known as recursive systems, where the output of one phase becomes the input of the next phase.

For example, Y= a cos t describes the motion of a pendulum. The coefficient a is the amplitude, the height the pendulum swings to, and t is the period, the time for one complete swing, out and back. The energy in the system is represented by a, the height to which the pendulum swings. Once it is set going, the pendulum will keep on swinging steadily. Unless it is disturbed or slowed by friction it would swing this way forever, a completely stable system.

Now suppose we give a little push to the pendulum at the top of each swing. This introduces a bit more energy each time it swings. At first as we do this, the system still appears stable , although the pendulum is swinging faster and faster and, because it has more energy, higher and higher. Eventually, at a point which is not predictable in advance, the energy contained in the system gets too great for its container. The pendulum becomes unstable and breaks down in chaos. It may swing wildly over the top of the bar, and start oscillating then in a different direction. It may destroy its supports completely and die.

In the pendulum system, we could consider the output of the system to be the energy in the system, which shows up in the height of the swings, or in its maximum speed at the bottom of each swing. So when we add a little push, this new energy, plus that which it had before, becomes the input to the next swing, increasing height and maximum velocity.

Whenever the energy of such a system becomes too great for its container the system will enter a period of chaos and its structure will then break down into a new order capable of containing the energies, or, it will collapse and the energies of its elements will dissipate. The former is called deterministic chaos, and the latter, entropic chaos, like death.


Economic Systems

Flow of:
TRADING BLOCK A _goods/services___ B TRADING BLOCK
TRADING BLOCK A>>>>>>>>>>>>>>>>>>B
currencies


Barter, Currency and Loans
The economic system will be stable so long as goods and services flows are matched between the trading blocks. Currency flows are a means of facilitating stable trading, stable production and service entities, If there is a deficit in trade between blocks, a loan is created to offset it. Imagine that I buy a car from you, and you put the cash in a drawer, don't use it to buy some good or service you need . Really, you have loaned me the car until you spend the money. It's the same as if I didn't pay you until you asked for the money, or until you came to me and said, now buy me a car or a computer to pay for the one I loaned you last year. Suppose the money I gave you deflated to nearly no value in the time you were hanging on to it. It would be the same as if you had just loaned me the car.

In trading systems, barter is the only reality. All the rest is an illusion put in place to "manage" the system for stability until the exchange is "settled" by completing the barter.

Deficit Inflation
If the deficit between trading blocks persists and grows, the loan grows. The longer the deficit persists, the greater the loan. Currency in this sense is like energy. It is stored energy. The system is gaining energy as it gains in outstanding loans, not paid for by reverse flow of goods from borrower to purchaser. Eventually, if the loan balance is too great, it cannot be made up by the productive work of the borrower and purchases by the lender. Furthermore, the interest payments will consume larger and larger portions of the borrower's capacity, exponentially increasing the loans. The stage will be reached where the system will begin to break down in chaos, and a new order will have to emerge, or the respective societies will disintegrate. Remember the 500 years of Dark Ages after the Fall of Rome, and what is happening Russia today.

Middle East Oil
Up to now Middle East Oil for $US has allowed the loans of goods/services to grow and remain unpaid. In effect, they are being paid by the Arab willingness to trade oil for dollars and a bit of gold, and protection by the costly (more debt) US army. In effect, the US has been settling its trade imbalance with Arab oil. The situation is no different than if the oil had been produced within the borders of the USA, except for the flood of $US created that now threaten stability of the system.

Financial Systems and "Apparatchiks"
Hedging and derivatives, and massive daily currency transactions, in what looks like gambling, all the vast apparatus of international banking, is an elaborate and not understood mechanism for maintaining the container for all these energies of world-wide work and production. It is a recursive system, subject to chaos, where the output of today, becomes the input for tomorrow. I believe it was the major mathematical thinker named Ilya Prigogine who demonstrated that large systems such as this, can unpredictably enter chaos, and develop a completely new order which will not be capable of being understood, in any acceptable meaning of that word.

Predicting the Collapse
As it starts to break down, the system should show signs of increasing "out of bounds" oscillation ( in chaos dynamics, a change in fractal dimension). I don't know where this would show up in financial systems, maybe in such stuff as higher and higher % range in daily stock indices.

Can this "banking apparatus" container hold much longer...??

Note: I purposely left gold out of this. It seems obvious that if currency settlements were done with gold, the whole system would have a "damper" that would enable productive capacities to get in balance sooner and the container would be better able to avoid utterly destructive chaos.

In this article I'm attempting my synthesis of what I've been reading by ORO, and SteveH, and Aristotle, and FOA and many others at USAGOLD.com, If there are any mistakes, they are mine, not theirs. I remain very grateful for the thoughts of all at this site.

Goldfan
goldfan
Margin Calls
A consideration on having your "savings" in the stock market...If the brokerage firm goes bankrupt, which many do in a really severe shakeout, then all your stock certificates become the property of the firm's secured creditors. You get to be an unsecured creditor, stand in line for the residue, if any!! In Canada recently, all the big banks have spun off their brokerage operations into stand alone subsidiaries so they can work this scam. When the collapse comes, the banks will wind up owning your stock, whether margin account, or fully paid for by you. All this because stock certs at the broker are usually held in street name, not your own name.The oply way to protect yourself, is to get the certificates registered to you, and keep them at home.

FWIW

Goldfan
DIRECTOR
Off Subject
Hello to all. Can anyone tell me what the Web Site is for (Adobe Acrobat Reader)? So I can download thier software.
Thank You.
TheStranger
Items
Cavan Man - One does not need to cash out of an IRA to buy physical gold. That prohibition was lifted a couple of years ago.

Leigh - A. B. Cohen is just wrong, that's all. She never saw the bond bear market coming. She never said most stocks would decline in 1998 and 1999. She is a very bright, highly regarded analyst who, like Alan Greenspan, is on the verge of appearing human again.

Goldman Sachs is probably a buyer of gold. If I am not mistaken, they have been an active bidder at the BoE auctions. In fact, their gold analyst recently forecast $375.00 gold for this year.

Michael - Your post about online trading reminds me of something. Since 1934, all registered representatives in the United States have been mandated by the S.E.C. to abide by something called the Know-Your-Customer Rule. This rule requires that all new brokerage clients be routinely grilled using such questions as, "what are you worth?, what kind of experience do you have?, what is your salary?, what are your investment objectives?" and so on. Thereafter, when a client is seen to have taken undue risk, the broker is often considered to be at fault and may be required, through arbitration, to make the client whole. With the advent of online trading, these precautions seem somehow to have been abandoned. But I suspect we are only one bear market away from rediscovering them. Unassisted online trading will be shown to be just as unwise for many people as a prescriptionless online pharmacy might be.
SteveH
Director
Leigh
Black Blade
www.robinsoncurriculum.comDear Black Blade: Your post this morning mentioned Dr. Arthur Robinson and his sons Zachary and Noah. Homeschoolers are very well acquainted with their story. Dr. Robinson's wife died suddenly about 12 years ago, leaving Dr. Robinson with six young children. He has homeschooled them all, with astonishing results. They actually teach themselves, with slight supervision from their dad. The older children's SAT scores were almost perfect. (The younger kids are still learning at home.) They graduated from college in two years, earned graduate degrees, and are now doing research with their father.
koan
on line trading
Hi Stranger: you are right there is going to be extreme volitility in the mkts of the world because most investors will get exuberant; but we can never go back. The future is that the whole world will be trading the whole world i.e. all the people in the world will be trading all of the mkts of the world around the clock, more or less. The internet has actualized Marshall Mcluens Global village.

I am a US citizen and trade mostly Canadian. I am starting to look into England, Hong Kong and Australia. On another note have you been watching platinum and palladium - they look ready to blow through $500. And the silver warehouse stocks are only 73 million the lowest I can remember. Up to this point I have been playing only really good exploration stocks like MAI, PVO and IP, but am watching ral close and ready to move into all of the metals. Regards.
FOA
Comment
ORO, Cavan Man:
I put the Dravos web site up so everyone could see what they were about (at least some of it). I'm not in their mind set nor do I agree with some of their ideals. It's just a view into their forum agenda.
Also, they are in no way the powerful minds behind the worlds political thrusts. They mostly represent the viewpoints of the major players behind them. It seems that the real movers in this world don't look good on TV, can't talk to audiences and in general do not present their thoughts well. They usually present an agreed architecture concept and leave it to the professionals to implement. At least this is my view and experience of this?

Cavan Man,
What is the USD camp response? Well, the fire has been burning from march of last year. It started small (in the basement) and is spreading now. I think Mr. Greenspan has been trying to put it out with a money spray, but he and everyone else knew that would only work for so long.

We said once before that the game was over and the US would "manage" this crisis to the end. Even to the point of forcing the IMF gold sales into open view and creating a contentious outcry. If you remember, I said last year that the US was coming around to letting gold rise because it's
revaluation could help control the dollar fire. Just like turning around a tanker, the political dollar machine had to slowly reverse to encourage this. Did they know congress would jump on the IMF gold sales and force a revision? It's your guess. Never the less, the IMF is now well on the road to reworking (even more now) it's gold stocks for the purpose of supporting the dollar with higher gold prices.

What a reverse, huh? For years they want gold down, now they want it up. Well, it had to happen once the dollar fire began to burn out of control. Besides, with oil prices spiking, there is an obvious (now) disconnect between low gold prices and cheap oil. Want to bet that the creation of
the Euro had anything to do with this? (smile) Notice that they (USA) signed onto the Washington Agreement. They didn't have to, you know. Are we reading the trail clearly, now?

The only players left in the paper gold market are the final fall guys. All the LBMA people. They now hold the full deck of cards in this modern gold market and the CBs and governments have walked away from them! Yes, their (CBs) support is still there, but only in the form of crisis
management if gold runs completely away. Witness the small CB lending at the height of the last crisis. Truly, the entire world currency architecture is shifting away from supporting the past paper gold market and allowing it to slowly die. At some point (Another says $360) it will begin a real breakdown and close it's doors to trading.

Just as the Fed is now "managing" an all consuming dollar fire, so will the last of the gold bankers "Manage" their now ongoing fire. Eventual, it will take them completely out of the gold banking business and leave a wake of scorched earth. Everyone (and I mean everyone) that must utilize gold derivatives to work this modern market will be hurt by this. Even some major players are showing the road ahead as they must unload big positions in gold derivatives (last Friday) because of (you guessed it) this dollar burning crisis. And we are only just getting started! Who is going to bid for future gold (paper gold) when it's delivery party is being cleaned out on the cash side from an unrelated play? Indeed, will anyone bid for paper gold when they themselves are being skinned in this? You see, there will be no security in dollar gold derivatives when the whole dollar house is on fire. They will bid for metal that is available "right now" or not bid at all! Only the "straight up" "cash bullion only" dealers will come out clean and strong in this. Is this a correct read of the cards all the players are holding? Let's hold some physical, lean back and watch the events unfold. We are "on the road", but the paper prices we watch may spike either way. It's now a political match that's between who can manage the fire best as it finishes it's work.

Back to the dollar: The Europeans are going to eat everyone's economic lunch with this low Euro! Just think, the markets have done for the ECB what the BOJ has been fighting like hell to achieve. Now, they (Japan) must gut their financial system with a "real live inflation" just to get back to a competitive zone (currency wise). Read this analysis someone sent me and then consider that some investors thought Japan was a good play:

-------------------
Japan to Turn to Direct Loans From Its Banks

Jan 30, 01:46


TOKYO, Jan. 28 -- In a striking demonstration of how precarious Japan's financial situation has become, the government plans to borrow money directly from banks to fulfil its obligations to local governments.

Governments normally borrow money by issuing bonds,which is cheaper than taking out bank loans. Japan's unorthodox approach to borrowing now and the size of the shortfall -- 8 trillion yen, or roughly $76 billion -- have stunned economists and other market watchers. With one small exception, this is the first time since the days after World War II that Japan has taken such a step.

The amount is equivalent to roughly 2 percent of Japan's gross domestic product, and exceeds the 7.7 trillion yen the government has injected into troubled banks.

"The funding mechanism is breaking down," said David
Asher, a research fellow in the Japan Program at the
Massachusetts Institute of Technology. "The dam is showing more and more stress fractures, and they're trying to put plaster on them."

Concern is rising that Japan is overextending itself. The government's debts now match the country's G.D.P., and Merrill Lynch is predicting a rise to 150 percent of G.D.P. in two years.

The skyrocketing debt, justified by politicians as a way
to keep a faltering economic recovery on track, is
increasingly a point of contention within the ruling Liberal Democratic Party.

But by side-stepping the traditional reliance on the bond
market, the new borrowing has placed a stark new emphasis on this crushing problem.

"By not issuing bonds, by taking on an intermediary like
a bank," said Jesper Koll, who is chief economist at
Merrill Lynch Japan and is typically upbeat about
Japan's prospects, "you are basically saying one of two
things: either you don't believe in the efficiency of
the financial markets or you're admitting you have a
credit problem."

Now, Mr. Koll said, the government runs the risk of
replicating, on a smaller scale, the trap that brought many Asian economies to their knees recently. "There's a mismatch because they're planning to borrow one year loans, but the municipal deficits are not going away in a year," he said.

There are signs, too, that the government may expand its
borrowing from banks, which are healthier than they were
two years ago. A Finance Ministry spokesman said there
were plans to cover shortfalls in another, unnamed "special account" this way, though the amount in question is far smaller.

The banks, for their part, are likely to welcome the plan. Although the Finance Ministry spokesman stressed that terms had not been set, the Nihon Keizai Shimbun, Japan's leading financial daily, said the government planned to pay 2.1 percent interest -- a handsome premium to the 1.6 percent the banks could earn buying government bonds.

Andrew Smithers, a prominent fund manager, is one of the
few experts who put a positive spin on the plan, saying
it will get more money into circulation, which many
economists have advocated as a way of curing the economy's ills.

Because loan demand is low, banks have too much money
sitting idle. "It's a good measure," he said, "because it further eases monetary policy and relieves pressure on the bond market, which will help lower real long-term interest rates."

Japan has been suffering from a classic "liquidity
trap": while an exorbitant amount of money is available
for lending, companies and individuals are not borrowing
as they try to reorganize their activities. Thus, the
money is bottled up in the banks, idle.

While most people see the move as a sign of government
desperation, it may also help some banks facing shrinking loan demand.

Masaaki Kanno, senior economist at J. P. Morgan in Tokyo, is also unconcerned. "Japanese commercial banks are the largest buyers of government bonds," he said, "so there's really no change."

The government is battling to keep its ballooning deficit in check in the face of continuing signs that the economy is addicted to stimulus measures that require more debt.

In a speech to Parliament today, Prime Minister Keizo
Obuchi said getting the economy on its feet would take
precedence over paring the national debt. "Fiscal reform
is important," he said, "but we cannot commit the
mistake of undertaking it while the economy is not firm
and before it is on the path of full-fledged recovery."

Yet highlighting the discord within the government,
Finance Minister Kiichi Miyazawa bemoaned the fact that
the proposed budget would push government debts to 645
trillion yen, or $6.15 trillion.

Economic prospects are not bright. The Japan Center for
Research estimates that G.D.P. fell by 1.6 percent in
the latest quarter, suggesting that the government will
have trouble meeting its target for 0.6 percent growth
this year.

Hiroyuki Inoue, the center's senior economist, said the
figures demonstrated that when government public-works
outlays end, the economy falls right back into the
doldrums. "After the effects of government spending
programs faded last summer," he said, "the economy
slipped back to the level it hit in 1998."

He expects the situation to change as the latest stimulus package starts kicking in. But the center's figures still suggest that the economy is far from able to sustain itself, even though Mr. Obuchi promised today that there would be no new spending beyond the record $810.8 billion budget he has proposed.

The Finance Ministry spokesman said the decision to borrow from banks rather than float bonds was merely an effort to segregate the funds, which will go into a special account for local governments.

He said it had nothing to do with the government's ability to raise money, an assertion confirmed by two recent bond auctions.

But that makes the plan even more puzzling. Economists
speculate that the government is wary of issuing more
bonds than it has to, fearful of jeopardizing any
recovery by pushing long-term rates higher. "They're
afraid of upsetting the bond market," said Ronald Bevacqua, senior economist at Commerz Securities in Tokyo.

The government also wants to avoid drawing additional
scrutiny from credit ratings agencies. Many economists
say Moody's Investors Service, which withdrew its triple-A rating of Japan's sovereign debt last year, is poised to downgrade its assessment even more later this
year. Standard & Poor's, though, recently reaffirmed its
triple-A rating.

The ministry spokesman said the new plan was nothing
more than a response to the fact that traditional sources of financing have fallen short. The government has traditionally been able to tap the 253 trillion yen postal savings system, but many 10-year deposits will mature soon, leading many economists to predict that money will flow out of the system in search of higher returns. The post office in Japan is the de facto largest bank in the country.

The spokesman stressed, however, that the outflow should
dwindle after two years, at which point the government
might be able to dip into it again.

Similarly, Mr. Koll noted that the post office took in
1.1 trillion yen in new deposits last month, suggesting
that Japan's ever-so-cautious investors may prefer earning 0.28 percent over 10 years to risking their life savings in the market.

The decline in tax revenues coupled with a decreasing
ability to tap the postal savings system left the
government with a gaping $76 billion hole when it came time to give local governments their share. "Can they keep spending money to cover the deficits of the local
governments and in the pension system?" Mr. Asher asked.
"If the answer is no, there's going to be a crisis."

The government has resorted to direct borrowing at least
once before, to cover shortfalls in a special account for national forestry projects. But the account for local government is different, said Kunji Okue, an
economist at Dresdner Kleinwort Benson in Tokyo.

"Borrowings for national forestry projects are used to
manage and cultivate national forests and parks and can
thus be viewed as an investment expense," Mr. Okue wrote
in a recent report.

Also, he noted, the amount borrowed for the forestry
account was far smaller. "This is the first time since the end of World War II that Japan has undertaken large-scale direct borrowing to cover recurring expenses," he said.

The last time the United States resorted to a similar
move was in 1893, when J. P. Morgan provided gold to help the Treasury.
-----------------------------------
C Man,
Now that the Euro has become even more competitive with the dollar, the US trade deficit is going to literally explode! And this is on top of a cascading dollar system that is forcing the Fed to pump money! And now Britain is running straight for EU membership with all that implies for the US dollar system. You tell me if this doesn't mean they are managing a gold banking crisis with their sales. If they join before a gold market failure, then "England in Euroland" will be the end of dollar gold banking as we know it! Believe it! Here is a real shocker:

------------------------------------------
Blair Accused Of Planning Euro-Superstate

Conservative leader William Hague says Tony Blair and Brussels bureaucrats are pushing ahead with plans to create a European super state. Mr Hague argued that European Commission proposals published this week could lead to further EU integration, and a limiting of member states' right to use their national veto.

But Mr Hague rejected Mr Blair's accusation that the Tories wanted to quit Europe. Mr Hague told the Council of Europe's European Democrat Group that the EC's proposals for the Intergovernmental Conference later this year let slip its integrationist ambitions.
He said :"They are pushing for a European Union with its own government, its own army, its own taxes, its own foreign policy, its own criminal justice system, its own constitution, as well as its own currency - in other words, a single European state.
"The submission is an integrationist wish-list - the blueprint for a single European state." Mr Hague said the EC wanted to expand the use of majority voting to push through policies which a minority of countries did not back. He said: "The national veto would be abolished in areas such as aspects of social security, social policy, industrial and transport policy, financial regulation and the spending of the multi-million pound structural and cohesion funds." The blueprint was not an "isolated document," the conservative leader warned.
He added: "It comes alongside moves to build a European defence capability independent of Nato, and a common foreign and security policy which the EU's High Representative concerned calls the 'integration project for the next decade'."

---------------------------------
Also read the Dear "investor letter" at http://www.prudentbear.com/markcomm/012600.htm

And read the Golden Sextant for a different view
http://www.goldensextant.com/commentary7.html#anchor10737



I'll get back when able
Thanks for reading and thinking,,,,,,,,,,,,,,,,,,,,,FOA



Cavan Man
Stranger
Thanks. I have investigated how to do it. I do not feel comfortable knowing I have merely a receipt of ownership when so many larger players are so very short. Call me paranoid I guess.
TheStranger
Cavan Man
If I were you, I would swallow hard and then buy the gold IN the IRA. An IRA accumulates wealth at a much faster rate than do non-IRA dollars, yet one can only contribute $2000/year. IF you remove IRA dollars to catch a major bull market in gold you may make a profit. But forever after, those dollars will be exposed to taxation. Why cut off your nose to spite your face?

At least, if you are cynical about investment company motives, it behooves you to find a reputable firm with deep pockets. You'll do alright.
lamprey_65
Black Blade
I agree, let's continue to pump our man made carbon gasses into the atmosphere at ever increasing rates - we can decide which side of the argument is right 100 years or so from now (when our data and science is better and we have more emissions to measure). No sense in making any decisions based on theories that have the slightest chance of being wrong, after all, common sense is not scientific. Raising the levels of greenhouse gasses ABOVE AND BEYOND any natural increase may just save us from the next ice age!

Also, reducing the emissions might cost business some money...like that legislation that cleaned up the rivers and the air - what a wasted effort that was, but business did try their best to drag their feet on that too.

Remember, "the business of America is business" - everything else takes a back seat, just ask the WSJ.

Lamprey
TheStranger
koan
Yowsa on platinum, palladium and silver! Had it not been for Friday's Yen/Aussie Dollar trade, I think gold would have had a good day. Here is an email I sent my Dad last night which sums up what I have learned this week:

"Insurance companies like to buy 30-year bonds. Some policies are
evidently structured on 30-year yields. With the Treasury retiring those
maturities, they are beginning to take on supply/demand characteristics
which differ from the rest of the curve. No other country in the world, I
am told, issues anything beyond ten years. No U.S. bonds at ten years or
less have inverted with one another, yet, although that may very well be
coming. Among others, Kathleen O'Sullivan, CNBC's Bond Belle, made the
point on Friday morning that various [strategists] have already begun
regarding the ten-year bond as the new benchmark because of this phenomenon.
If the Treasury continues to retire enough debt, the street will have to go
back to using a corporate benchmark one of these days like they did before
the 1970s. I am sure you will be hearing more about this in the weeks to
come.
Despite what I have said above, Friday's strength in bonds and the
dollar both resulted from very heavy hedge fund activity. Credit spread
positions which involved large shorts in the Treasury markets and large
longs in higher yielding foreign bonds and corporates were being closed
because the inflation news indicates the possibility of a more aggressive
Fed going forward. The drop in gold happened when a large hedge fund which
was long the yen and short the Australian Dollar closed the position. This
pushed up the Australian Dollar 5% on Friday triggering Australian gold
producer sale limit orders which were already in place "above" the market.
The whole drop was over with in two minutes at midday and had nothing to do
with inflation expectations (thanks, sippin). These hedge fund operations are a nuisance, of
course, but we all have to live with them.
Like you, [Dad,]I have no bullish conviction on the Euro. There is, however,
more to its weakness than meets the eye. European bond issuers have been
issuing new Euro-denominated debt for a year now and buying dollars with the
proceeds(thanks, ORO). Then they use those dollars to retire their older
dollar-denominated debt. I don't know how long this process will go on, but
until it reaches cash flow equilibrium, it will continue to depress
Euro/Dollar. This is why Euroland's leaders seem as unconcerned as they do.

The 10% drop in the dollar against a basket of currencies since
September 1998 is mostly yen-related, to be sure. IT IS IMPORTANT TO
REMEMBER, HOWEVER, THAT IN A REINFLATING WORLD, THE RELATIONSHIP BETWEEN
CURRENCIES IS IMMATERIAL TO ME. What is material is how all of them relate
to gold...

...Whether the Fed will act as
decisively as Friday's markets seem to expect is still debatable. This
being an election year, and with Greenspan's reappointment in the balance, I
kind of doubt it. In any event, it is now too late to completely negate the
rising inflation I warned you about over a year ago (while [guys like Lawrence] Kudlow [were] off in
dreamland, by the way).
A crash in the markets would, of course, throw everybody's forecast for a
loop, so we will just have to see what happens.

By the way, on the markets, with miserable earnings reports at Dell, Lucent,
Compaq, Intel, Lexmark, Qualcomm, Xerox, IBM, Amazon.com (which is even
announcing layoffs), etc., I think tech investors have been given a real
wakeup call this month. Meanwhile, guess where the $22billion dollars in
new margin loans got invested last month."
lamprey_65
MK - The Margin "Misunderstanding"
Here we go, now people don't want to be held accountable for their trading decisions. Unbelievable.

It has been my opinion for some time that this is THE major crisis facing the United States - the inability of citizens to take responsibility for their own actions. You can see it in a miriad of forms, from the example you gave us today, to the abortion debate, to gun ownership, to a populace looking toward the federal government for all the answers (notice how education is becoming a main political topic in this year's presidential race...with the two candidates in one of the parties tripping over each other over how much they will "give" us).

Our representative democracy is shot - I've thought this for some time, but now I just shake my head and wait for the
the majority to give away or deny any semblance of freedom (and responsibility) they have left.

Tyranny will arise from this, out of which will spring our next revolution.

Lamprey
goldfan
FOA (1/30/2000; 11:37:56MDT - Msg ID:23870)
Http://www.lbma.org.uk/clearing_charts.htm
Thanks for your continued insights...FOA You said:

>>>The only players left in the paper gold market are the final fall guys. All the LBMA people. They now hold the full deck of cards in this modern gold market and the CBs and governments have walked away from them! Yes, their (CBs) support is still there, but only in the form of crisis management if gold runs completely away.>>>

Three charts at the link above, to my eye, show the LBMA sliding slowly out of business. (LBMA, Statistics, Clearing)....

FWIW
Goldfan
Knallgold
euro
Fred Bergsten of the Institut of International Economics (on the World Economic Forum) sees in one year an euro of 1.25$.
Cavan Man
Stranger
Of course, you are right. I will call one of the big boys.

A note to you on inflation.....

A lot of my work involves the paper and packaging industries. My guess is that there are two more price increase in store for this year. In fact, one was just announced. Typically, linerboard leads and the rest of the grades follow. Expect linerboard (where corrugated boxes come from) to go up 5.8% real soon with perhaps another 5% or so before year end. Following on, converted products will double those numbers. The feeling on our street is that with times so very good, price increases should continue to sail through. Once purchasing manager's begin to yield to their suppliers, they lose the advantage and then it becomes a game of damage control (DEFENSE)as all of the suppliers they have beaten up over the last several years come in to take a shot at getting even and then some.

Here's a further thought; most Americans do not understand VALUE denominated in currency, gold, real estate, automobiles, POKEMON cards, whatever. It is this lack of value awareness shall we say that blinds so many of them from the insidious threat of inflation. How many times have you heard people say, " oh well I'll just pay a little more. Prices are just going up." Yes they will gladly pay a little more and a little more until their portfolio of investments and perhaps their employment status becomes affected. IMO, before the average American gets it with regards to inflation, something dramatic needs to happen to get their attention.

PS on boxes and paper.....life as we know it without them is impossible.
Knallgold
Mines,@FOA
I can see the necessarity to clean (burn) the paper overhang in the old Gold market,including the mine forwards,calls,lease swaps and so on.But is it really necessary to let them suffer besides this? I mean,won't they be allowed to sell their unhedged physical Gold in the new Gold market? Would be good PR for this new market,dont you think? It is the missing stone for me to make it totally friendly,"loved by heart".Yes there will be turmoil and a difficult transition,but is there the will at the BIS to engieneer it as smooth as posssible,for those who want to deal only in physical?
Ulysses
Stranger
http://www.usagold.comIt seems to me that the Russians and South Africans are just squeezing the platinum and palladium markets.Your thoughts?
TheStranger
Cavan Man
Thanks for the anecdote about paper price increases. I love stuff like that. I read in my paper yesterday that personal computer prices have begun to surprise nearly everyone by also rising lately. More than any single industry, that was the one disinflationists liked to point to.

As I do not wish to advocate any ivestment firms to USAGOLD's Forum members, I am afraid my advice about holdimg gold in an IRA goes about as far as it can. I take this stance because of my respect for Michael and not because anyone has ever admonished me. (No one ever has). I wonder if, in fact, Michael might, himself, have some ideas on this subject.
TheStranger
Ulysses
I'll bet you are right. Those markets are thinner even than gold and more political even than gold. For this reason, I do not play them, and don't profess to understand them.
Peter Asher
goldfan (1/30/2000; 9:30:04MDT - Msg ID:23863)
Town crier! -- Nomination hereThis is very, very good.

>>> In trading systems, barter is the only reality. All the rest is an illusion put in place to "manage"
the system for stability until the exchange is "settled" by completing the barter.<<<

Now, if we say it this way, "In trading systems, barter is the only reality. currency is put in place to "manage" the system for stability until the exchange is 'settled' by completing the barter," we get the picture of the valid use of fiat (credit) money that FOA and I have been pointing to.

BTW great post, all of it. Belongs in the HOF. Another in a collection I choose to call "Tools for analysis posts"
koan
very interesting Stranger
Most of that was above my head Stranger, but then most of your stuff is . Don't you think a lot of the bond action on friday was the classic flight to quality with the dow and nasdaq down so much? Monday will be interesting. The new cdnx was actually up for most of last week including friday - I actually had my best week last week but most of it was the result of a couple of junior wirelesses like nhc that went from .27 to a high of 6.90 - pretty wild. Still.

Platinum and palladium. I was guessing a few months ago that the South Africans and Russians might have formed a mini cartel - makes sense. I am going to move into those mkts on Monday a little bit just in case. Lots to watch, very exciting.

I would actually like to see the Dow go down to between 9 and 10,000 and just stay there for a year to let earning catch up. We will see.
lamprey_65
Another Bull turns Cautious
A recent post I made on TheStreet.com:

I think Cramer is coming around to the idea that valuations will matter again. I have no problem with certain sectors and stocks carrying a premium in their PE based on expected future earnings - that's the way an efficent market is supposed to work. I do have a problem with nonsensical valuations above and beyond a company's ability to deliver.

I just read Cramer's "State of the Web.." - here's a quote:

"...maybe they are the beginning of a collapsing of our two markets into one, where earnings matter, and multiples to earnings again play a role in determining a stock's trajectory. If that happens, believe me, we won't be returning to the Red Hots any time soon. That's just not where the action will be."

In other words...there would be quite a bit more correcting to do in some of these stocks.

Makes sense to me. In my opinion he's always known this is a bubble, but was willing to play it for trading purposes - can't blame the guy for that.

Also, watch the dollar this week. Over the past year or so, the DOW/SP 500 and the dollar have tracked rather nicely, now we have large divergence. So, either we get a rally in the markets next week, or the dollar begins to fall rapidly. My guess would be the latter.

Lamprey

lamprey_65
Oil coming out of the Strategic Reserves
Recent rumors just out that an announcement is coming about releasing oil reserves...film at 11.

L.
lamprey_65
Link
lamprey_65
Soros on the Euro
R Powell
Mr. lamprey , dollar divergence
I also noticed the dollar's advance over the past week while the markets weakened and have been wondering what's causing this divergence. I'm watching the dollar's strength while keeping in mind Mr. ORO's prediction of the sequence of events to unfold if we see a "Flight to Quality pattern" Msg. 23559, 1/24/00. Is this divergence an anomoly? Will the dollar decline with the Dow and Nasdaq? With foreign markets recovering, how much downside will it take to see a withdrawal of capital from Wall street? Will this money (debt) then return to the land of it's birth (printing) creating by it's return inflation? Perhaps Mr. Cage Rattler, a currency trader, if he's lurking can post. So many questions- so little knowledge!
koan
Cramer - brillant trader
Lamprey: I know the mkts are over valued, but I'll bet you a cyber beer the mkts are up or flat next week. Although they may go down, but there is a lot of money on the sidelines and I can't believe the fed will blow the mkt in an election year ,g>. Cramer is a brillant trader. The concept of his I like best is "winners win". I have seen a lot of people lose money trying to catch falling knives i.e. valuation trading ( not that there isn't a place for that). My position has been for quite a while that nobody, including me, knows anything . I just think the new paradigm and variables involved i.e. technology evolution are just too complicated for our species. I stay diversified and counter hedged all the way through (i.e. metals and a diversity of companies0.

How many big concepts have the pros missed over the past few years - most of them. I didn't see anyone predict the Asian contagion. I think the world mkts in the future are going to be like the weather: something different all over the world all the time and as hard to prdict . Cheers.
ORO
FOA - Residents of the Halls of Power - and the banker's holy grail
Obviously, the power resides with the nearly invisible. Those who are not in power, but merely courtiers are the ones one puts on display at the castle windows. Why? Because the power can not be put in danger of being the target for the arrows of discontent from the peasants around the castle.

Nonetheless, the town criers of Davos do speak the intentions of those in whos courts they serve. Where competing agendas arise, so does discord in Davos. I don't know this to be a fact, however, there is an apparent break between the Anglo branch and the European branch on many fronts. The EU side is seeking to retain for itself the priveleges formerly showered on the Anglos as the mercenaries that they were. The Europeans, however, though they have won the battle before even trying to pull the plug on the dollar, have put at risk their part in the benefits of the system. Whereas the dollar system provided the US with an average signiorage profit of 100% over most of recent history, the EU has enjoyed a much greater one, at some 150%, and had none of the debt problems of the US. Obviously, the segniorage was insufficient in volume to satisfy the continentals. Furthermore, the dollar system of debt traps and their consequent perpetual servitude of the populace of Latin America and many other regions, had no more capacity to produce goods to trade for dollars to return debt. The governments of the Asian Tigers have learned the tricks and found the methods for dealing with the problem by maintaining current accounts surpluses when possible. If they did not understand before 1997, they understand now.
The production capacity and creativeness of the Asian Tigers rivals that of the US technology world. However, the mad dash for market share has left their businesses lacking in profitability. It is a measure of the honesty of their "crony capitalism" that the truths came to light and were discussed well before the disaster. It is a testimony to the dishonesty of our own "crony capitalists" that the lack of profit in US business in general is hidden from view through the capital market's subsidy of company operations through the ESOP structure and the purchase of tax loss carry forwards by high cash flow corporations. (The latter essentially tell a company eyeing a loss maker that the purchase would allow them to shield a certain amount of earnings from taxes. The residual value of the operating business may not be the attractor for the buyer.)

Back to power issues.
I would like to point out this little fact: There has NOT been an ECONOMIC reason to maintain separate stock, bond, commodities and derivatives markets for each national market, and separate exchanges between them. The computing power used to trade the NASDAQ and the commodities markets since 1973, and that made aggregation of debt possible (mortgage backed securities), made all currency trading uncontrollable nearly a decade earlier.

The reason for the deregulation of the securities industries and the capital markets in the time since, have to do with the need to stave off the alternative: a global market of all debt and all equities, with or without currencies, with or without gold. Oil derivatives could have been used just as well to denominate the other markets.

Any of the large brokerage houses of the early 70s or the banks of the late 70s and early 80s could have come together to form consortia to do just that. The only reasons they had not to do so were the following:
1. Size of capital risk.
At that time, the capital investment in doing so would have been prohibitive.

2. Protection of current profit margin from the new business model.
Obviously, the players of the day had a good reason to prevent anyone from doing away with their business as intermediaries and sources of lending.
But they themselves had to be compensated for the differential in costs between running individual exchanges and trading separate currencies and classes of securities relative to the option of a single multinode market with no intermediaries and a stateless and uncontrolable medium of exchange.

3. Governments shared a general preference that things do not move in that direction, since then no government would be capable of exacting its toll on funds crossing into and out of its people's hands through tax, regulatory charters, and segniorage.
Bankers saw an opportunity to blackmail governments into paying them for this "concession". Of course, they had as much to lose as governments, but the conditions had to be such that not one of the major players would break away from the pack and use its own trading facillities for tax free and anonymous cross border trade without a national currency.

4. The compensation package:
The compensation package included (a) exclusive charters, (b) prefferential interest rates, (c) larger scale government bailout obligations, (d) higher profitability of subsidiary and development stage corporations by government subsidy and the setting of favorable terms of commerce via (e) accounting rules, (f) negative taxation (i.e. corporations receive some of the tax collections of the state off of their employees), and (g) active government policy participation in creating and sustaining the international debt trap dynamics that make both US and EU banks so profitable, (h) floating exchange rates assure the bankers of profits in selling currency exchange insurance, the derivatives of the currency and debt markets. If there are losses, the government would compensate the bankers through bailouts and further guarantees.

5. Paying the piper:
To pay all these issues of government bailout guarantees on everything from pension plans to international sovereign debt and mortgages, the government had to reduce its scale or see its currency fall into oblivion. Government employment, and size relative to the economic activity (no matter how distorted) had fallen.
A major shift came underway as corporate tax contributions moved from a net positive contribution to government taxation to nearly a net negative. Government needed taxes on the employees that were retained within their borders and were even willing, since the early 1990s, to kick back some of these taxes back to the corporations if they just stay put and don't move their jobs - and the tax base with them - offshore.
Banks were rewarded since 1979 with much of the segniorage of the government by a series of extra interest rate hikes combined with government guarantees to cover virtually any possible losses from LDC debt to large municipal debt, through Chrystler, the S&L bailout, chasing out Milken's free debt market, the issuance of SBA and student loan guarantees, etc..

Total cost of this system: Bankers get 20% of global trade of final goods as currency protection revenue. They get another 3% of global GDP as net interest margins between their borrowing and lending, and they make another 1.5% of global GDP selling protection against interest rate swings. And they make simillar proffits in the commodities business amounting to the interest rate, about 7% on 20% of global trade. This total comes out to about 13% of global GDP coming to the bank's door, and banks retain about 1/3 to 1/2 in profits before management compensation. The currency revenue and half or more of the interest revenue would be gone if there were a gold based trading system. Banks would then have only 3-5% of global GDP as their revenue.
Most important here, is that the risk is covered by government guarantees. Bank customers have government guarantees for much of their funds that lower bank interest rate costs relative to any alternate player in the market. The second set of guarantees, of commercial and foreign sovereign debt allows much of the trade of banks to be insulated from risk factors and allows them to underprice any possible competitor.

Only now are the differences in operating efficiencies becoming so great that even government guarantees and subsidies are having difficulty in keeping the costs of banks in all areas of banking competitive with the alternative of a transnational gold (or something/s else)based financial exchange system without any possibility of government regulation, and therefore no value to government charter, and no value to cooperation of banking with government.

Had banks and government not come to this solution, the current threats of ECNs breaking up the priveleges of brokerages and banks in the exchanges would have ended up killing both the profitability of the financial players and the possibility of government control. No government power in the Fed, none in the SEC, no CFTC, no department of commerce, no HUD, no taxation, no dollar, no bank profits from currency derivatives and interest rate derivatives could be made.

The only way left to retain any of this, for both government and banking, is to create a larger scale world government - a federation - that would block all options from people wanting to exit the system. I believe it would be difficult, if not impossible, and it would remove power from the banks because they, too, would be subject to global government.


TheStranger
Why Bonds and the Dollar Rallied (koan and R Powell)
koan - forgive me for not posting with greater clarity. This stuff isn't complex, but I have noticed that I too have to read other people's posts a couple of times to focus on their meaning.

SO ANYWAY - the street is now all abuzz about inflation, and yet bonds rally. Is this a "flight to quality"? Well sure, it is for some. But I think what is really at work here is that evidence of inflation is now sufficiently incontravertable to convince big bond buyers that the same Fed which has spent two years fighting deflation will now get serious about fighting inflation instead. This is a swing toward greater confidence in the Fed which may or may not be justified. Remember, it is an election year. Greenspan is up for confirmation.

I tried to explain credit spreads. If you were a hedge fund manager recently who thought we were going to have an improving world economy with little or no inflation, you may have been apt to buy corporate or foreign government bonds. Both usually offer higher yields than U.S. Treasuries. So, why not simultaneously hedge by shorting Treasuries. By doing so, you reduce your risk and you pocket the difference between the yields.

Okay, that's a credit spread, and it is perhaps typical of what hedge funds do. But when you suddenly get evidence that inflation is picking up, you can assume that the Fed will now increase rates and may slow the economy as a result. Aha! Farfel's stagflation scenario pops up. Now you have to worry that we may be about to experience inflation and high interest rates and a slower economy for awhile. In this new more "dangerous" environment corporates and foreign bonds may represent a higher degree of risk than you are comfortable with. So you sell them, and when you do, you buy back your U.S. Treasury shorts. Combine this influence with the developing notion that 30 year govies are in a developing short supply situation, and you begin to understand how it is that inflation news can initially result in a higher dollar and a U.S. Bond bounce. Again these hedge funds are a nuisance, and they often pervert the markets, but that is just the way it is.
Elwood
Guess What?

Yesterday I went down to the coin dealer's, and that guy sold me all the American Eagles I wanted for ONLY $299 an ounce!!

MWAHAHAHAHAHA

Elwood
To ALL:
You do realize there is a way out of this mess we Americans have made of things don't you? I'm talking about a non-default solution. The announcement today regarding the SPR should provide a hint, but take that thinking a little farther. What else, besides gold and oil, represents wealth? Something that the American Government controls that has value.

Regards,

Elwood

Gandalf the White
Elwood's comment
The Hobbits think that you paid too much!
<;-)
Elwood
To Gandalf:

On the contrary, I feel bad for taking advantage of the guy.
;-)
Leigh
Elwood
Dear Elwood: I'm a slow study, so please help me. Is it land? Are you saying the U.S. government should include land in one of their statistics?
Elwood
Leigh you hit the nail on the head

Recall that the government holds title to approximately 40% of the land mass of the 50 states, plus some additional in territories such as Puerto Rico and Guam and so forth. The fair thing to do would be to auction it all off after taking out a small part for bona fide governmental needs such as military bases and Post Offices, etc. There are other things also such as the entire SPR, NASA, TVA, the Hoover Dam and the radio spectrum that should be coughed up for the excesses of the past. Will this be a considered a possible alternative by our esteemed leaders? Probably not, since the majority of them are of the mindset of "What can I take?" vs "What can I trade?"

Since this won't be considered an alternative, things will probably play out like FOA and Another have described. Just remember that when we see the devastation that this has done to our economy and standard of living, it's a voluntary choice on our part.

By all means, everyone should write their congressmen and Senators and demand that we pay our debts in full even if it means the Arabs will own the Grand Canyon. It's not like they can take it back to Saudi. ;-)

Elwood

koan
bonds
So the bond mkt anticipates the fed will fight inflation thus an inverted yield curve? Could this not possibly lead to a rather flat year - for everything? I guess that's what I am betting on. Stocks, bonds and interest rates flat for the year. Which may mean special attention being given to specialty tech plays because there is no other game in town? that's what has been going on with the NASDAQ.

I have no feel for inflation at all. I think silver and the white metals are simply demand / supply reactions, which is good from my perspective, but where does that leave gold? I still say $10 dollar silver before $500 gold . These are fun times, but then I am playing both sides of the fence. Thanks for the explanation Stranger. When you get to Europe I get lost .
Leigh
Elwood
Actually, what the government could do is auction it off and then find an excuse to seize it from the new owners.

Your post reminded me of a Biblical prophecy of the end times that says (quoting loosely): "Foreigners will live among you."
Mr Gresham
Oro #23891
Sort of the Whole Enchilada, eh? The Big Picture, with some statistics to nail it. How DO you leap over the trees and put that forest together?
Elwood
To Leigh:


Leigh says:
Actually, what the government could do is auction it off and then find an excuse to seize it from the new owners.

Elwood replies:
No, this wouldn't happen. If our "Elwood Alternative" were to occur Americans would suddenly rediscover the true meaning of the word "wealth". This would ensure that those excesses of the past would not be repeated for at least a few lifetimes. At its heart, our system truely is better than the European system.

Leigh continues:
Your post reminded me of a Biblical prophecy of the end times that says (quoting loosely): "Foreigners will live among you."

Elwood replies:
With all due respect to Biblical prophecies, ma'am, foreigners live among us today as they ever have, and we are better for it in my opinion.

Regards,

Elwood
Leigh
Elwood
That's true (about the foreigners), but I was thinking in the sense of non-citizens owning large amounts of U.S. land.
Elwood
To Leigh
Leigh in post (1/30/2000; 19:56:45MDT - Msg ID:23903) states:
That's true (about the foreigners), but I was thinking in the sense of non-citizens owning large amounts of U.S. land.

Elwood replies:
Who's sin is the greater? The buyer's or the seller's?
beesting
ELWOOD and Leigh U.S. Land Sales.
Go ahead and sell the land to whoever will buy it, than let the states charge property taxes on the land to give the current land owners a break on taxes...thank you...beesting.
Leigh
Elwood
I wasn't making any judgments about anyone. I just happened to remember something and I quoted it. That's all.
Cavan Man
FOA 23870
Hello and thanks.

I have read the "Dear Investor" letter at PB and also follow the commentary by Mr. Howe.

IMHO, there are some who follow the commentary at this site who really want to believe in what you propose because if you are right, their portfolios will rise. There are many who read your thoughts here who do not believe what you teach. For that group, their life experiences, their professional experiences, their cumulative frame of reference, blinds them, period. They cannot begin to understand what you and your friend have been posting for the last couple of years. In your words, the cycle for them will simply begin anew and they will move ahead. Most are in this camp. Hubris is a factor IMHO. No they say; impossible! "The dollar in all probability should weaken but this will only strengthen the hand of US exporters". Well my friend, I have been many times to Mexico. I have seen first hand the fruits of a manufacturing based economy. Through the eyes of humility, I understand the immensity of the world in which we live. I respect the cultural "differentials".

I can readily understand and accept the need for a digital currency but in no way do I consider the Euro honest money. Some have said the Euro will fail because of the loose federation of quasi-socialist states backing its issue. I maintain it will succeed because there will be no other choice and because oil will make it so. Indeed, it is the best of a bad lot. Why some cannot understand the preference for purveyors of a most precious product to name the settlement medium of their choice is beyond me. After all, they are the sellers and we, the very willing buyers.

I hope that your friend will post here again soon and that you will continue to enlighten us.

Please accept this from someone who sees the wisdom of your purpose. Also, please know that I appreciate the opportunity to participate in the "Academy" you conduct. I do not take it for granted. The last time I made a similar post, you took offense and I took insult. I want you to know that you (along with others here) have made a profound impact on at least one individual. My friend, I am "with you". I humbly extend my simple gratitude sans effusiveness.

If I am wrong in my assessment, I will not regret it.

God Bless the USA. God Bless all here.
R Powell
Mr koan
If you're right about "a rather flat year", specialty tech plays might not be the only game in town. General sentiment among commodity advisors seems to be that deflation is over and inflation is on the horizon while most commodities are at multi-year lows or just off their lows. Most advisors are calling for long positions(at least in grains and metals). Most of these advisors also consider gold to be a commodity, and IMHO few have much knowledge of the gold situation other than that the Washington Agreement has changed sentiment a bit. But if they go long, so much the better. If inflation is coming then playing commodities long might be another game in town.
R Powell
Mr. Stranger
Thanks for explaining the higher dollar. I wish I knew if they're done buying back their shorts as I believe they may have unintentionally created a good spot from which to short the dollar. Mr. ORO says (MSG 23891) "The computing power used to trade the NASDAQ and ...since 1973... made all currency trading uncontrollable nearly a decade earlier." I don't know if he means unfathomable when he says uncontrolable.It often seems the former. Thanks again for explaining the dollar's rise. This has also provided another entry opportunity for gold purchases before the dollar weakens.
koan
Mr Powell
I agree with you on all accounts. I was never a proponent of deflation. I never saw that as a possibility; just as I never thought y2k would be anything. Both the Stranger and I took a lot of heat about y2k and I think the Stranger was in the bah humbug camp about deflation as well, but he should speak for himself. I have enormous respect for the Stranger so if he sees inflation I will look - interest rates are rising as are commodities, pretty good indicator . Thanks for your ideas. I am always looking to learn something.
Black Blade
Last word on the subject......then back to Au
Leigh, I didn't know that about the Robinson's. Thanks.

Lamprey_65, OK, I'll bite. Let's ignore the evidence and cry the "sky is falling" with all the other Chicken Littles". Besides it is fashionable now and politically correct. We can assume that your apples to oranges comparisons are relevant to the discussion (i.e. Computer development vs. Earth science, and clean water legislation vs. Man-induced global warming). Of course the carbon balance has changed between atmosphere and earth many times before (mostly from episodes of intense volcanism and periods of natural Global Warming), and guess what? Afterward life on Earth flourished very nicely! We know this from the fossil record! This results from carbon dioxide fertilization, a process that occurs as carbon is removed from the Earth and placed in the atmosphere. This has happened on much grander scales than man can ever hope to achieve by his actions. When carbon was released into the atmosphere in the past, plant and animal life increased. Some studies indicate that N. American forests are growing so fast that they are storing increasing amounts of carbon (from man maybe?). Of course herbivores eat plants and likely increase as well. Farm production can be expected to increase proportionately as well. Earth scientists have known this for quite some time. It is no wonder that the vast majority disagree with the Kyoto proposal, and 19,000 of us have openly opposed its implementation. But why let science fact get in the way of what is fashionable nonsense.

Now back to Gold!
Journeyman
Global Warming @CavanMan & BlackBlade
www.giss.nasa.gov/dataHere are three sites with basic global warming data. CavanMan, fake environmentalism, has become, unfortunately one of the main tools of the branch of the NWO which regards mankind as pollution rather than the resource most of us are. This means, IMO, that ALL environmental damage claims are suspect. Just like the disinfo on gold, environmental disinformation is used to scare the people into submission.

They got me with this disinfo several times. The first was with Mo Udall endorsing Sears phosphate free laundry detergent to prevent eutrification of the great lakes. Turned out that nitrate run-off from farm fertilizer was teh culprit. Bad science.

The largest environmental study of all time, involving all the environmental heavies including Paul Erlich, proved there is no such thing as acid rain. Congress chose to ignore the study results for fear they would be characterized as voting for acid rain. Turns out that those Adirondack lakes were acidified by rain running through layers of pine needles from the newly grown pine forests, previously clear cut during early American settlement. Bad politics.

The ozone hole apparently happens spontaneously, and the amount of chloro-flouro carbons released by man is as nothing compared to natures contribution. The whole scenario was based on very questionable assumptions built into computer simulations, which as BlackBlade suggests can be distorted to show anything.

Fred Singer and others have constantly pointed to the anomalies in global warming conclusions, beginning with a 7 to 1 (I think) funding bias in favor of studies attempting to prove global warming and against studies attempting to disprove it.

It may be there is indeed global warming partially caused by humans, but it's clear there is manipulation of data and conclusions as well. Erring on the side of caution in this case could be very expensive if the agreements in the Koyto Accords are carried out, especially here in the soon-to-be impoverished???? U.S.

See the above website for actual NASA data, and the following two sites and decide for yourself if the data, as they get to press, have been disinformated:

ftp.ncdc.noaa.gov/pub for the NCDC CD history, and ftp://vortex.atmos.uah.edu/msu for the satellite record.

Regards & stay cool,
Journeyman
Black Blade
Koan.....PGM's - YES!
Koan, how are you guy? I have been catching up on previous posts tonight. You wrote the following (msg. ID 23884):

Platinum and palladium. I was guessing a few months ago that the South Africans and Russians might have formed a mini cartel - makes sense. I am going to move into those mkts on Monday a little bit just in case. Lots to watch, very exciting.

I agree, I have been watching Stillwater (SWC) rise these last few weeks. As far as the Russians are concerned, I don't think that they have that much above ground PGM stockpile left. Their PGM's are mostly by-product from Norilsk Nickel's mining operations. The majority of their PGM supply was built up during the Soviet era and was either sold or stolen by corrupt leaders and the Russian mafia. I would not expect much more supply in the short term since miners aren't very productive when they aren't paid. S. African PGM's are very expensive to mine, so current prices are quite attractive for these deep underground mining operations. I posted some info awhile back that the mainland Chinese are about to impose European emission standards on vehicles within China starting this year, with the standards becoming more strict over the next few years. Looks as if more pressure is coming to bear on the PGM market. Stillwater Mining is still progressing toward their East Boulder deposit and still plans to expand production this year. It looks as if PGM exploration junior Idaho Consolidated Metals (V.IDO) PE of 1.9, doubled this last week, however, it is very thinly traded. I will keep adding Stillwater shares for myself. I think that the bears are coming out of hibernation, and I'm not talking about the ones that look like big dogs ;-)

Take care!
PERMAFROST
Leigh; as promised...
Posted by FOA 1/19/2000 Msg. ID 23197

Third paragraph:

"...In none of our meetings have we heard when a fear was expressed that the governments [the US AND Euroland? who else could he be talking about?] will lose control of digital currencies [the Euro] and give it (that control) back to gold. That is simply not going to happen, no matter how severe a downturn the loss of the American dollar system creates. Believe it."

He does pay lip service to gold but is against its resuming its real and only role as THE financial/monetary yardstick.
It's analogous to saying He's the only honest man and king I know but he should never be allowed to leave prison and regain his rightful throne...

Further; [towards the end of the mesage]

"Our sole reason for writing is a private [as in 'necessarily representing and promoting a personal agenda']
commission to share official [the "PRIVATE" and the "OFFICIAL" hand in hand? Now that's major conflict of interest, my friends, with criminal connotatations] direction and perception with the average citizen. Nothing else."

--You guys get irate when I point out the inconsistencies in your thought processes but buy it hook, line and sinker when it comes from this man even when he's being so condescending towards all of you.

I've known people who'd ask you how many lumps of sugar you'd like in your tea while ordering your execution with a subtle twitch of an eye. D�ja vu...

Now I'm writing all this without having looked at what you've done since I left Friday morning (for you). Buckle- up time, I guess!

Cage Rattler
TheStranger - re euro bonds
You said: "European bond issuers have been issuing new Euro-denominated debt for a year now and buying dollars with the proceeds. Then they use those dollars to retire their older dollar-denominated debt. I don't know how long this process will go on, but until it reaches cash flow equilibrium, it will continue to depress Euro/Dollar."

How you define cash flow equilibrium? And then, what happens in the future to the Euro denominated debt? TIA.
PERMAFROST
Replies to all who addressed me on Friday...
Dear Solomon,

You remind me of an uncle I lost at an early age. I wish I could sit and chat with you over a cup of tea sometime.
Re your comments: Children either grow up or die... (Forgive the terseness; bladder content impinging on available belly space!)

Dear Town Crier;

I acknowledge that you only alluded to the CONTENTION of the ECB that inflation was not problematic, even in light of euro's forex decline.
The numbers belie the contention?

Dear Golden Truth;

I'm saying the dollar and the euro are the same thing. You know I don't approve of the euro. I trust you can figure out the rest--for I must go to the restroom bad!

Oh, BTW--I think some of the mistrust against me amongst your ranks is due to my Msg. ID 22769 of 1/12/2000 where I plagiarized Ayn Rand verbatim to point out the irony of the US stance and also to see if any of you would catch me at it. I'm no fiat man, friends. Hell, I even think that the stock market should be outlawed. I'll jostle with pugnacious Round Table knights on that one, but not NOW!

PH in LA;

"It will take many, many more generations for the Euro to achieve any similar fate." [He's alluding to the demise of the dollar.]
--SO, THAT'S WHY WE SHOULD BUY THE EURO! Now I get it!
Thanks for waking me from my turpitudinous torpor! Besides, I was wearing my flak jacket and you shot blanks anyway...

Journeyman;

"Go 'head; make my day!" [was that Eastwood or Bronson? At least I'm not forgetting my quotation marks!]

Oh, yes, ORO;

If the Euro boys don't raise rates to par with US ones ON MONDAY the game is over. They will have been exposed as purveyors of just another carry trade. To quote from Bill Buckler, I believe, from the-privateer.com: "the final struggle would always be between the Dollar and Gold."

FOLKS! I MAKETH MARKET CALL! THE TIME HAS COME!

(Zipper time! than "Miller Time! for those who stood by my "queen" with me...)
PERMAFROST
Oh, Davos is it now...
In the City with the seven hills I've seen your "face" on the strange little screens, FOA. Your minions have been at work here recently. Great job!

--The very being of the devil is a lie; what could be more natural for the lord of lies. He's not a single, unique being; He is Many. Unity is God.

Gold will not "go up" because of man-caused events. Man can only recognize the goodness of gold, its divine symbolism. He can disparage or steal it but never rever it. Gold is the stake driven through the heart of the one who has faces and names. It is the light of the One Who cannot be qualified.

I write as my heart dictates.
Mr Gresham
Permafrost
Perma --

I went through a period of spiritual crisis in my early 20s. I believed I was encountering the nature of evil, the "devil", the lies I had been raised with. But I believed then, and still do, that the real work was to find them in myself and expel them. It was a deep plunge and a few years before I could forgive myself all the pollutions I had encountered but not created, and allow myself just to exist and enjoy life on earth.

It never gave me license to attack others, and to this day I have trouble even knowing (still learning!) when it's time to defend myself for simple self-protection. I have thought it my primary responsibility to try to give what I can to others, since so much has been given to me.

Out of that 30-years of experience, I recognize FOA's voice, and many other wise (and humble) ones who post here.

I am sorry but my recognition of you must harken way back to that time of crisis when I was still a new adult. The things you touch upon are vital to consider, but in the absence of gentleness and humility they are a vexation to the spirit, and perhaps even become a nearer approach to being the evil you speak so much of, rather than understanding it. I wish you well in your struggle.

Journeyman
Re: PERMAFROST (Msg ID:23916)
It was Clint Eastwood in "Dirty Harry."
PERMAFROST
Mr. Gresham
Granted, the last post was cryptic and "subjective". I'd say it doesn't lend itself to objective debate. Fine.

But for the rest--I think you and others MUST advance a logical argument as to why I am this or that or why I'm wrong etc. before you make such assertions.

In my straightforward messages, I present simple and clear arguments. Instead of debunking them, most of you who don't like to hear what I'm saying solemnly declare I'm being bad.
I'm sorry but I think you're the one being immature. Don't appeal to emotions (only). Give us a reasoning as well.
Fact is, if you put your money where your mouth is (FOA, the euro), you lost.

---ALSO---the local Mason Lodge held an open house affair in Constantinople in the last week or so, inviting media and TV reporters to display how innocuous an organization they are...Jason, my wife isn't here; could you help us relate the City with seven hills, His face will be seen on little screens etc. to the Book of Revelations, the Scriptures?
I suppose you're all aware that the non-Protestant churches and the Masons do not think highly of each other?
And that the Knights of the Red Cross? (I forget the name)
were the first bankers of the Western world. They are also one of organizations connected with Free-Masonry. I believe the first ten presidents of the United States were Masons and, generally speaking, anti-religious.
Cavan Man
Permafrost
What is your point in the last paragraph? Your reference to "Constantinople" gives a clue. I know something about that. However, I completely miss what you are saying.
Hipplebeck
just a question
Does anyone here think it possible that a country like China or Japan could execute what would be a kind of economic pearl harbor? Do these countries have enough dollars saved up that they could just flood the world with them? Spend them all at once on tangible goods? (Gold would be one).
Could the world economy just absorb this with a "bump in the road", or would it really do deep damage?
I'm grasping for perspective on scale.
Michael
TownCrier
Today's Market Report
Market Report (1/31/00): Friday marked an all-around selloff, but for perspective we note that the 1.4% decline in gold was the envy of stock indices. The Dow Jones industrial average lost 2.6% while the Nasdaq fell 3.8%. In describing the bond markets that day Reuters said, "Friday's market was roiled by reports of bad derivatives plays, banks dumping mortgages and huge mutual fund trades." The 30-year bond found some support, however. Apparently the sharp fall in stocks has prompted investors to move their investment funds into the percieved saftey of the fixed income instruments. They must be oblivious to the yearlong slide in prices that has gripped that same bond market, threatening their principle investment. They are essentially jumping out of the frying pan and into the fire. When the day was done, Reuters reported that a West Coast hedge fund was rumored to be "scrambling to cover a short position in 30-year Treasuries," adding further temporary support to the bond price. The markets were put on "inflation alert" when the Commerce Department released their report on Friday showing that in the final quarter of 1999 the economy grew at an annual rate of 5.8 percent, while the Labor Department's release of the latest data showed a 1.1% spike in Employment Cost Index (an item closely watched by Fed Chairman Alan Greenspan,) built on a 1.3% increase in employee benefits--the biggest increase in six years. Coupled with unemployment at 30-year lows, some economists are looking for the Fed to hike interest rates by half a percent when the FOMC meets Tuesday and Wednesday this week. However, most economists expect a quarter-point rise on Wednesday, followed by another quarter hike on March 21st. Bridge News reported from the forum in Davos that Treasury Secretary Lawrence Summers declined to comment on the "massive volitility" in the US Treasuries market that has lifted the ten-year Treasuries' yield above that of the long bond, raising talk of systemic risk on rumors that several hedge funds may be in default.

Getting back to gold......we offered these thoughts to the USAGOLD Discussion Forum in answer to a query on the reason behind the sudden $4 fall at noon in the New York session:
-----------------
The first important step is to realize that this is entirely a paper phenomenon. The price movement is determined by the forces of supply and demand for the investment product known as the COMEX gold futures contract...a way to place bets on the future movement of the contract's price. When one side or the other (buyers or sellers) gets more aggressive in their efforts to execute their position, the price moves in their direction...a self-fulfilling prophesy, essentially. If you have been following the various daily reports here, you may recall a couple of items. First, we reported a couple days ago in The GOLDEN VIEW that a trader said that gold was approaching some of its moving average lines which could lead technical traders into some decision fits. Perhaps we are seeing some of that today.
+
The other item is that Open Interest on COMEX gold futures has fallen to the lowest level in five years. Open Interest is the trade term for the number of futures contracts that are currently held between the gamblers. Following yesterday's trade, open interest fell by another 1200 to 139,790 contracts. You can look at this as a representation of fewer entities taking smaller positions through this specific form of investment derivative. In thin trade, any price movement tends to be exaggerated.
+
Looking to Financial World News for any clues, we have this report in response to today's downdraft:
"Market talk suggested a large hedge fund was forced to sell a hefty gold position, possibly due to serious credit problems. Several fund names were rumored about, but there has been no clear consensus on which fund was responsible. Sources said a bank acted on behalf of the fund... With markets thin and jittery, the move was made quickly, but sources say good trade buying quickly brought gold off its lows."
------------------
Today, Standard Bank of London had this to say on the recent pricing action in gold: "the lower price was a big bonus for the physical market and the decline was met by excellent buying from this sector as traders 'fixed' previously sold gold." As advocates for physical gold ownership, we would certainly concur with this "big bonus" assessment.

Gold was mostly sideways in overnight trade, marked by some additional short covering and physical demand. After a quiet morning session in Europe, Bridge News reports that traders are expecting little initial activity in NY. As we send this report to the server, gold seems to have firmed and found the more comfortable side of $283, now 20� above that mark, $0.40 above Friday's close.

That will do it for today, goldmeisters. We'll see you here tomorrow.
Cavan Man
EURO
TownCrier
Fed adds a whopping $12.005 billion in reserves to the banking system
http://biz.yahoo.com/rf/000131/us.htmlYou can't pass this stuff off as the Fed simply replacing folks' precautionary Y2K-inspired withdrawls. This is the real deal...

Of the $12.005 billion of reserves added to the banking system today, $6.505 billion were through 10-day repurchase agreements, and $5.5 billion were through overnight repos.

In early dealings, federal funds were trading above the target rate--at 5-7/8 percent.
Usul
@Hipplebeck
http://www.japanecho.co.jp/docs/html/240506.htmlWhen Prime Minister Hashimoto Ry�tar� said that Japan had been "tempted to sell U.S. Treasuries and buy gold", he revealed the existence of an economic weapon that could shake the foundation of the dollar standard.
Usul
Hashimoto's "economic weapon"
http://www.interesting-people.org/archive/3899.htmlPrime Minister Hashimoto was asked the following question following a speech at Columbia University in June 1997:

"In light of the fact that, over the past 20 yrs the US dollar
has lost about 50% of its value against the yen, do you
think it is in the long term interest of Japan and its people
to continue to accumulate US government securities?"

See the above link for his response.
TheStranger
Cage Rattler
"How you define cash flow equilibrium? And then, what happens in the future to the Euro denominated debt? TIA."

Stranger's Reply: ORO wrote a fairly complete explanation of this early in the week and is far better equipped to respond to your first question. I am not sure he would have used the term "cash flow equilibrium", however. What I meant by it was that, at some point, the rate of replacement of dollar-denominated bonds by euro-denominated bonds will decline to a point where it is more than offset by the conversion to euros of the increased dollar export income which will undoubtedly result from a lower euro. Does this sound like a mouthful? Well, for me, it is. Nonetheless it probably somewhat perverts ORO's original point. (ORO, ARE YOU OUT THERE?)

As to your second question, I would consider the future of Euro-denominated debt to be entirely in the hands of European monetary policy, assuming, of course, the Euro survives.

Thanks, Cage Rattler. I hope I did more than just muddy the water.
goldfan
Global warmers,currency, world bank?
Sir Journeyman:
Maybe the idea of global warming helps people reduce consumption of fuel oil and gasoline. Is it always bad to do a good thing for the wrong reason? I know it is offensive to scientists to see "science" misused and misstated to serve agendas other than the truth for its own sake. Me too, I hate that. But maybe some illusions are worth fostering 'til the children are grown up enough to hear the truth? Also, some scientists, global warmers or not, often state their stuff as if they "know" when later, it turns out they didn't really know. Or when a surgeon tells you this operation has a 65% chance of success, and then you find out that surgeons hardly ever do complete followups on their patients. They have no idea how many live or die. What he was quoting was the statistics from the original studies, if there were any, done by completely different surgeons. There is even a theory, to which I partially subscribe, that a particular scientific truth doesn't emerge until enough scientists "discover" it, usually all about the same time. As if this truth was something they created, out of thin air, the way banks do money.

Sir18Karat:
Thanks for your thoughts re currency creation. In this country, Canada, the banks have a reserve requirement of zero for consumer loans, and I think only 3% for commercial loans. Money without end. If I get a loan from my neighbor, I feel a lot of pressure to pay it back, I know what it cost him to make it. But a loan from a bank? Cost them nothing to make, why should I knock myself out to pay it back? Why value currency if it's so easy to get? Why value anything that easy to get? (I guess we do value daffodils and children, though easy to get, for men anyway(smile))

Sir ORO: Your stuff is extremely interesting and enlightening, though difficult for me at times , often because of the terminology, I wonder if we could start a glossary?

Considering banking. In this country, Canada, we have only a few national banks and no regional banks to speak of. A few years ago, the big bankers got together to kill off a couple of new banks that started in Western Canada. If the government had permitted it, I think the banks here would by now be just one giant, owning all the trust companies, the insurance companies, even the credit unions. So without government control we would have had a monopoly and al the evil that entails.

If the banks were separate from government, would we not be back in the long ago days when the King had to humble himself before the goldsmiths, to get money to conduct his wars to defend the borders, and of conquest or revenge? Then the goldsmiths held the power of life and death over people. I'm not sure it was a great thing that way either. Maybe nothing has changed. We have no King, either real, or in our souls, and it's the financial people who appoint the candidates for political offices.

Jane Jacobs in her writing ( I forget the name of the particular book) distinguishes between Custodians ( Government) and Traders. She says the two are necessary poles of a properly functioning society. The society breaks down, when they get contaminated with each other's roles and values. Custodians operate from a moral base, of preservation and protection. Traders operate from a non-moral base of commerce and enterprise. Morals complementing pragmatics. The two have distinct realms and must be kept separate to have a viable society, though both are necessary. Kind of like, in a family, there is a moral obligation to preserve and protect family values, and be charitable to kids (aka the environment, the disadvantaged, the artists) and also, to be traders, pragmatically doing whatever is needed to get a living. One set of values inside the family, another, outside.

I can't see how a "world bank" would be good, any more than a "world government". I can see how separation of banks and states, properly done, might work better, more appropriately than what we've got. Today we ask banks to be good citizens, make lots of charitable donations. So they do this to justify their greed and high management salaries. Governments ask hospitals and schools to be traders and make profits. So the patients trade their genes to researchers in return for treatment, those without useful illnesses have to pay or die. Smart kids get scholarships from Monsanto, and clean safe schools, artists get babysitters instead of teachers, and learn on their own how to deal with gang warfare in the schoolyard. Everybody everywhere having lost their sense of "value" of what they trade their work for.

FWIW, in gold.
Goldfan
law
Permafrost/ Conveyance mode of information
Dear Permafrost,

I, like Mr. Gresham, having experienced over fifty years of living on this planet (including formal training in philosophy, psychology, and history; an early stage/phase of development somewhat similar to Mr.G's; twenty-five years in the markets as a stock/commodity investor/trader...also "recognize FOA's voice, and many other wise (and humble)voices who post here.
And like Cavan Man...that is not to say...all is believed with blind faith. Synthesizing the idealism of an earlier youth with the liberal and conservative (not meant paradoxically) thought of aging (read that realism) in a world of illusions (smoke and mirrors)is not an easy task...in "fact", it may be one of the more important facets in the struggle and process of gathering meaning from life.
Your thought and expression is as a "shrill voice in the wilderness" with an "absence of gentleness and humility" so aptly stated by Mr. G. Although your thoughts and opinions may have some basis in fact, the shrillness and harshness detracts from your message. Please, you need not get on the soapbox and confront in such a manner...any message with far reaching implications...whether yours or FOA's will be revealed by events. Our choices are our individual responsibilities! How we "wish" it to be has little realistic relevance! Please, allow the purveyors of thought to express, and the lurkers to absorb and determine their own actions on the basis of civility and thoughtful consideration. I question whether you can make a blanket statement of "fact" concerning the "anti-religious" beliefs of the first ten presidents. After all, they had the emotional and rational intelligence to keep church and state separate. As someone with a background in philosophy, you might agree that religion could be considered a component in a broader spiritual realm of thought on a very personal basis (low profile).

Best wishes Permafrost...we, along with the others, walk this road together.
Cavan Man
law 23930
I have thought long and hard about all of the information presented here. I do not see the sense of the argument because it is what I want or need to believe for whatever reason(s). I realize I am in the minority of my friends and acquaintances. I guess it's a tough job but, somebody has to do it.

Thank you for the kind insight.
Gandalf the White
GBU
Stanley L.
If you knew the Vancouver like I know the Vancouver, then you would know why ! --- As the promo can not be released into USA, I therefore can not see and comment upon it.
<;-)
Stanley L
To Gandalf the White..
What do you mean that the info is not for the USA?
Regards
Stanley
Gandalf the White
Stanley L.
Please READ the Promo !
I have "cut" the statement for you.
---
http://www.newswire.ca/releases/January2000/27/c3841.html

Gabriel Resources Ltd. announces $16,100,000 brokered private placement

/NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

VANCOUVER, Jan. 27 /CNW/ - Gabriel Resources Ltd.
CDNX Trading Symbol: GBU
----
<;-)
Stanley L
To Gandalf The White.
Thanks, can you tell me why it is not for the USA , I found it on the Internet, so I think that it is available for everybody to find...I am from Belguim , so I do not know the rules in the US or Vancouver..
Or do you like to e-mail it to me?
Thanks..
Stanley
goldfan
WHAT IS THIS!!!
What is this enormous long post just puffery for some vancouver mining outfit??? I object.!! I was going to post another pieice of deathless prose, but I'll forget it until it gets out of the shadow of this junk.


Goldfan
Cavan Man
VIRUS ALERT
Coming in via email: "It takes guts to say JESUS"

I am told this will erase your entire hard drive and is much worse than the "Melissa" virus.
SHIFTY
silver/stock
I have heard that Bill Gates bought Pan American Silver.Can anyone confirm this?
el St.One
Stock options
http://www.fallstreet.comFound this in the daily crash report for Jan 29. Just one more stat to ponder....el

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

----Part 4-----Closing Comment--------
On the first day of trading in 1996 total open interest on CBOE options was just under 600 thousand, on the first day of trading in
2000 it was over 51 million.

Is this a sign of studious hedging practices by "new paradigm" investors and institutions, or a sign of gross and unfettered
speculation?

I hope you enjoyed reading the 27th Crash Report.

Sincerely,

Brady Willett
Journeyman
HOF & Global Warming @goldfan, Black Blade, CavanMan, Peter Asher, TC
Sir Goldfan,

I'm truly humbled by the elegance and simplicity of your
statement, mentioned by Sir Peter Asher as well, that:

"In trading systems, barter is the only reality. All
the rest is an illusion put in place to "manage" the
system for stability until the exchange is "settled" by
completing the barter." -goldfan (1/30/2000; 9:30:04MDT
- Msg ID:23863), Chaos Dynamics and the World Economy

The rest of your post is also excellent IMO. I hereby
second Sir Peter's (implicit??) nomination of this post, Msg
ID:23863, for the HOF.

I've been working on a few posts to attempt a simplification
and explanation of several things which keep confounding
issues here. I hope you won't mind if I quote some other
sections of your post to support some of the suggestions in
these? (I always include specific references, of course.)

As far as global warming, etc. my main point is that, from
what I know, the data is manipulated to further certain
elitist agendas. It IS always appropriate to conserve on a
personal level if for no other reason than it saves you
money. I conserve, and encourage others, when I can, to do
the same. It's even OK to con us folks into conserving - -
- I guess, as long as in the last analysis, the decision is
left up to us and the free market. This worked, for better
or worse, to reduce freon use (green "propaganda") two years
before required by law.

The problem is the elitists want to use such concerns,
mostly very tentative at best from the science, to scare
folks into accepting controls on nearly every aspect of our
already over-regulated lives. For example, any fireplace in
Aspen, Colo. must have a sensor installed which displays
whenever a fire is burning in it to a read-out at police HQ.
If an air quality alert is instituted, the cops can then
look at their board and site you. This is only a tip of the
iceberg of what can be done, and not for the stated
purposes, if we don't wise up!

Regards,
Journeyman
Gandalf the White
Stanley L.
YES! -- Let us take this offline via email!
Please have USAGOLD provide you my email address.
Thanks
<;-)
goldfan
Sir Peter Asher, Sir Journeyman
Sir Peter: Many thanks for your acknowledgement. I'm hoping to be able to say what I learn here in a way simple enough for my friends who aren't at it all day and have never even heard of most of these ideas, and yet not so simple as to appear foolish to the wise at this forum...Your words tell me I may be doing ok, so far...

Sir Journeyman Thank you for the acknowledgment. You are certainly welcome to quote anything I write. I have utterly no desire for more regulation, but I would refer you to my last post, what I said to ORO, about the need for the Custodians to regulate the Traders so that they don't tear each other to bits or take over the entire planet, leaving no room for those on the fringes of their efforts to turn everything into gold....Likewise the Custodians need the Traders, else they would have nothing to eat, nor new fashionable clothing, nor new gadgets to simplify life and amuse themselves with...Traders need the Custodians, since they are not by nature suited for warfare or defence, just for getting and distributing.

FWIW in gold

Goldfan
Goldfly
Cavan Man - It's a hoax.....
fox
confiance in the future gold price




Breaking News Sport Technology Special Reports News Roundup




netAssets news
Bank gold sales problem over: Mbeki
President Thabo Mbeki says he believes the problem for SA as a major gold producer of sales by European central banks depressing gold prices is 'over'


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

South African President Thabo Mbeki said on Monday he believes the problem for South Africa as a major gold producer of sales by central banks in Europe depressing gold prices is "over".
Mbeki accuses EU nations of bad faith. Click here to read more

Speaking at a press conference at the World Economic Forum, he also said he believes South Africa will have "strong" economic growth in 2000 and "even stronger" growth in 2001.

Questioned about whether he is still concerned about the possibility that gold sales by several European central banks could depress prices, he said that in recent months South Africa had held a series of discussions with central banks and even with Swiss President Adolf Ogi to ensure that any sales of gold reserves were made in a way which did not cause a major fall in prices.

"The reaction from the central banks has been very good," he said. "We think that we are over that particular problem."

Asked about likely South African growth this year, he said most economists forecast GDP to rise by 3% to 5%.

"I think there will be strong growth this year and I look forward to even stronger growth next year," he said.

He gave no precise growth figure of his own.

He said that in his upcoming speech for the opening of the South African parliament he will announce formation of an international advisory council of businessmen to encourage inward investment in the country.

Its members will include international business executives with special knowledge of South Africa.

Questioned about the South African government's planned inflation targeting concept, he repeated that meetings will be held with business representatives and trade unions in February but declined to give any details of what the inflation target could be.


Michael Hogan, Bridge News

31-1-2000
















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nickel62
Not for release in the United States is used by promoter alias investment bankers in Canada.
To try and protect themselves from prosecution by the US securities laws. Canada has a "Wild West " approach to securities regulation. In that they basically claim to have a body of laws but really don't enforce them. It is basically "caveat emptor" if you are purchasing securities in Canada. While the US has been doing it's best to emulate the Canadian lack of regulation the process officially is not yet recognized so the Canadian's use such phrases to attempt to avoid being dragged into US jurisdiction and prosecuted. If you weren't supposed to read it you can't claim we defrauded you. In the US recently the regulators look the other way while the investors are defrauded.but the US authorities probably would prosecute a Canadian firm who was found to be bilking US investors 'sort of a anti-poaching clause to protect the interests of American investment bankers.
SteveH
Euro
Cavan Man
A Request For HOF Induction (Town Crier please)
Cavan Man 23198 asks for seconds for FOA's "overview" series.

FOA 22663 1-10-00
FOA 22690 1-11-00
FOA 23002 1-16-00
FOA 23197 1-19-00

Seconds from:

Invisible Hand 23515
Mr Gresham 23220

Thank you.
goldfan
Masters and Servants
Castelforza

There was an ancient family in south Italy that survived the Roman invasion and the Huns and eventually entered the 19th Century with a large 100-room mansion, a church of their own, outbuildings around a square as if, itself, it were a small town. They had many acres of vineyards, many acres of olive groves, all the best land on the edge of the town of Castelforza, most of whose inhabitants had the family's surname.

By this time they had become more devoted to their religious practices than to management of the estate. The priesthood were seen daily on the property, visiting, getting donations, coming and going, enlarging and expanding the chapel, conducting retreats. By the last years of the 19th century, the family had only one son and one daughter. The old patriarch wanted the son to become a priest, to carry on the religious fervor he had embraced. The son wanted to travel to see the world. He emigrated to North America and did not go back until he had married and had children, and then only to visit. No priest , he!

Eventually, only the daughter was left alive, surrounded by priests, nuns, and hangers-on. The estates, run by those designated by the priests, were said to be producing less and less, (maybe, they were just easy to rob) the mansion had been converted to an orphanage, again at the advice of the priests, to avoid onerous taxes.

The daughter became old and sick. The son, far away in Canada, the designated inheritor, signed over the property to the church, in return for their promise to care for his sister until her death. And that's how the story played out. The church, originally just servants, got it all. And I, that son's grandson, dream sometimes of tending vineyards, olive groves in the warm sun, listening when I awake to a boy singing as he herds goats to pasture in the morning cool.

The Yen and The Euro are like two such faithful servants, selling their goods to the Master, who gambles and plays, in return for his IOU's. Eventually, if they're kind, they'll let him live in a little hut at the back of the property.

Nothing is good as Gold

Goldfan
.

goldfan
On When to Say Yes
BTW I never presume to argue with anyone who claims to be gettiing his info direct from the Almighty. This is a response to the occasional preacher who thinks this forum is a pulpit.

Nothing is good as gold
Goldfan
Phos
Global Warming
http://www.microtech.com.au/daly/solar/solar.htmFor anybody interested in doing some research on global warming, the attached link is worth a visit. The author has done a lot of research into climatic variations and presents a thorough argument that, compared to variations in the sun's output, anything we do or have done on earth, is of limited consequence (at least so far). Also, major volcanic eruptions in the past have had a much more dramatic effect on climate than anything we have achieved.
PRWKent
If manuipulation occurs, why isn't it exposed?
In today's media climate, I am surprized that the manipulation of the price of gold is not exposed by the media. I have been an investor in gold stocks for only a short time--about a year, but have been reading the various gold sites online for quite some time. Each I read about the possibility of price manipulation, I wonder why this is not covered by one of the news agencies.
ORO
The Stranger - Dollar demand
The dollar demand for interest payment this year is near $3 Trillion by my estimate. That is the amount of new debt that is necessary for the creation of a sufficient number of dollars or substitutes to pay this interest.
The EU credit markets (bonds + banking) are "eating" the dollar issuance there. Of the $1.3 trillion created there, only $0.8 trillion was in dollars. This year, $1.5 trillion are needed in the Eurodollar markets, only $0.6-0.7 are likely to be created.
To supply the deficit it is necessary for the US to run trade and current accounts deficits of some 60% of the missing amount - in 1999 that was $0.3 trillion, which is close - in 2000 that would be $0.5 trillion.

What these deficits mean in the credit markets inside the US is that there is a net world Ex-US draw on the US debt markets of $0.8 trillion per year, or something near that. As a result, the US credit markets are strained to produce that debt growth rate - at $1.5 + $0.8 = $2.3 trillion annual rate.
The aggregate US debt growth rate in Nov 1999 was $2.25 trillion, compared to $1.4 trillion in Apr 1998 - Apr 1999 and just over $1.5 trillion in the year before Apr 1998.
The bond markets are operating at a $1.2 trillion annual rate compared to 0.7 in 97, 1.1 in 98, the banks are operating at $1.25 trillion annual rate compared to 0.7 in 97, 0.3+ in 98.

As the Euro credit market expans to displace more of the dollar issuance, because of the lower interest rates and perceived downward trend in the Euro (making it easier to repay these borrowings later), the debt issuance pressure in the US will grow. Interest rates will continue to rise because of the need to roll over dollar debt and pay interest outside the US not being met in the global markets. The replacement borrowings within the US are reaching the point of saturation of borrowing capacity. The borrowing capacity falls as interest rates rise. This is because the expected return on borrowed funds is not growing at the same rate as the growth of interest rates.

Unless the Fed gives the absolute surefire signal that it will add as many funds as necessary to have prices rise at a sufficient rate to allow US business margin growth above interest rates (that is, completely do away with price stability as a goal), the growth of borrowing will be insufficient to create the necessary dollars needed to satisfy the market's demands. This would cause further breakdown in global debt settlement and would lead to further defaults. In this light, the IMF actions to discharge LDC debt by creating cash dollars can be interpreted as an attempt to keep an impossible game going by cleaning up some of the deficit in the dollar credit markets.

We know that much of the new money creation goes into the equity markets. The exact amounts are not too clear, however, besides the $0.1 trillion in new margin debt, there is another $0.1 trillion in OTC equity index derivatives delta hedging and another $0.1 trillion in exchange traded index derivatives delta hedging. The Whopper is the $0.3 +/ 0.2 trillion in delta hedging for individual equity call options ($2.25 trillion in open interest notional value), most of which came in the last quarter and coincides well with M3 nominal growth and in its growth rates in the stratosphere.

So, essentially, the current global dollar debt demand is being met by the rise in equity prices forcing the delta hedging arbitrageurs to buy more stock with non-broker margin from the stock markets. The purchase of more stock dictates the rise in prices and forces the arbitrageurs to borrow more funds to buy more stock.
The higher stock prices allow more cashing in of ESOP stock options, a greater tax kickback to the corporations, and therefore, higher higher earnings. Higher earnings then attract further equity buying, forcing up the stock price.

Thus we have a self reinforcing circle that can create more debt as long as the return from the delta hedging arbitrage is better than the interest rate charged. The interest rate charged is about 8% and the current option prices less the black scholes valuation comes to -10% now, as opposed to +10% during much of Q4 last year. This means that the computer models used for trading would not allow the traders to sell the options because the BS model would predict a loss relative to lending the funds out. That means, in turn, that if investor enthusiasm does not revive quickly, this avenue to debt growth would be blocked. Since it has been generating much of the debt needed to cover the dollar issuance deficit, it puts pressure on the Fed to print new funds to replace those missing dollars and thus increase the dollar monetary base. Indeed, in December, the monetary base was growing at an annualized rate of $0.35 trillion, up from an average rate of $50 billion - or some 8 times greater rate than before. Since then, the Fed has reduced the monetary base slightly in the two weeks to Jan 26 (next report in Feb 9, at http://www.federalreserve.gov/releases/H3/Current/).

Would the Fed dare let either the stock market, prices, or monetary base grow in these proportions?

Would it dare not to?
Peter Asher
goldfan (01/31/00; 15:54:27MDT - Msg ID:23949)
I have a reply that is much to personal for the main site.

peter@ peterasher.com
Hipplebeck
to Usul
Thank you very much for the links to Hashimoto
Strad Master
Global Warming - off topic post
http://www.oism.org/oism/s32p31.htmAs long as we are briefly off topic, the above link should be of great interest. Global warming is, by and large, a crock.
lamprey_65
For what it's worth...
Sam Adams
A personal experience with leasing
Shortly after the Washington agreement I convinced several family members to purchase gold as a hedge. Between my order and several others we purchased what I would consider a large quantity of Roosters and Angels.

I've spent many hours discussing the same issues that are discussed here with my dealer. Shortly after the coins arrived I started making arrangements for an even larger shipment.

The deal fell through because of some problems his supplier was having with Customs. He happened to mention to me that that his supplier in Europe leases directly from bullion banks. He didn't fully understand what this meant and sort of laughed about it. Said he didn't understand how banks could lease gold when it was obviously being sold.

He said the coins come directly from European banks which have them in their vaults. This guy is very low key, doesn't brag, not really interested in impressing anybody. I know he sometimes moves shipments in excess of a million dollars.

I am offering this data as grist for discussion. Does the Washington agreement exclude coins or does it specifically apply to bullion? Are these banks cheating? Maybe certain types of cheating is tolerated or encouraged. I don't know. Maybe someone else here does. Just my 2 cents.

I do know that the US market has recently been flooded with these European coins and I suspect they made their way here via the same leasing mechanism. Does anybody here have knowledge of how they can continue to lease what appears to me as sizable quantities of gold coin?
lamprey_65
Sam Adams
Interesting question. Maybe MK would have some insight on that one?

L.
koan
Black Blade and shifty
First, Shifty: yes Bill Gates did buy a fair amount of Pan American silver, BUT they have some big problems with the Ducat mine in Russia (which they ar putting back in production)- someone else got the mill? in an auction. - so do you DD.

Black Blade: how are you doing my friend - still running around in the jungle? I am still concentrating on my trading, but am starting to take some profits and put them back in the metals. Silver, and the whites. I will start buying gold when I see it move above $300. The mkt is so "upset" with gold that there will be plenty of time to move into it. If the white metals can get through $500 I think we will see panic buying. I mean the junior platinum and palladium stocks I own and follow have only moved a litttle bit. I bought this morning and will continue to buy the metals as I see more evidence of the move. Take care, always nice to hear form you! koan.
canamami
Reply to ORO - #23593
Oro,

You're flying circles around me.

A couple of questions. If the Fed is creating such a huge new supply of dollars, why does the Euro keep falling relative to the dollar - i.e., would not the new supply of dollars lower the dollar's value? If new Euros are being created to pay off dollar principal (thus re-denominating the debt in Euros instead of dollars) would not the "repaid" dollars (i.e., the repaid principal) be available to meet the demand for dollars to cover dollar-denominated interest payments, thereby precluding the need for massive new dollar creation by the Fed?

Kindly excuse these questions from an amateur.

Thx,
canamami.
ORO
Canamami - the disappearing dollars
Happened to cross the board just now, so here is a short answer.

When you buy something, dollars move from your hand or account into someone elses. When you repay a debt, the dollars disappear and are available for no one. The dollars are created by new lending, as are dollar substitutes - liquid bonds and bonds near maturity that trade in the money markets and secondary CD markets. Since the dollars extinguish the debt, both the debt and the dollars disappear if it were a bank debt. If it were a bond, bond disappears. Since in the period close to maturity the nearly 100% of the bond was part of the money supply, there is a net destruction of dollars (or dollar substitutes) when the debt was repaid.

Therefore, the people trying to get their interest payments in order are more hard pressed to find dollars for this repayment. If Euro are easier to come by or have a lower cost (interest rate), they will be borrowed. The shortage of dollars causes interest rates to rise, which makes future interest payments more difficult to pay, because each debt repayment makes the overall pool of dollars smaller. This is the essence of a deflationary spiral.

The Fed's anti-deflationary medicine is inflation of the monetary base.

In this way, dollars are created with no - or little - demand associated with them. Since monetary base dollars are the ones that dictate the level of pricing (its not that simple, but good enough for now), price inflation is caused by the Fed's response to deflationary pressures. In this way, inflation is always a deflationary phenomenon.
Bonedaddy
hipplebeck, economic Pearl Harbor
Have you had a chance to read Tom Clancey's "Debt of Honor"? I found it a finely woven tale about such a scheme.
FOA
Part 1
Part 1

Hello everyone,
Finally I have some time. Permafrost has come into this forum and made a few posts that need review by us all. I'll present my case against his position as in a court with all of our forum members as the jury.

Hello Permafrost,
Nice to see you today as we stand before the court of public opinion. Now we can feel the pressure many of my friends feel before voters (smile).

ALL: What we have here is a person walking into our convention where FOA has been offering his reasons for gold for a year,,,,,,,,,then Mr. Frost stands up and says ""he's (FOA) telling you to buy Euros"!

He comes in on (12/24/99; 2:31:01MDT - Msg ID:21594),,,,,,,,'saying
--------Hailing from a "Third World Country"! Mes Compliments to you all! Dear Forum particants, I have stumbled upon this Shoe Box while shuffling my cyber feet to locate the LBME site. After a few weeks of perusing the postings, especially those by the Elders----------------

,,,,,,,,,,,,,,and suddenly he is an expert on my position?? From a person that has read for a "few weeks" and is so new he just found the LBMA web site!!

(Your Honour: this line of reasoning goes to "experience credibility" in the affairs of the modern information markets.)

My Position:

I state this from the beginning: no one can claim an understanding of a book if they read and use only the last chapter for reference. This is essentially what Mr. Frost has done. By design of purpose or by mental accident he has stated my position out of context and continues to do so.
Before me, Another proclaimed that gold was the only wealth investment Westerners could count on in the long term. Not stocks, not bonds, not currencies or paper gold derivatives. Using hundreds of posts he offered bits and pieces of the puzzle he referred to as the "New Gold
Market". Time and time again, he pointed out the relationship between oil, gold and currencies as they were maneuvered by the political wills of the world. Of course, just like you, me and everyone that reads this forum, he holds other investments. Yes, all the usual paper items traded in this modern world along with the other hard things. Like property, businesses and personal belongings.
Still, the thrust of his logic was "always" that the dollar would fall and gold would rise! His reason dictated that one could extend their wealth, safely through this coming transition by holding a large position of physical gold.
Myself, I have also produced hundreds of posts on this forum,,,,,and they all presented the "logic" and "reasons" for holding gold. Yes, some of them said that the Euro will eventually be strong. But, always the "Euro Event" in our time was viewed as the main catalyst that would propel the dollar down and gold up.

Mr. Frost; you must present a series of my thoughts that in a chain of reason conclude what you present as true. Otherwise your posts are false and without credibility. Show us where my "chain of thought" or "logic in progression" has directed one to invest in Euros without gold or in Euros and
not gold. If you cannot demonstrate this reasoning, your contentions are worthless for consideration and must be discarded.

My thrust and feelings for gold as stated in from hundreds of posts, are most clearly stated in the end of FOA (12/28/99; 8:34:38MDT - Msg ID:21734):

Gold, the only investment needed for the next thousand years


Onward:

In Mr. Frost's post of (12/29/99; 7:40:27MDT - Msg ID:21773),,,,,,he replies to Cavan Man
---------I find your train of thought quite pragmatic for the most part. But I personally don't think we'll have a "fix" to our dollar-based monetary systemic problem. That would be like trying to cure the disease...I think it'll be a wake up in the morning into a new world sort of cathartic affair. For gold and finance are mutually exclusive. ------------------

ALL: This is in part something I completely agree with. Our views part ways in that I see the Euro eventually taking over the dollar's reserve function. Reducing the dollar to a much lower standard in world affairs. For this transition I proclaim that "Western Investors" buy mostly gold. But, knowing that everyone holds other assets, we should try to denominate those (other) holdings in Euros if possible. So, just like he says (Mr. Frost) ------I don't think we'll have a "fix" to our dollar based monetary systemic problem ---.

Part 2 is next.



FOA
PART 2
Part 2

ALL: Early on Mr. Frost addressed me in (12/29/99; 3:21:27MDT - Msg ID:21765)------Dear Sir, Based on your logic, two outcomes are possible.----------

How nice, he even said Dear Sir. Proving the point that he is capable of civil conduct in the affairs of professional people. (Your Honour, this line of reasoning goes to purpose of action,,,,,,his later caustic conduct is wilful and meant to discredit)

As evidence: My reply to him is reproduced below. I submit that it clearly lays out my reasoning, logic and produces an expected course of events. Please read for the peoples court.-------------

FOA (12/30/99; 16:38:17MDT - Msg ID:21859)
Reply
Hello and welcome Permafrost,
I'll comment on your items in order:
------------------------------------------------------------
PERMAFROST (12/29/99; 3:21:27MDT - Msg ID:21765)
FOA Msg ID: 21734
Dear Sir, Based on your logic, two outcomes are possible.
1) If you're right and we are witnessing the re-monetization of gold than all those that benefited from the fiat money scheme will lose their power. ------------------

Mr. Frost,
Not all of them! Only the ones that did not hedge their power effectively. Surely the Euro will carry some of the same political agendas the dollar currently does. Only, it will be controlled more so by the cross currents evident in the various old world countries. Let's face it, we all need a dollar like currency if our modern economy is going to function. What we don't need is a single reserve currency that precludes any avenue of escape if it hurts other countries. If gold is trading in a free physical market, no one is going to run to gold as a single currency and leave the Euro entirely. Indeed, a free world economy needs and demands a currency that can expand and contract with changing conditions. The curse of the old gold standard was that it didn't allow this latitude and always created a crisis when needs required this flexible money supply. Only
a separate gold market can offer a means to truly measure the success of the money creating treasuries. This is the direction we are heading, for better or worse.

-----------A gold backed and restrained financial system (An oxymoron, in my belief) will simply preclude them from accumulating goods and services against monopoly money -- the source of their power.--------------

Well PF, the power you speak of can also be held through the use of gold itself. Many a king and monarch ruled the land with the effective use of bullion. Your oxymoron is not in the restraint of the monopoly money, rather in the present lack of a free choice between "gold wealth" and "dollar
wealth". The blending of these concepts will create a new power block that must conform to the needs of all.

----------2) If you're not and gold is merely being used as a relatively-untapped "new" source of non-debt-backed dollar creation, than it's a very old game we're playing, indeed. Was not gold itself responsible for one of the greatest INFLATIONARY explosions in History when the Conquistadors "expropriated" Aztec gold and brought it all to Europe to consume (chaseafter) a "limited amount of goods and services"? Colombus turning over in his grave? -------------

PF, During the time of the Conquistadors, we must consider that goods were not being inflated in price, rather gold was being devalued! At the very least gold did not disappear as bank notes do. No, the coming run in gold will be a reflection of the tremendous dollar inflation already in the
system. It's only in the eyes of the Western dollar saver that this price inflation is unwarranted. Again, they are only loosing something they never had. An illusion of wealth on a grand scale.

------QUESTION: Do you know of any emperor (I think you called them 'Grandees' here on this forum) who's willingly abdicated power--Besides God himself?------------

My friend (PF), power belongs to the swift of heart and mind. This world waits for no one as power flows from peoples to peoples. Even the strongest emperor knows to occupy the high ground before the flood. The powerful in tomorrow's future will own gold today. Thank you, FOA
------------------------------------------------------------

ALL:
At the beginning of this post (above) I made the statement: " " Surely the Euro will carry some of the same political agendas the dollar currently does. " " .
This item alone is proof of my opinion of this new digital currency. It will be little more than a digital contract item of settlement,,,,,,a fiat currency in competition with the dollar for reserve use. It's advantage is obvious ,,,,,,,,, it's new! History has shown that every currency system "at least" has it's time on stage,,,,,,,and they always start out with low debt and a dearth of holders. For this reason alone it will function for at least a while. Do I say "hold only Euros and no gold"? Of course not! Who here could read such a position into this given viewpoint?

Further:

Again he addresses me in a civil manner as below:

-------PERMAFROST (1/3/00; 3:35:05MDT - Msg ID:22106)
Dear FOA Sir,Having noticed that the last of my three part posting is shown first, I thought you may mistake the tone to be on the inflammatory side. It's not the case. I consider it a privilege to have an intelligent conversation with people of knowledge. Please go to Msg. #1 then proceed
"upwards." Thank you!-----------

To the court: The gentleman posts in a civil tone only to give way to a caustic format later. For what purpose does one so obviously break the social rules of forum conduct?

Again, I reply to all of his items and clearly present my position. This is an important post as it dissects most of Mr. Frosts future comments about my position. It clearly shows that he did not comprehend it.

Part 3 is next

harold
YEN/$
http://www.usagold.comIt would appear that a weak yen is exactly what both gov'ts' CB's would prefer currently. Am I totally off base or would this allow (according to their thinking) Japan's exports to remain cheap enough to boost their economy, and as for the FED, a strong dollar - "what me care" - maybe it'll help ice down the US economy. If this is way off, could someone please expound. The technical picture of the yen/US$ continues to look weak.
FOA
PART 3
Part 3

ALL: Below, I clearly demonstrate my position on the current evolution of financial affairs. Please read for the peoples court:(I will comment on each part with ALL: preceding my analysis)
-----------------------------------

FOA (01/08/00; 17:34:05MDT - Msg ID:22538)
Reply
To ALL: I'm trying to catch up now. More to follow.
Hello PERMAFROST,
Sorry to see you go (if you still are gone?). I'll reply to your comments, somewhat in order.

You write in :------------
PERMAFROST (1/3/00; 2:31:57MDT - Msg ID:22103)
FOA Msg ID: 21859 Part 1
Dear Sir, Thanks for your response.
--------You are advocating a global financial system predicated on the peaceful and mutually-beneficial "concubinage" of gold and the "new girl in town" fiat money the Euro which you unwarrantedly presume to be relatively more "chaste" than the Old Whore, the US dollar, ONLY
because it is not "backed" by as much debt as the dollar, and its "lovers" (the EU Central Bankers,the Rothschilds?; an assorted variety of Illuminati and various other power brokers playing both sides [the sheeple?] against the middle [more sheeple]) tip their hat at gold without solemnly
declaring their allegiance at sovereign money, PM etc. ------------------

No Mr. Frost;
I don't advocate that. I think this is your perception of future events. This transition will not be "peaceful" in any way. Any time one large official faction (Dollar/IMF group) has it's money power replaced by a new official faction (Euro / BIS), it's never peaceful and not without significant loss of wealth by some of the players. I add that both little and big players get hurt when these events
happen. Usually, it's the little "uninformed" players that lose the most. Your observation that people are "sheeple" comes as they step in front of a train with no breaks. Then
you tell the world that "someone" is out to get them. My experience is that the average investor is much more intelligent than that and they can do a good job of "moving" off the tracks if it's pointed out to them that a train is coming. The dollar is giving up it's reign as a reserve currency, not "only" because it has so much debt. It's
being replaced because it's inflation (total money supply, dollar derivatives supply, dollar debt supply and the official liabilities foreign nations hold as reserves supply) has discounted so much future real US production, at a constant exchange rate, that it is losing the ability to function as a reserve currency. Every currency on earth has one day come to this end. We call it a "fiat money's
timeline". At this point the users of this money begin to either "deflate it's supply" through debt and payment default, or the they devalue it by bidding up the value of real goods (price inflation). Once either of these begin, the money function of that reserve currency declines. Further, one will find that deflation is only a choice if no other official world currency is available to run to. World citizens vote with their feet at this point and greatly discount unpayable debt thus causing said deflation.
Inflation is the choice when people can "refinance" into another currency media. Leaving the old to contend with an ever increasing velocity of the useless money supply. This is the fate that waits the dollar.
Is this some structure brought about by a New World Order? If you want to see it this way, then remember the world has been doing this from creation. I only add, why bother to put the "New" on it? Let's just call it "Next World Order"! Besides, it's only one peoples as a nation group (EURO/BIS) trying to protect their wealth because another nation group of peoples (Dollar/IMF) borrowed more that they could ever pay back! Still, I read this New World Order faction (NWOF) as loudly declaring the Euro as a fraud, yet they (NWOF) are hip deep the dollar assets
of a country that "defaulted on it's gold delivery. Twice! Then they (NWOF) yell because no one is creating a new gold or gold backed currency. Why do that? So we can be defaulted again by the "NEXT World Order"?
-----------------------

ALL: Later on Mr. Frost tries to paint a picture that I did not hold this logic. His future contention that all the "boys in control" are in the same club and the Euro is but another dollar. My chain of reasoning demonstrates how his logic is flawed. The very fact that we find "tribes" and
"sides" on this forum speaks volumes about human interaction. In like kind, world power brokers also form "tribes" as they jockey for position in world affairs. Is this not plainly obvious to all of us? They even fight among themselves as witnessed in the Euroland struggles. But this is no different than the US political fights. Still, we all band together in larger groups when it comes to world
affairs. Financial power is no different. Sure, they all hate gold, but they will embrace it if it gives them an advantage in currency warfare.

In my next reply to his several part post, I offer the logic and reasoning behind the dollars position. Why it is managed today in a defensive posture. It presents it's weak link from where the Euro/BIS faction can attack.
------------------------------------
-----------------------------------
You write:
-----------------
This fiat money is necessary, you say, because it will allow management [manipuation] of the economy without suffering the deleterious side effects that a rigid gold standard has saddled us with in the past. Would you care to draw for the benefit of the forum the the philosophical line that
separates you from, say, an Alan Greenspan, as per the gold/fiat money relationship? do we not have TODAY a fully-floating POG alongside the dollar? What shall we gain in re-baptizing fiat money with a different name, i.e., the Euro? except the prolongation of the Game? IF gold IS
money than nothing else is. Disagree?
--------------------------

No PM;
We don't have a fully floating price of gold today. This is the illusion (paper gold) that has many people (such as yourself) locked into a narrow view. Mr. Greenspan has always seen the gold money relationship from a US dollar perspective and holding the US as the only dominating
financial power. He knows that the dollar could never retain it's position if gold became a "separate settlement currency" through a true world free physical market. All of the dollar price inflation that is currently locked into the present dollar supply inflation would present itself. Dollar reserves held world wide would become useless unless they could be used to buy real US goods (at a non inflated price).
Truly, Mr. G. only sees gold from a Washington view and even that must be locked in the cellar. He manages a system built by others and must use the tools this system allows. The present paper gold market is as much a function of the dollar value as interest rates and it is controlled as such.
Today, gold is money, I agree! But, it is not and never can be a fluctuating (in supply) digital money of high speed settlement. For it to work it's past magic in this modern world, it must trade in physical form without derivative use. It will.
----------------------------

ALL: next I conclude the replies
----------------------------
----------------------------

You write:
PERMAFROST (1/3/00; 3:02:19MDT - Msg ID:22104)
Reply to FOA Msg. ID: 21859 Part 2
Capitalism, this familiar but insidious term really stands for the wilful confusion of a descripitive proposition [that private property exists] with a PRESCRIPTIVE one [that private property and the wealth that can be generated from it is GO(O)D]. -------------------

No PM,
not at all.
This is the standard (higher level) teachings in modern Western education. History proves that "real private property" has and always has been both wealth and a purchasing power medium (money). Through the best of times and the worst of times, in war and peace, people have always had private property. Even in Russia of old, they had to allow people their things. Even if these positions weren't recorded "officially". A universal truth is that no form of official ruler-ship can function unless people have some private wealth. Never has worked for even a short time and never will. Further, generating more wealth from private property (owned wealth)is only good if one can overcome the "RISK" that comes with it. This is nothing new to most of the world. It's just a different concept for modern Western man.

You write:
---------------
It's a logical fallacy that doesn't survive the glare of critical analysis. Omit the adjective "private" from the premise and what you end up with is the other side of the coin, or communism. Both systems are basically worship of materialism and humanistic (man is the measure of the universe) propaganda. Now, whereas communism theoretically aims at generating its "GOD", or 'goods and services' in economic parlance, via the sweat and toil of its fellow gods (the proletariat), capitalism is predicated on CONSTANT INSTABILITY [the insidious rhetoric of the bankers
notwithstanding] of the prices of these very goods and services, the [managed] fluctuations of which allow the people Greenspan works for to earn wealth they did not work for. -----------------

PF:
I'm glade you understand this ages old function of humanity. Through out time and space our life quest is influenced by others that try to control our desires. The successful time traveller lives his days in harmony by adapting to the "lay of the land". Today, it's time for gold and Euro assets.
Indeed, what you have just written is the very action that has brought the dollar to the end of it's timeline.
------------------------------------------

Again, your words,

PERMAFROST (1/3/00; 3:09:12MDT - Msg ID:22105)
Reply to FOA Msg. ID: 21859 Lastly,
As to even the 'emperor running to higher ground when he sees the flood coming'--if he were to do so, he'd be emperor no more for what makes an emperor an emperor is the "land" he rules. Without it he's nothing. That's why captains do not abandon their sinking ships; and why sometimes even emperors get their heads chopped off. To die an emperor is perhaps preferable than to live as a normal human being for some...You?
--------------------------------

In addition PF,
the history of gold shows how one may remain in their chosen land and retain their wealth. For gold needs not return to a native place to receive it's value. We do indeed chose the
high ground, with or without our heads. (smile)
--------------------------------

--------------------------------
ALL: Here again, I promote gold as the high ground, not the Euro!
-----------------------------------

Further you add from :Msg ID:22104
-------------------------
Therefore; I find myself obliged to conclude that, due to your avowed devotion to the Euro and the "The King is dead; long live the King" tradition it propounds, the only difference between you and an "Alan Greenspan" lies in your respective handles. If you already are not one of them, you wanna join 'em. Incorrect?
------------------------------------

Very incorrect my friend (Permafrost).
The difference lies not between myself and others, rather between the life experience of "you" and "I". Somewhat like the movie "The wind and the Lion": You like the wind hold the power of force in your words. I as the lion roar in defiance as the sand stings my eyes in a land I cannot leave. Yet, as a lion, I know my place on earth while as the wind, you will never know yours!Thanks Much ,,,,,,,, FOA
---------------------------------

------------------------
ALL: Here (above) is where Mr. Frost begins to promote my "devotion to the Euro". It is completely out of context and misguided. The complete evidence, inherent in all my posts point to using the Euro as the political tool for making gold rise in dollars.
Because all of the Another / FOA public viewpoints were presented on the Web,,,,,,,,,,I hold that Mr. Frost could be much too new to this venue to have read them all (smile?). I don't think so, but still as evidence of this I offer his ------------(1/5/00; 6:55:41MDT - Msg
ID:22322)---------Now, could you tell me what "IMHO" stands for? Thanks!---------------

Later, after Cavan Man told him what it was he posted --------(1/6/00; 4:42:35MDT - Msg ID:22396)--------Not good, IMHO (now that I know what the acronym stands for).

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

Part 4 is next

Golden Truth
TO F.O.A
Howdy F.O.A just wanted to let you know how much we i appreciate you posting here, So here it is "Thankyou, Thankyou, and thanks! :-)
Now i must go and read your very latest part 1& part 2.
G.T
goldfan
Peter Asher (01/31/00; 17:00:58MDT - Msg ID:23954)
donato@log.on.ca
Happy to hear from you. This isp rejected your email address. Kind of frustrating.

Goldfan
canamami
Further Question for Oro
Oro,

Thx for your reply. I need more help. If I loan my brother $10,000 @ 12%, the principal being repayable at his option provided he makes the monthly $100.00 payment (to avoid demand by me). I thus have a promissary note from him, but no "money". In a sense, the promissary note can only extinguish my liabilities if someone else thinks my brother is creditworthy, and will accept the note as payment. Then my brother pays me back. I now have $10,000 cash, which is better because it is legal tender. How then is money "destroyed" by the repayment of debt, at least from my micro perspective as a creditor? This $10,000 now can be used to pay my dollar-denominated interest payments, to my creditors.

I recognize the above example probably does not accord with the usual commercial practice, but it sets out my lack of comprehension. Now, if my brother borrows Euros, to effect an exchange of Euros for dollars with someone who had $10,000 in his account, to effect repayment to me of the loan, would not the dollars just be moving from the new creditor's account to my account? Contrariwise, if my brother deposited the Euros with a bank, and the bank then loaned my brother $10,000 "created" by the bank as permitted by the reserve requirements, would not the supply of dollars have thus been increased?

I again apologize for these second week of class, Economics 101-level questions, but an answer would help me follow your theory.

Thx again,
canamami.
The Believer
PRWKent
This only brings us back to the questions;
The media is run by?
The media is owned by?
I have read reports on this forum stating the fedral
reserve is not helmed by old money bankers.
Hogwash.
I hear tell we get our news from "the free press".
Snicker.
Am I to think we have a free market place?
And the truth be shown on the eleven o'clock news?
Come sit by the fire Kent...and let us think..and speak.
canamami
O.T.: Question for Permafrost
Permafrost,

Your posts appear to me to evidence a particular world-view. Are you a sedevacantist?
koan
gold, silver platinum and palladium
Gold: China is buying hand over fist (Kitco news), silver comex stocks are very low and Platinum and palladium - big supply shortage and big increase in demand from auto makers. These are real stories: we may actually be on the verge - AT LAST - of a real bull mkt based on supply demand - which is how I like it. PS Kaiser is speculating $5000 - I'll settle for $500 .
FOA
PART 4
Part 4

ALL: Now we review a post that I submit is pure garbage! I'll break some of it up and commit.

----------------
PERMAFROST (1/13/00; 3:18:40MDT - Msg ID:22817)
To the Forum...So; are we to believe the pagan [Aristotle] when he says that the dollar is NOT backed by oil--please
arrest needless mincing of words--or the holy trinity [ORO, FOA, and the "holy spirit" ANOTHER?] when they make noises to the effect that it is? The fact is, it is NOT--de jure, de facto; in reality or in illusion. ATTN: ALL THOSE THAT EQUIVOCATE THEIR PERSONAL SPECULATIONS TO ACTUAL FACTS;

You are doing this willingly because the content of your postings display articulate intelligence and considerable knowledge. The only conclusion I can deduce from these FACTS are that you are either trying to surreptitiously mislead your following or simply making an [---] of yourself.
Unfortunate in both cases.
--------------------------------

ALL: Some chain of logic? One would think he would respond to all the previous discussion ,,,,, and do so in a manner that spells out his position. Instead he uses the old ---I can't present my views in a way that proves me right so I'll tell everyone that you're an (---)!

Then he goes on:

------------------------
TO THE FORUM PARTICIPANTS:
Your fawning and obseqious behaviour towards the local gurus places you in the same ship [the Titanic?] as the sheeple you frown upon.I've been reading this forum for a month; thence follow my observations for those who care to read them:
-----------------------

ALL: Again I say, "What a bunch of garbage!!" He admits that he's been reading the group for a month,,,,,,no less,,,,,,,,and has us all pegged. And later on says that I am talking down to everyone!!

Then he goes on:

-----------------------------
1) Only A=A. If gold=A then NOTHING ELSE equals A. Period. No Euros, dollars, dinars or
liras.
2) Positing premise #1 to be true, all those here claiming that the Euro constitutes the lifeboat off of
the Titanic [the dollar] are LYING, because YOU know that they know better!
3) Now I ask YOU who previously considered yourselves to be so well informed; WHY would they do such a thing? Do they have a hidden agenda or are they plain you-know- what?
When they disparage one fiat money [the dollar] and sing the praises of another [the Euro] they are talking from both sides of their respective mouths. Sheer dishonesty!
---------------------------

ALL: Again I say "What a bunch of garbage!!" You have all just read our (FOA/A) position as given. Did anyone feel "arm twisting" ,,,, or "mind control",,,,,or a "hidden agenda"? I ask, where is his logic chain,,,,,,,his political analysis ,,,, his reasoning. Does he just give "predictions" based on his perceptions without laying the ground work of how political logic would bring his events about?

------------
Mr. Frost says (part of his post) in (1/13/00; 6:59:28MDT - Msg ID:22822)----------Even assuming Aristotle's words were written in stone, YOU are still confusing an alleged (by Ari) RESULT with an actual CAUSE of that result, or fact (irrationally assumed by the lot of them) that never was the case: THE DOLLAR WAS NEVER PEGGED TO OIL!--------------
------------

ALL: But he never offers his reasoning as to why! Nothing! Deep stuff, huh! Big help to the forum as a team effort! Here is another of his team effort-----------(1/13/00; 7:15:04MDT - Msg ID:22824)---------You're right Steve; nothing wrong with being friends and sharing thoughts. But I
sensed a whiff of insipid and insidious tendencies and aired out the room. See? now we got fresh air, and that's good as well.----------------

---------------------
ALL: finally we get some analysis in 22826 and 22875, but it's again mostly rebutting other posters.
He attacks me (and others) with innuendoes and then states the following---------(1/18/00; 2:39:41MDT - Msg ID:23093)-------RossL; and Forum also To condemn someone in public without elaborating evidence or at least an argument is not a sensible thing to do. IMHO, I am simply reacting to what I perceive as being the promulgation of half-truths and wilful creation of confusion and intellectual miasma on this forum.------------------------------------

ALL: "What a bunch of garbage!" ,,,,,,and "What an incredible contradiction!"
He is "simply reacting to what I (he) perceived"-----and after only reading the discussion for a month or so. Does
"his perception" give him the right to step all over other participants?
--------------------

Mr. Frost says in --------(1/18/00; 8:28:03MDT - Msg ID:23104)------------------Mr. Peter Asher; With all due respect, sir, I never stoop to calling people names like your camp has done re Msg. ID 23098 by FOA.FOA; Strange...I have the nagging feeling that what you wrote there (Msg. 23098) hurt YOUR credibility more than it did anything else. For God's sake man, you actually called me a nut! Was
that really warranted? Does THAT fit the guidelines?
-------------

ALL: "What a bunch of garbage!" He just said that we offer ----half-truths and willful creation of confusion and intellectual miasma on this forum------,,,,,,,,and then says he never insults anyone!

Then admits that in my Msg. 23098 he was the nut referred to. Read my post,,,,,I never referred to him. "What a bunch of ?"
---------------

And Further:

He continues his posting with----(01/20/2000; 06:13:29MDT - Msg ID:23242)----As for your mentor, FOA, he states that #23197: "In none of our meetings have we heard where a fear was expressed that the governments will lose control of digital currencies and (give it) back to gold. That is simply not going to happen, no matter how severe a down turn the loss of the American dollar system creates. Believe it."
beesting, why should we believe your mentor? This guy is talking about NOT giving control back togold which YOU YOURSELF equate with SOVEREIGNTY. He wants gold bridled and the Eurobewinged to monetary heaven and you want to put him in the HOF?----------------

ALL: did anyone read my entire post and receive it in the full context of what I presented today? His perception of what I said is garbage,,,,pure and simple. Then he goes on in the same post
----------This, the banker community, of which I suspect FOA to be a member of as evinced in his own allusions to be speaking down to us from "official" spheres, are trying to hide from us by advertising the Euro as the one lifeboat off of the dollar-Titanic.-------------

Again, after all this guy says about our discussion, I am accused of this trash!

There is more------(01/21/2000; 02:39:57MDT - Msg ID:23334)----------BEESTING: FOA has discredited HIMSELF. Just as you yourself did by standing by a man who's betrayed you.----

ALL: What was that ????,,,, where did that come from? Why am I standing on the same stage and attempting to add to this convention while this "!!!" is saying anything that comes to mind?
--------------------

Now I'm told (by a friend) who he is
--------(1/28/2000; 4:37:35MDT - Msg D:23715)--------Someone was asking Leigh if I was TZADEAK and had any good leads that would presumably help him/her make a buck or two. Well; here's my "predictions" for 'you'...-------------

---------------------
Well I have to thank my good friends for tracking much of the gold talk on the web. They are the ones that saved all these posts and pointed out that this PERMAFROST is indeed of the same mold as TZADEAK that posts on Kitco. Today, he and Disney go round and round using several handles (go follow it past and present and you will understand). This is the same type of guy (or is he the same?) that came over here using the Mello88 handle and NewGold. He has always tried to claim that he is Another or had Another's ideas or some other ridiculous crap,,,,,,,,,,,,,,and does it
in a totally caustic fashion. His postings are well documented (PHinLA you witnessed his incredible conversations)and Another would never share a stage with ANY SUCH FOOL or the Lurking Gold Bug idiot (ON k),,,,,,,
once he realized their tactics.
My writing is a reflection of him (Another) when he's not posting and I must honour his directions. I said I would walk off this stage if there kind were allowed here. It
was bad enough to hear Stranger literally stomp me into the ground, then promote himself as a professional pillar of the community,,,,,apologize and return. But, no amount of camaraderie is worth being associated on stage with this other nut.

Sorry Michael. This decision was made for me. From time to time I'll send in something for you to post in another area (off the forum) if you will allow (OR WANT). But this is where I MUST draw the line. This is final, good luck all.

FOA
canamami
Reply and Request to FOA
FOA,

I am very sorry to see your recent post, indicating that you will not post again. I always found your posts thought-provoking, even when I disagreed with or could not completely follow them. Hopefully you will eventually reconsider. Sadly, in an internet forum such as this, there are sometimes "sharp" exchanges, and there are also "off the wall" posters....such is the internet world.

Again, it was a pleasure to read your posts, and I hope you will decide to return.

Yours,
canamami.
ORO
Canamami - the disappearing dollars - or the Devil in the details... er bank
When you hold that note of your brother's you have an "asset" which is somebody elses obligation. Given an inventory taken by anyone of your net worth, the note from your brother would be counted as an asset. So it has a partial similarity with money in that it is a non-depreciating asset in terms of the "money" in which it would be repaid.

Now go one step further. Let's say you are in a small town and so is your brother. Everybody knows you and knows him. You are pressed for cash for a new addition to your house and exchange your brother's note for cash by selling it to your contractor, who knows both you and your brother. The contractor uses your brother's note as collateral for a loan at the local bank, or from someone else who happens to have enough cash on hand or in an account to do this. In this way, the note has been used in payment, as collateral for a loan and as an asset. It is, for all intents and purposes "money" or at least a pretty good substitute.

If your local mortgage company issued that note to your brother, it would soon thereafter pool it with other high quality loans and sell it on the debt markets. The debt markets would trade it and use it as a money substitute - it would turn over in the financial markets many times, be used as a part of a few derivative transactions, borrowed against and used in settlement of debts. It would be part of the money supply in the broadest sense.

When your brother pays off the loan it is no longer available as part of the liquidity pool of money and money substitutes. It can't be used as collateral and is no longer available as a means of payment.

Most stocks and large bond tranches are liquid enough to be thought of as a money substitute - they are usable as payment within short notice through third party exchange, or are usable as direct payment.
canamami
Thx Oro...
for your reply -#23976.
koan
theoretical scenerio
Handicapping the next move: Platinum and palladium move through $500. This brings speculation to the metal mkts which worsens the shortage of the white metals - silver would be next as it is now in short supply and all three would pull up gold. This could happen folks. Cheers. Sitka Alaska on Sunday 52 degrees. That will bring the bears out.
elevator guy
FOA
FOA offers the most illucidating information and far-reaching vision of any poster I have ever heard anywhere on the net. Or come to think of it, in my life.

Permafrost has a hair up his a*s, and if we lose FOA cause of some body who comes stomping into the Forum, and spewing hate and discontent, well, that would be a sad day indeed. I, like canamami, do not always understand FOA. But to the degree I can absorb, I am learning. And I sure dont wanna go back to CNBC for my dosage of insightful analysis. (Thats funny, laugh now)

FOA has benefitted this Forum and all who listen.

Where else can we go? FOA has the words of gold.
TheStranger
ORO
I very much appreciate your explanation of dollar destruction. Thanks in part to your response to canamami, I even think I understand it. I do, however, confess, it is a little unsettling to be as confident of one's strategy as I have been and then discover how much I may have missed. I still see growing U.S.trade deficits in your schema, though. And I still see American consumption outstripping supply. Obviously, you think so, too.

HLime
FOA
This forum is diminished when a poster of merit feels he is no longer welcome.
I do not know how much of Mr. FOA's sensitivities are cultural or a character
flaw. This forum, hell any forum, needs differing viewpoints. I have been following
FOA and ANOTHER from their KITCO days. They seem to require a devoted
following bordering on a cult worship. This is not an exchange of ideas, it is
indoctrination. Mr. FOA if you can not take the heat get out of the kitchen.
Best of luck to you but go sulk elsewhere.

HLime
JCTex
Cavan Man
RE: A Request For HOF Induction (Town Crier please)
Cavan Man 23198 asks for seconds for FOA's "overview" series.

Couldn't tell if you were simply notifying TC or needed more seconds. If you need more, please include me. In fact, I wish we could put them all together somewhere. I am building muscles at the tender age of 57 just carrying hard copies of his work around.
Regards

ORO
FOA - Please don't go.
FOA, you and Another have opened the eyes of many here, definitely, you have opened mine. You are the "raison d'etre for this forum.
That is a great legacy for anyone.

I will forever view with regret and a deep sense of loss your leaving this forum.

I beg of you to reconsider.


I am sorry to say that my thick skin has me pushing for a liberal acceptance of tirades, fools, and mud slinging barbarians.
But rather than view this forum as a stage of scholarly informed debate, and a classroom with a panel of experts, I view it as a marketplace of ideas, a "shuk". Where not all of the participants come to present ideas in orderly fashion, but where some come to steal, some come to ruin the goods of their competitors, some just browse, and some buy. Some come to exchange ideas, some some come to sell. Some come for entertainment and some for an education.

Perhaps it is MKs time to decide how much of a "shuk" and how much of a class this forum would be. Perhaps it is a forum of participants screened by FOA that is needed in parallel to a wider "noisier" forum.
flierdude
F.O.A. What is the correct answer?
Date: Mon Jan 31 2000 23:46
crazytimes (Newsflash......) ID#351368:
FOA bids farewell from the USA Gold Forum. Three possibilities in my mind why.......

1. He is legit and because he spends so much of his spare time answering posts and educating, when sharp criticism hits
him he wonders if it's worth it.

2. He's a fraud and is looking for a way out.

3. He just can't handle the heat.

Chris Powell
A plug for GATA and an exchange about GATA
http://www.egroups.com/group/gata/353.html?Some mainstream media interest in gold and a
gold mining stock:

http://www.egroups.com/group/gata/353.html?


An exchange with two people skeptical about
GATA:

http://www.egroups.com/group/gata/354.html?
TheStranger
FOA
Trust me, I know I behaved like a jerk. My month in the cooler gave me plenty of time to think about it, too. It's hard to make amends for something like that by just saying I am sorry, but I am.

You aren't just smart, FOA. You are also sensitive. In my book, that's a good quality, not a bad one. So, when you are ready, come back, here, you dummy! You've got some of the best and most respectful friends a man could ever ask for in here.

I promise, I won't read the drivel if you won't. (I don't anyway.)

Your friend who really did wise up,
Dave

P.S. - Non-carborundum illigitimum! (Don't let the bastards get you down!)
JCTex
flierdude
#2 & #3 do not make any sense at all. This is the inernet, you can just leave.
As for #1, I would add that it is one thing have the tigers from hell after you; it is entirely something else to have a yapping dog nipping at you every day.
mellow88
RE FOA's ridiculous comments on TZADEAK*
I have been asked to post this message, by TZADEAK*
I can assure this discussion forum that PERMAFROST
is most certainly NOT TZADEAK*.
And I hope that PERMAFROST confirms this as soon as
possible. Many others are now claiming to be TZADEAK*
I don't quite know what gets into FOA, but frankly
I, and I am sure many are very tired of his accusatory diatribes and tamper tantrums, each and every time
his theories and ideas are questioned, and blaming
TZADEAK* for it all.
I hope he will soon come to his senses.
Peter Asher
Stranger
BRAVO !!
schippi
XAU Vs FSAGX Chart
http://www.SelectSectors.com/xautoday.gif Local double bottom on XAU?
Canuck Gold
FOA (01/31/00; 20:49:50MDT - Msg ID:23974)
It is truly a shame that FOA has taken the abuse by PERMAFROST to heart. As I suggested previously, when it became apparent that PERMAFROST was intent on maliciously maligning various posters on this forum with unsubstantiated claptrap, participants would be wise to skip his posts without reading them.

It would be my guess that he intentionally set out to rattle a few cages but was careful to stay just inside the posting guidelines to avoid being booted off. It's one thing to provide an opposing viewpoint with substantiating facts, it's quite another to be just a heckler looking for attention.

It's obvious to anyone who has been around this forum for any amount of time that the value of FOA's posts are vastly more beneficial to the participants than anything that PERMAFROST has to offer. I particularly hoped that PERMAFROST would cease posting, as he indicated he would do, but some people just don't seem to get the message that they're not wanted.

Personally, I was hoping that Michael would adjust the posting rules to avoid us having to put up with for too long the posts of those who are obviously making a nuisance of themselves and have nothing constructive to say.

Of all the posts to this forum, those made by FOA have been amongst the most thought provoking. One may not necessarily agree with everything he has said, and only time will tell if he is right, but they are thought provoking nonetheless.
Nothing posted by PERMAFROST has provoked any thoughts in me other than to wish him gone. He has added nothing of merit to the discussions here. He has been nothing more than a stone in a shoe where relief is found only when it's gone.

FOA, if you let this unworthy person drive you away from this forum, it will be to the detriment of us all. You know what they say about sticks and stones. Please reconsider.

CG
foolsgold51
TRUTH---RETURN TO LEARNING--FOA WE NEED YOU!
"There are two mistakes one can make along the road to truth -- not going
all the way, and not starting. " --Buddha (563-483 BC) Indian religious
leader

On Kitco and this forum I learn truth, its hiding between the lies and bs that is common these days. Those who feel they have the truth will always be offended by those who teach them otherwise. State your opinions and refrain from attacking others. The truth will always be the truth, and the lies will be forgotten. I feel there is more truth in what FOA says than lies and that brings anger and attack for those who already think they know it all.
DD
Why We Post
Hi All - I haven't posted for quite a while but keep up with the forum family on a regular basis. Watching how we tend to go from calm seas to stormy emotional waters on a cyclical basis, I wondered why. I look at the excellent writing and mind of an FOA and ask myself, "David, why would a person like FOA take the time to share his insights with a know nothing like me. I think it's because he wants to give something back. I could say the same about many of you who post here. Your smarts and knowledge are nothing short of remarkable. Again, I think that if we get closer to the truth, it's because you, too, want to contribute to others. Bravo!

However, I think we get into trouble when we forget why we come to this family gathering on a regualr basis. When the need to make others wrong in order to be right (ego junk) over powers our real "Selves", people get their feelings hurt. The hurt is usually covered over with anger and this is when things start to come undone.

FOA, I encourage you to remember why you've posted here so well and so long. Your posts have made a difference in many of our lives. Possibly you will join us again. I certainly hope so.

As for the rest of us, let's not forget our real purpose for posting here. There's plenty of good hearted give and take to spice up the table round. And a good thing, too. But the world is chock full of intractable problems based on black/white, right/wrong ego based perceptions. We will be better if we can avoid this type of miscommunication.

By the way, I was wrong on Y2k and my friends have been teasing me as a daily ritualistic torture. Looks like the homeless shelter downtown is going to get a nice influx to its food inventory. It feels good to make a contribution to others, yes? Best, DD
Lafisrap
Gold priced below spot

FOA and ANOTHER have spoken of the spot price of gold, how the spot price is determined by the paper price, how physical gold will be priced much higher than the spot price, and how the diverging prices of paper gold and spot gold will signal the end of the paper gold market. The FOA/ANOTHER scenario may still happen, but what is happening right now is that physical gold is being priced (in at least one coin shop) lower than the spot price.

For example, at:
http://ajpm.com/htbin/gold.cgi

We can see that Krugerrands are priced at $297, while spot is at $283. American Gold Eagles are also at $297.

Perhaps the demand for physical gold is simply not as great as we here at this forum think. I expect that particular coin shop is awash in gold it has bought back from Y2K hoarders. The story is the same at all coin shops I checked, which is where I have been told that coin shops in general are awash in the returned Y2K gold hoards. The first week in January, coin shops I checked would still buy gold coins at one or two dollars over spot. It appears that at least one coin shop is willing to sell below spot. Their buyback price for Krugerrands is listed at $276, seven dollars below spot, almost %2.5 below spot.

Lafisrap

Permission to reprint is hereby granted where the USAGOLD name is cited along with our web address, mailing address and phone number. For electronic reproductions, citing the post heading and the http://www.usagold.com/cpmforum/ website address as the source is sufficient.